EXHIBIT 10.2


 


Lock-Up Agreement


 


 


 


Joseph
Stevens & Company, Inc.


59
Maiden Lane, 32nd Floor


New
York, NY 10038


 


Re:          The Power
Efficiency Corporation Lock-Up Agreement


 


Ladies
and Gentlemen:


 


This letter agreement (this “Agreement”) relates to the private placement offering (the “Offering”) by Power Efficiency Corporation, a Delaware corporation
(the “Company”), of Units comprised of shares
of common stock of the Company, par value $0.001 per share (the “Common Stock”) and warrants to purchase Common Stock.  Capitalized terms used and otherwise not
defined herein shall have the meanings set forth in the Placement Agency
Agreement dated June 1, 2005 (the “Placement Agency Agreement”),
by and between the Company and Joseph Stevens & Company, Inc. (“Joseph Stevens”).


 


In order to induce Joseph Stevens to act as placement agent for the
Company in connection with the Offering, the undersigned hereby agrees that,
except as set forth herein, without the prior written consent of Joseph Stevens
during the Lock-Up Period (as defined below), the undersigned shall not:


 


(a)           directly or
indirectly, offer, sell, agree to offer or sell, solicit offers to purchase,
grant any call option or purchase any put option with respect to, pledge,
borrow or otherwise dispose of any Relevant Security (as defined below), and/or


 


(b)           establish or
increase any “put equivalent position” or liquidate or decrease any “call
equivalent position” with respect to any Relevant Security (in each case within
the meaning of Section 16 of the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder), or otherwise enter into
any swap, derivative or other transaction or arrangement that transfers to
another, in whole or in part, any economic consequence of ownership of a
Relevant Security, whether or not such transaction is to be settled by delivery
of Relevant Securities, other securities, cash or other consideration


 


As used herein, the term “Lock-Up Period” means the period beginning on the date
hereof and ending on the twelve (12) month anniversary of the initial closing
date of the Offering; provided, however, that  the Lock-Up Period shall terminate if at any
time after the date which is ninety (90) days after the date upon which the
Registration Statement is declared effective, the 20-day average of the closing
bid price of the shares of Common Stock on the OTC Bulletin Board exceeds two
hundred percent (200%) of the Common Stock Purchase Price.


 


As used herein, the term “Relevant Security”
means any shares of Common Stock or any other debt, equity, option, warrant or other
security or instrument (“Other Securities”)
of or binding upon the Company or any subsidiary thereof that is convertible
into, or exercisable or exchangeable for, shares of Common Stock or any Other Securities
of the Company or any subsidiary thereof or that holds the right to acquire any
shares Common Stock or Other Securities of the Company or any subsidiary
thereof.


 


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The undersigned hereby authorizes the Company during the Lock-Up Period
to cause any transfer agent for the Relevant Securities to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, Relevant Securities for which the undersigned is the record holder
and, in the case of Relevant Securities for which the undersigned is the
beneficial but not the record holder, agrees during the Lock-Up Period to cause
the record holder to cause the relevant transfer agent to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, such Relevant Securities.


 


Except for the Registration Statement (as defined in the Placement
Agency Agreement), as to which Joseph Stevens has agreed the undersigned may
exercise any rights described in (y) below, the undersigned hereby further
agrees that, without the prior written consent of Joseph Stevens during the
Lock-Up Period the undersigned shall not:


 


(x)           file or participate
in the filing with the Securities and Exchange Commission of any registration
statement, or circulate or participate in the circulation of any preliminary or
final prospectus or other disclosure document with respect to any proposed
offering or sale of a Relevant Security, and/or


 


(y)           exercise any rights
the undersigned may have to require registration with the Securities and
Exchange Commission of any proposed offering or sale of a Relevant Security.


 


The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of the undersigned,
enforceable in accordance with its terms. 
Upon request, the undersigned will execute any additional documents
necessary in connection with enforcement hereof.  Any obligations of the undersigned shall be
binding upon the successors and assigns of the undersigned from the date first
above written.


 


It is understood that if the Company notifies Joseph Stevens that it
does not intend to proceed with the Offering or if the Placement Agency
Agreement shall terminate, or be terminated, prior to the initial closing contemplated
thereby, the undersigned, upon the occurrence of any such event and without
further act by or on the part of Joseph Stevens, will be released from his, her
or its obligation under this Agreement.


 


This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the conflicts of laws
principles thereof.  Delivery of a signed
copy of this letter by facsimile transmission shall be effective as delivery of
the original hereof.


 


Dated: June     , 2005


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
   

  



 


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