EXHIBIT 10.50


 


SETTLEMENT AGREEMENT
 


This
Settlement Agreement (the “Agreement”) is entered into this 21st day of
December, 2004 (the “Effective Date”), by and between Thomas Mills (“Mills”),
located at 3115 34th Street NW, Washington, DC 20008, and Power Efficiency
Corporation (“PEC”), located at 3900 Paradise Road, Suite 282, Las Vegas, NV
89109.


 


WHEREAS:          PEC and Mills previously signed a
settlement agreement on or about September 30, 2004 (the “September Settlement”)
that provides for:


1.               the payment of $18,750 in gross wages from
PEC to Mills, and


2.               the issuance of 36,500 qualified options to
Mills with a strike price of $0.65 per share,


 


in
lieu of the payment of $37,500 in accrued wages owed to Mills.


 


WHEREAS:          On November 1, 2004, Mills resigned
from PEC, thus terminating his employment with PEC.


 


WHEREAS:          Between the end of the period covered
by the September Settlement and Mills’ resignation on November 1, 2004, Mills
claims to have worked for and earned $5,000 in wages (the “Accrued Salary”).


 


WHEREAS:          Mills has submitted to PEC an expense
report with various travel and other expenses for the period of May 26 to
October 1, 2004, which have remained unreimbursed to this time (the “Unreimbursed
Expenses”), and which total $8,368.23; and


 


WHEREAS:          With PEC’s consent, Mills purchased a
computer (the “PC”) for Mills to use on PEC, academic, and personal matters
during his employment with PEC, and for which he was partially reimbursed by
PEC, and whereas further Mills wishes to have the PC for his own use in the
future, recognizing that PEC paid $1,967.17 of the total amount of the cost of
the PC.


 


NOW, THEREFORE, the parties hereby agree to settle these
matters as described in the following items:


 


1.             The parties agree they continue to
be bound by the September Settlement; PEC will make the payments of cash and
options called for in the September Settlement, and Mills reaffirms his consent
that the September Settlement is just and complete consideration for all wages,
back pay, and all other compensation PEC owed Mills through September 30, 2004.


 


2.             PEC agrees to pay Mills the
complete $5,000 in gross wages for the Accrued Salary.


 


3.             PEC agrees to reimburse Mills for
the complete amount of the Unreimbursed Expenses, in accordance with PEC’s
expense reimbursement policies and the requirements of Mills employment
contract with PEC, minus the $1,967.17 PEC already reimbursed Mills for the PC,
for a net amount of ($8,368.23 - $1,967.17) = 
$6,401.06.


 





















 


4.             Mills accepts the consideration
described in items 1-3 above as complete and final compensation and payment of
all amounts currently owed to him by PEC, and further agrees that PEC does not
and will not owe him any further payment of any kind for anything. PEC will
make all salary payments as soon after the Effective Date as ADP, PEC’s payroll
processor, can make the payment. The parties understand that the Unreimbursed
Expenses require significant time to enter into PEC’s accounting and that
payment for the Unreimbursed Expenses will be sent as soon as reasonably
possible by PEC, but in no case later than January 5, 2005.


 


5.             Regarding withholding and all other
taxes, the parties agree: a) that PEC will withhold standard taxes from all
cash payments made to Mills, except for cash payments for the Unreimbursed
Expenses, and b) that Mills will pay any and all taxes associated with any
capital gains and income from the options related to the September Settlement.


 


6.             The parties agree that the
employment agreement entered into between PEC and Mills on October 16th,
2003, is hereby terminated and the parties hereby release each other from any
and all obligations and claims under this employment agreement, with the
exception of sections 10 and 11, which will survive and are hereby incorporated
in this Agreement.


 


7.             The parties agree that the
validity, interpretation and effect of this Agreement be governed by the laws
of the State of Nevada, and that if any provision of this Agreement is held to
be invalid, such provision shall be deleted and the remainder of this Agreement
shall remain in full force and effect.


 


8.             The parties agree that any legal
suit, action or proceeding arising out of or relating to this Agreement shall
be instituted exclusively in and subject to the jurisdiction of the courts of
the State of Nevada, Clark County. The parties further waive any objection to
the venue of any such suit, action or proceeding and the right to assert that
such forum is not a convenient forum.


 


9.             The parties agree that this
settlement represents the entire agreement of the parties and that no
modification or amendment of this Agreement shall be binding or effective,
unless such modification or amendment is in writing and executed by each party
hereto. This Agreement may be executed in several counterparts, each of which
when so executed shall be deemed to be an original and such counterparts
together shall constitute one and the same Agreement.  Any counterpart of this Agreement shall be
validly and effectively delivered, if delivered by facsimile transmission.


 


IN WITNESS
HEREOF, the parties
hereto have executed this Agreement as of the date and year first above written


 


	
  POWER EFFICIENCY CORPORATION

  
	
   

  	
   

  
	
  By:

  	
  /s/
  John Lackland

  	
   

  
	
  Name:

  	
  BJ
  Lackland

  
	
  Title:

  	
  Interim
  CFO

  
	
   

  	
   

  
	
  THOMAS MILLS

  
	
   

  	
   

  
	
   

  	
  /s/
  Tom Mills

  	
   

  
	
  Thomas
  Mills