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**EXHIBIT 10.2**

 

Lock-Up Agreement

 

 

 

JosephStevens & Company, Inc.

59Maiden Lane, 32nd Floor

NewYork, NY 10038

 

Re:          The PowerEfficiency Corporation Lock-Up Agreement

 

Ladiesand 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 sharesof 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 notdefined herein shall have the meanings set forth in the Placement AgencyAgreement 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 theCompany in connection with the Offering, the undersigned hereby agrees that,except as set forth herein, without the prior written consent of Joseph Stevensduring the Lock-Up Period (as defined below), the undersigned shall not:

 

(a)           directly orindirectly, 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 orincrease any “put equivalent position” or liquidate or decrease any “callequivalent position” with respect to any Relevant Security (in each case withinthe meaning of Section 16 of the Securities Exchange Act of 1934, as amended,and the rules and regulations promulgated thereunder), or otherwise enter intoany swap, derivative or other transaction or arrangement that transfers toanother, in whole or in part, any economic consequence of ownership of aRelevant Security, whether or not such transaction is to be settled by deliveryof Relevant Securities, other securities, cash or other consideration

 

As used herein, the term “**Lock-Up Period**” means the period beginning on the datehereof and ending on the twelve (12) month anniversary of the initial closingdate of the Offering;****provided, however, that  the Lock-Up Period shall terminate if at anytime after the date which is ninety (90) days after the date upon which theRegistration Statement is declared effective, the 20-day average of the closingbid price of the shares of Common Stock on the OTC Bulletin Board exceeds twohundred 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 othersecurity or instrument (“**Other Securities**”)of or binding upon the Company or any subsidiary thereof that is convertibleinto, or exercisable or exchangeable for, shares of Common Stock or any Other Securitiesof the Company or any subsidiary thereof or that holds the right to acquire anyshares Common Stock or Other Securities of the Company or any subsidiarythereof.

 

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

 

Except for the Registration Statement (as defined in the PlacementAgency Agreement), as to which Joseph Stevens has agreed the undersigned mayexercise any rights described in (y) below, the undersigned hereby furtheragrees that, without the prior written consent of Joseph Stevens during theLock-Up Period the undersigned shall not:

 

(x)           file or participatein the filing with the Securities and Exchange Commission of any registrationstatement, or circulate or participate in the circulation of any preliminary orfinal prospectus or other disclosure document with respect to any proposedoffering or sale of a Relevant Security, and/or

 

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

 

The undersigned hereby represents and warrants that the undersigned hasfull power and authority to enter into this Agreement and that this Agreementconstitutes the legal, valid and binding obligation of the undersigned,enforceable in accordance with its terms. Upon request, the undersigned will execute any additional documentsnecessary in connection with enforcement hereof.  Any obligations of the undersigned shall bebinding upon the successors and assigns of the undersigned from the date firstabove written.

 

It is understood that if the Company notifies Joseph Stevens that itdoes not intend to proceed with the Offering or if the Placement AgencyAgreement shall terminate, or be terminated, prior to the initial closing contemplatedthereby, the undersigned, upon the occurrence of any such event and withoutfurther act by or on the part of Joseph Stevens, will be released from his, heror its obligation under this Agreement.

 

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

 

Dated: June     , 2005
|   | Very  truly yours, |
|--------|--------------------|
|   |               |
|   |               |
|   |               |
|   |               |   |
|   | Print Name:   |   |
|   |               |   |

 

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