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                                                                   EXHIBIT 10.37

                                COMMERCIAL LEASE


DATE:          as of June 1, 1997


BETWEEN:       McLAIN-RUBIN REALTY COMPANY II, L.L.C., a                   
               Delaware limited liability company ("Landlord")
               38207 Northeast Gerber Road
               Yacolt, WA 98675


AND:           WESTERN POWER & EQUIPMENT CORP., an
               Oregon corporation ("Western Power" or "Tenant")
               4601 N.E. 77th Avenue
               Vancouver, Washington 98662


     Subject to the terms and conditions of this Lease, Landlord hereby leases
to Tenant, and Tenant hereby leases from Landlord, the real property described
on Exhibit A hereto (which by this reference is made a part hereof), together
with all improvements now and hereafter situated on said land (said land,
together with such improvements, being hereinafter referred to as the
"Premises").  The Premises are located at 913 South Central Avenue, Kent,
Washington.

     The parties hereto, for themselves, their heirs, administrators, executors,
successors and assigns, hereby covenant and agree as follows:

Section 1.   Occupancy

      1.1    Term.  The term of this Lease (hereinafter referred to as the
"Term") shall commence on the date (the "Commencement Date") on which Landlord
acquires fee title to the Premises, and continue through, and expire on, May 31,
2017 (the "Expiration Date"), unless sooner terminated as hereinafter provided.

      1.2    Possession.  Tenant's right to possession of the Premises, and its
obligations under this Lease, shall commence on the Commencement Date.  If the
Commencement Date does not fall on the first day of the month, Rent (as
hereinafter defined) for the first month under this Lease shall be prorated
accordingly, and shall be due on the Commencement Date.

      1.3    Lease Conditional.  This lease and all of Landlord's and Tenant's
obligations hereunder are expressly conditioned upon Landlord's acquisition of
fee title to the Premises on or before June 30, 1997.  If for any reason,
including, without limitation, Landlord's refusal, Landlord does not acquire fee
title to the Premises on or before June 30, 1997, this lease shall be deemed
null and void and of no force or effect.

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Section 2.  Rent

    2.1     Base Rent.  Tenant covenants and agrees to pay to Landlord an 
annual base rent (the "Base Rent"), in equal monthly installments, in 
advance, without demand, deduction or set off, at such place as may be 
designated by Landlord, on the first day of each month throughout the Term of 
this Lease, as follows:

            (a)  For the period commencing on the Commencement Date and 
ending on May 31, 2002, both dates inclusive, $205,200.00 per year 
($17,100.00 per month);

            (b)  For the period commencing on June 1, 2002 and ending on May 
31, 2007, both dates inclusive, $230,856.00 per year ($19,238.00 per month);

            (c)  For the period commencing on June 1, 2007 and ending on May 
31, 2012, both dates inclusive, $258,000.00 per year ($21,500.00 per month); 
and

            (d)  For the period commencing on June 1, 2012 and continuing 
thereafter throughout the remainder of the Term, $288,000.00 per year 
($24,000.00 per month).

    2.2     Additional Rent.  All taxes, insurance costs, utility charges, 
maintenance costs, repair charges and other sums that Tenant is required to 
pay pursuant to this Lease to Landlord or third parties, shall be "additional 
rent."  For the purposes of this Lease, Base Rent and additional rent are 
sometimes collectively referred to as "Rent."

Section 3.  Use of the Premises

    3.1     Permitted Use.  The Premises shall be used for retail sales, 
service, storage and repair of agricultural, utility or industrial equipment, 
machinery and parts, and incidental office use, and for any other lawful 
purpose, subject to the applicable provisions of this Lease.

    3.2     Restrictions on Use.  In connection with the use of the Premises, 
Tenant shall:

            (a)  Comply with all applicable laws and regulations of any 
public authority having jurisdiction over the Premises and the use thereof, 
and correct, at Tenant's own expense, any failure of compliance created 
through Tenant's fault or by reason of Tenant's use;

            (b)  Refrain from any activity that would make it impossible to 
insure the Premises against casualty, would permanently increase the 
insurance rate, or would prevent Landlord from taking advantage of any ruling 
allowing Landlord to obtain reduced premium rates for long-term fire 
insurance policies, unless Tenant pays the additional cost of the insurance;

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            (c)  Refrain from any use that would be reasonably offensive to 
other tenants or owners or users of neighboring premises or that would tend 
to create a nuisance or damage the reputation of the Premises;

            (d)  Refrain from loading the electrical system or floors beyond 
the point considered safe by a competent engineer or architect reasonably 
selected by Landlord; and

            (e)  Subject to Section 3.3, refrain from making any marks on or 
attaching any additional sign, insignia, antenna, aerial, satellite dish or 
other device to the exterior or interior walls, windows, or roof of the 
Premises without the written consent of Landlord, which shall not be 
unreasonably withheld or delayed.

    3.3     Signage.  Tenant will be responsible for providing its own 
signage. Tenant will obtain Landlord's prior approval of the design, size, 
color, materials, and other details of the sign face, which approval shall 
not be unreasonably withheld or delayed.  Landlord acknowledges that Tenant 
already has signage on the Premises and hereby consents to such signage.

    3.4     Hazardous Substances.

            (a)  Definitions.  For purposes of this Section, the term 
"Hazardous Substance" means any substance, material or waste, including oil 
or petroleum products or their derivatives, solvents, PCB's, explosive 
substances, asbestos, radioactive materials or waste, and any other toxic, 
ignitable, reactive, corrosive, contaminating or pollution materials which 
are now or in the future subject to any governmental regulation; the term 
Hazardous Substance Laws" means all federal, state and local laws, 
ordinances, regulations and standards relating to the use, analysis, 
production, storage, sale, release, discharge, disposal or transportation of 
any Hazardous Substance.

            (b)  Tenant Compliance With Hazardous Substance Laws.  Neither 
Tenant or its officers, employees, agents, invitees, sublessees or assigns 
shall cause or permit any Hazardous Substance to be spilled, leaked, disposed 
of, or otherwise released or discharged on or under the Premises, or cause 
any Hazardous Substance to be spilled, leaked, disposed of, or otherwise 
released or discharged on or under any property adjacent to the Premises. 
Tenant may use or otherwise handle on the Premises only those Hazardous 
Substances (hereinafter referred to as "Ordinary Hazardous Substances") 
typically used or sold in the prudent and safe operation of the business 
specified in Section 3.1. Tenant may store such Hazardous Substances on the 
Premises only in quantities necessary to satisfy Tenant's reasonably 
anticipated needs. Tenant shall comply with all Hazardous Substance Laws and 
exercise care in the use, handling, storage and transportation of Hazardous 
Substances and shall take all possible measures consistent with the 
practicable operation of its business to minimize the quantity and toxicity 
of Hazardous Substances used, handled, transported or stored on the Premises. 
Upon the expiration or termination of this Lease, Tenant shall remove from 
the Premises all Hazardous Substances stored there by Tenant or its 
sublessees or assigns.

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            (c)  Indemnification by Tenant.  Tenant shall indemnify, defend, 
and hold Landlord harmless from any and all claims, judgments, damages, 
penalties, fines, costs, liabilities, or losses which arise during or after 
the Term as a result of contamination by Hazardous Substances as a result of 
Tenant's use or activities or the use or activities of Tenant's officers, 
employees, agents, invitees, sublessees or assigns. This indemnification of 
Landlord by Tenant shall include, without limitation, all costs incurred in 
connection with any investigation of site conditions or any cleanup, 
remedial, removal or restoration work required by any federal, state, or 
local governmental agency or political subdivision because of Hazardous 
Substances present in the soil and ground water on or under the Premises.

            (d)  Indemnification by Landlord.  Landlord shall indemnify, 
defend, and hold Tenant harmless from any and all claims, judgments, damages, 
penalties, fines, costs, liabilities, or losses which arise during or after 
the Term as a result of contamination by Hazardous Substances that exist on 
or before the date of this Lease or as a result of Landlord's use or 
activities on the Premises or the use or activities of Landlord's officers, 
employees, agents, invitees, or assignees on the Premises. This 
indemnification of Tenant by Landlord shall include, without limitation, all 
costs incurred in connection with any investigation of site conditions or any 
cleanup, remedial, removal or restoration work required by any federal, 
state, or local governmental agency or political subdivision because of 
Hazardous Substances present in the soil and ground water on or under the 
Premises.

            (e)  Notification.  Each party shall give written notice to the 
other within three (3) business days after the date on which the party learns 
or first has reason to believe that:

            (1)  there has or will come to be located on or about the 
Premises any Hazardous Substance (other than Ordinary Hazardous Substances);

            (2)  a release, discharge or emission of a Hazardous Substance 
has occurred on or about the Premises;

            (3)  an enforcement, cleanup, removal or other governmental or 
regulatory action has been threatened or commenced against the party or with 
respect to the Premises pursuant to any Hazardous Substance Laws;

            (4)  a claim has been made or threatened by any person or entity 
against the party or the Premises on account of an alleged loss or bodily 
injury claimed to result from the alleged presence or release on the Premises 
of a Hazardous Substance; or

            (5)  a report, notice, or complaint has been made to or filed 
with a governmental agency concerning the presence, use or disposal of any 
Hazardous Substance on the Premises. Any such notice shall be accompanied by 
copies of any such claim, report, complaint, notice, warning or other 
communication that is in the possession of or is reasonably available to the 
party.

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            (f)  Cleanup Activity.

            (1)  If during the Term any remedial action is necessary to clean 
up any environmental contamination of the Premises (the "Cleanup Activity") 
to which Tenant's indemnification of Landlord in Section 3.4(c) applies, 
Tenant shall proceed with reasonable diligence to complete the Cleanup 
Activity as promptly as possible in compliance with all Hazardous Substance 
Laws. If after written notice from Landlord, Tenant fails to proceed with 
reasonable diligence to complete the Cleanup Activity, Landlord shall have 
the right, but not the obligation, to carry out the Cleanup Activity, and to 
recover all of the costs and expenses thereof from Tenant. The rights and 
obligations of the parties set forth in this Section 3.4(f) shall be in 
addition to those rights and obligations set forth elsewhere in this Lease.

            (2)  Except as set forth in Section 3.4(f)(1), if any other 
Cleanup Activity is necessary, Landlord shall proceed with reasonable 
diligence to complete the Cleanup Activity as promptly as possible in 
compliance with all Hazardous Substance Laws. If Landlord fails to proceed 
with reasonable diligence to complete the Cleanup Activity, Tenant shall have 
the right, but not the obligation, to carry out the Cleanup Activity, and to 
recover all of the costs and expenses thereof from Landlord as a set off 
against payment of rent under this Lease. The rights and obligations of the 
parties set forth in this Section 3.4(f) shall be in addition to those rights 
and obligations set forth elsewhere in this Lease.

            (g)  Phase I Report.  Within thirty (30) days prior to after the 
expiration or sooner termination of the Term, Tenant, at its expense, shall 
cause a so-called "Phase I" environmental inspection to be performed and a 
report in respect thereof to be prepared and delivered to both Landlord and 
Tenant to determine whether any Cleanup Activity is required, Landlord and 
Tenant agreeing that the responsibility for the Cleanup Activity shall be 
determined by the preceding provisions of this Section.

            (h)  Survival.  The parties obligations under this Section 3.4 
shall survive the expiration or earlier termination of this Lease.

Section 4.  Repairs and Maintenance

    4.1     Tenant's Obligations.  Tenant shall repair and maintain the 
entire Premises to the extent necessary to preserve the Premises in good 
working order and condition, including but not limited to providing regularly 
scheduled maintenance and replacement (if necessary) of the heating and air 
conditioning system, and making structural repairs.  Tenant's repair 
obligation shall include, but not be limited to, the repair of any damage to 
exterior building siding and internal walls of the Premises caused by moving 
furniture, fixtures and equipment in and out of the Premises.

    4.2     Repairs to Comply with Laws.  All repairs, alterations and other 
improvements on or to the Premises that are required by any governmental 
authority having 

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jurisdiction over the Premises or the use thereof shall be performed by 
Tenant at its sole cost and expense.

    4.3     Reimbursement for Repairs Assumed.  If Tenant fails or refuses to 
make the repairs that are required by this Section in a timely manner, 
Landlord may (but shall not be obligated to) make the repairs and charge the 
actual costs of repairs to Tenant.  Such expenditures by Landlord shall be 
charged to Tenant as additional rent and shall be reimbursed by Tenant within 
ten (10) days after Landlord's demand therefor.  Except in an emergency 
creating an immediate risk of personal injury or property damage, Landlord 
may not perform repairs which are the obligation of Tenant and charge Tenant 
for the resulting expense, unless at least ten (10) days before work is 
commenced Tenant is given notice in writing outlining with reasonable 
particularity the repairs required, and Tenant fails within that time to 
initiate such repairs in good faith.

    4.4     Inspection of Premises.  Landlord shall have the right to inspect 
the Premises at any reasonable time or times, and upon reasonable prior 
(written or oral) notice, to determine the necessity of repair.

Section 5.  Alterations

    5.1     Alterations Prohibited.  Tenant shall make no improvements or 
alterations to the Premises without first obtaining Landlord's written 
consent, which consent shall not be unreasonably withheld or delayed.  All 
alterations shall be made according to architectural designs and plans, 
construction drawings and specifications approved by Landlord, which approval 
shall not be unreasonably withheld or delayed, and in a good and workmanlike 
manner, and in compliance with applicable laws and building codes. As used 
herein, "Alterations" includes the exterior installation of transmitters and 
receivers (e.g., satellite dishes) and related wiring, cables, and conduit. 
All approved improvements and alterations shall be made at Tenant's sole 
expense and Tenant shall keep the Premises free from any lien arising out of 
work performed pursuant to this Section. In the event any such lien is filed 
against the Premises by any person claiming by, through or under Tenant, 
Tenant shall, within fifteen (15) days after Landlord's demand therefor, at 
Tenant's expense, either cause such lien to be removed from the record or 
furnish a bond in form and amount and issued by a surety reasonably 
satisfactory to Landlord, indemnifying the Landlord against all liability 
relating to such lien.  Provided that such bond has been furnished to 
Landlord, Tenant, at its sole cost and expense may contest, by appropriate 
proceedings conducted in good faith and with due diligence, any lien, 
encumbrance or charge against the Premises arising from work done or 
materials provided to and for Tenant, providing that such contest is 
conducted in a manner that does not cause any risk that Landlord's interest 
in the Premises will be foreclosed for nonpayment.

    5.2     Ownership and Removal of Alterations.  All approved improvements 
and alterations made to the Premises by Tenant during the Term, other than 
Tenant's trade fixtures, shall be the property of Landlord when installed 
unless the applicable Landlord's consent provides otherwise. Upon expiration 
of the Term or earlier termination under this 

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Lease, Tenant's trade fixtures shall be removed by Tenant and the Premises 
restored to its condition prior to installation if the applicable consent so 
requires.

Section 6.  Insurance; Indemnification; Subrogation

    6.1     Liability Insurance.  Tenant shall procure, and thereafter 
maintain during the Term, the following insurance at Tenant's cost: 
commercial general liability policy (occurrence version) in a responsible 
company with coverage for bodily injury and property damage liability with a 
general aggregate limit of not less than $1,000,000 for injury to one person, 
$3,000,000 for injury to two or more persons in one occurrence. Such 
insurance shall cover all risks arising directly or indirectly out of 
Tenant's activities on, or any condition of, the Premises. Such insurance 
shall protect Tenant against the claims of Landlord on account of the 
obligations assumed by Tenant under Section 6.3, and shall name Landlord as 
an additional insured. Certificates evidencing such insurance and bearing 
endorsements requiring 10 days' written notice to Landlord prior to any 
change or cancellation shall be furnished to Landlord prior to Tenant's 
occupancy of the Premises.

    6.2     Property Insurance.  Tenant shall, at Tenant's expense, keep the 
Premises insured against loss or damage resulting from perils covered by what 
is commonly referred to as "all risk" coverage insurance (but excluding 
earthquake and flood) for the full insurable replacement cost (guaranteed 
replacement). All premiums on said policy(s) shall be paid by Tenant. The 
policy(s) or a certificate thereof signed by the insurer shall be delivered 
to Landlord within five (5) days after the issuance and/or renewal of the 
policy(s) to the Tenant. Each policy shall name Landlord as an additional 
insured, and shall provide that such policy(s) may not be amended or canceled 
without thirty (30) days' prior written notice to Landlord. If Tenant fails 
to obtain the above required insurance, Landlord may, but shall not be 
required to procure such insurance and charge the cost to Tenant as 
additional rent, payable on demand. Tenant shall carry similar insurance 
insuring the property of Tenant on the property against such risks.

    6.3     Indemnification.  Except as set forth in Section 3.4(d), Tenant 
shall indemnify and hold Landlord harmless from and against any and all 
third-party claims, loss or liability for accident, injury or damage to 
persons or property arising from or in connection with, Tenant's possession, 
operation, use, or occupation of the Premises. In case any action or 
proceeding is brought against Landlord and such claim is a claim from which 
Tenant is obligated to indemnify Landlord pursuant to this Section, Tenant, 
upon notice from Landlord, shall resist and defend such action or proceeding 
(by counsel reasonably satisfactory to Landlord). Landlord and Landlord's 
agents shall have no liability to Tenant for any injury, loss, or damage 
caused by third parties or by any condition of the Premises, except to the 
extent caused by Landlord's negligence or breach of any of Landlord's 
covenants contained in this Lease.

    6.4     Waiver of Subrogation.  Neither party, nor its officers, 
directors, employees, agents or invitees, nor, in the case of Tenant, 
subtenants, shall be liable to the other party or to any insurance company 
(by way of subrogation or otherwise) insuring the other party for 

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any loss or damage to any building, structure or other tangible property, 
when such loss is caused by any of the perils which are or could be insured 
against under a standard policy of full replacement cost insurance for fire, 
theft and all risk coverage, or losses under workers' compensation laws and 
benefits, even though such loss or damage might have been occasioned by the 
negligence of such party, its agents or employees (Landlord and Tenant 
agreeing that the preceding clause shall not apply, however, to any damages 
causes by intentionally wrongful actions or omissions of such party); 
provided, however, that if, by reason of the foregoing waiver, either party 
shall be unable to obtain any such insurance, such waiver shall be deemed not 
to have been made by such party and, provided further, that if either party 
shall be unable to obtain any such insurance without the payment of an 
additional premium therefor, then, unless the party claiming the benefit of 
such waiver shall agree to pay such party for the cost of such additional 
premium within thirty (30) days after notice setting forth such requirement 
and the amount of the additional premium, such waiver shall be of no force 
and effect between such party and such claiming party. Each party shall use 
reasonable efforts to obtain such insurance from a company that does not 
charge an additional premium or, if that is not possible, one that charges 
the lowest additional premium. Each party shall give the other party notice 
at any time when it is unable to obtain insurance with such a waiver of 
subrogation without the payment of an additional premium and the foregoing 
waiver shall be effective until thirty (30) days after notice is given. 
Notwithstanding anything contained herein, Landlord is not obligated under 
this Lease to insure the Premises.

Section 7.  Taxes; Utilities

    7.1     Property Taxes.  Tenant shall pay as due all taxes on its 
personal property located on the Premises. Tenant shall pay as due all real 
property taxes levied against the Premises. As used herein, real property 
taxes includes any fee or charge relating to the ownership, use, or rental of 
the Premises, other than taxes on the net income of Landlord or Tenant.

    7.2     Special Assessments.  If an assessment for a public improvement 
is made against the Premises, Tenant shall pay such assessment. Landlord 
shall take all appropriate action to cause such assessment to be paid in the 
maximum number of installments permitted by law, statute or ordinance (if 
such option for installment payments is available to Landlord), in which case 
all installments coming due during the Lease term shall be treated the same 
as general property taxes pursuant to section 7.1.

    7.3     Contest of Taxes.  Tenant shall be permitted to contest the 
amount of any tax or assessment as long as such contest is conducted in a 
manner that does not cause any risk that Landlord's interest in the Premises 
will be foreclosed for nonpayment.

    7.4     Proration of Taxes.  Tenant's share of real property taxes for 
the years in which this Lease commences or terminates shall be prorated based 
on the portion of the tax year that this Lease is in effect.

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    7.5     New Charges or Fees.  If a new charge or fee relating to the 
ownership or use of the Premises or the receipt of rental therefrom or in 
lieu of property taxes is assessed or imposed, then, to the extent permitted 
by law, Tenant shall pay such charge or fee. Tenant, however, shall have no 
obligation to pay any income, profits, or franchise tax levied on the net 
income derived by Landlord from this Lease.

    7.6     Payment of Utilities Charges.  Tenant shall pay when due all 
charges for services and utilities incurred in connection with the use, 
occupancy, operation, and maintenance of the Premises, including, but not 
limited to, charges for fuel, water, gas, electricity, sewage disposal, 
power, refrigeration, air conditioning, telephone, and janitorial services.

Section 8.  Damage and Destruction

    8.1     Damaged Premises.  Tenant shall give immediate notice to Landlord 
in the event of any damage or destruction affecting the Premises. Subject to 
the provisions of this Section, Tenant shall immediately proceed to restore 
the Premises using the proceeds of insurance carried pursuant to Section 6 of 
this Lease and any insurance proceeds available from Landlord's insurance. 
Restoration shall be performed according to architectural designs, plans and 
construction drawings and specifications approved in advance by Landlord, 
which approval shall not be unreasonably withheld or delayed.  

    8.2     Damage or Destruction Late in Term.  If within two years before 
the end of the lease term the Premises are destroyed or damaged such that the 
cost of repair exceeds 50% of the value of the structure before the 
destruction or damage, Tenant may elect to terminate this Lease as of the 
date of the damage or destruction by giving notice to Landlord in writing not 
more than 45 days following the date of destruction or damage. In such event 
all rights and obligations of the parties shall cease as of the date of 
termination, and Tenant shall be entitled to the reimbursement of any prepaid 
amounts paid by Tenant and attributable to what would have otherwise been the 
unexpired Term.  Tenant shall surrender possession of the Premises within a 
reasonable time after such written notice is given, and assign any insurance 
proceeds paid on account of such damage to Landlord. If Tenant does not elect 
to terminate, Tenant shall proceed to restore the Premises to substantially 
the same form as prior to the damage or destruction using the proceeds of 
insurance carried pursuant to Section 6 of this Lease and any insurance 
proceeds available from Landlord's insurance. Work shall be commenced as soon 
as reasonably possible and thereafter shall proceed without interruption 
except for work stoppages on account of labor disputes and other matters 
beyond Tenant's reasonable control.

    8.3     Rent Abatement.  To the extent that the Premises are rendered 
untenantable as a result of a fire or other casualty, the Rent shall not be 
abated or reduced in any way.

    8.4     Personal Property.  All personal property in said Premises shall 
be at the risk of Tenant. Except to the extent caused by the negligent or 
intentional acts of Landlord, Landlord or Landlord's agents shall not be 
liable for any damage either to person or property, 

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sustained by Tenant or others, caused by any defects now in said Premises or 
hereafter occurring therein, or any part or appurtenance thereof, caused by 
being out of repair, or caused by the bursting or leaking of water, gas, 
sewer or steam pipes.

Section 9.  Eminent Domain

    9.1     Partial Taking.  If a portion of the Premises is condemned and 
Section 9.2 does not apply, this Lease shall continue on the following terms:

            (a)  The parties shall be entitled to share in the condemnation 
proceeds in proportion to the values of their respective interests in the 
Premises. Tenant's right to participate in the condemnation proceeds shall be 
limited to the value of its leasehold interest and the depreciated value of 
any improvements and alterations constructed on the Premises at the Tenant's 
sole expense subsequent to the Commencement Date.

            (b)  Landlord shall proceed as soon as reasonably possible to 
make such repairs and alterations to the Premises as are necessary to restore 
the remaining Premises to a condition as comparable as reasonably practicable 
to that existing at the time of the condemnation.

            (c)  After the date on which title vests in the condemning 
authority or an earlier date on which alterations or repairs are commenced by 
Landlord to restore the balance of the Premises in anticipation of taking, 
the Base Rent shall be reduced in proportion to the reduction in value of the 
Premises as an economic unit on account of the partial taking. If the parties 
are unable to agree on the amount of the reduction of Base Rent, the amount 
shall be determined by arbitration in the manner provided in Section 17.

    9.2     Total Taking.  If a condemning authority takes all of the 
Premises or a portion which Landlord and Tenant agree is sufficient to render 
the remaining Premises reasonably unsuitable for the use that Tenant was then 
making of the Premises, this Lease shall terminate as of the date the title 
vests in the condemning authorities. The parties shall be entitled to share 
in the condemnation proceeds in proportion to the values of their respective 
interests in the Premises.

    9.3     Sale in Lieu of Condemnation.  Sale of all or part of the 
Premises to a purchaser with the power of eminent domain in the face of a 
threat or probability of the exercise of the power shall be treated for the 
purposes of this Section 9 as a taking by condemnation.

Section 10. Liens

    10.1    Except with respect to activities for which Landlord is 
responsible, Tenant shall pay as due all claims for work done on and for 
services rendered or material furnished to the Premises, and shall keep the 
Premises free from any liens. If Tenant fails to pay any such claims or to 
discharge any lien, Landlord may do so and collect the cost as additional 

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rent.  Any amount so added shall bear interest at the Interest Rate (as 
hereinafter defined) from the date expended by Landlord and shall be payable 
on demand. Such action by Landlord shall not constitute a waiver of any right 
or remedy which Landlord may have on account of Tenant's default.  For the 
purposes of this Lease "Interest Rate" shall mean three (3%) percent per 
annum over the then prime rate of interest established by Citibank, N.A. (or 
any successor thereto), adjusted daily, but in no event in excess of the 
maximum lawful rate of interest permitted by applicable law.

    10.2    Tenant may withhold payment of any claim in connection with a 
good-faith dispute over the obligation to pay, as long as Landlord's interest 
in the Premises will not be foreclosed for nonpayment.  If a lien is filed as 
a result of nonpayment, Tenant shall, within ten (10) days after knowledge of 
the filing, secure the discharge of the lien or deposit with Landlord cash or 
sufficient corporate surety bond or other surety satisfactory to Landlord in 
an amount sufficient to discharge the lien plus any costs, attorney fees, and 
other charges that could reasonably accrue as a result of a foreclosure or 
sale under the lien.

Section 11. Quiet Enjoyment; Mortgage Priority

    11.1    Landlord's Warranty.  Landlord warrants that it is the owner of 
the Premises and has the right to lease them free of all encumbrances, except 
for the encumbrances (the "Permitted Encumbrances") set forth on Exhibit B 
hereto (which by this reference is made a part hereof) and except as 
expressly set forth in Section 11.2 below. Landlord will defend Tenant's 
right to quiet enjoyment of the Premises from the lawful claims of all 
persons during the Term.  Tenant hereby acknowledges and agrees that this 
Lease, and the leasehold estate created hereby, are subject and subordinate 
to all of the Permitted Encumbrances.

    11.2    Mortgage Priority.  This lease is and shall be prior to all 
mortgages or deeds of trust (collectively, "Fee Mortgages") recorded after 
the date of this lease and affecting Landlord's interest in the Premises. 
However, if any lender holding a Fee Mortgage requires that this Lease be 
subordinate to the Fee Mortgage in question, then Tenant agrees that this 
Lease shall be subordinate to such Fee Mortgage if the holder thereof agrees 
in writing with Tenant that as long as Tenant performs its obligations under 
this Lease no foreclosure, deed given in lieu of foreclosure, or sale 
pursuant to the terms of such Fee Mortgage, or other steps or procedures 
taken under such Fee Mortgage shall affect Tenant's rights under this Lease. 
If the foregoing condition is met, Tenant shall execute the written agreement 
and any other documents required by the holder of such Fee Mortgage to 
accomplish the purposes of this paragraph. If the Premises are sold as a 
result of foreclosure of any Fee Mortgage thereon, or otherwise transferred 
by Landlord or any successor, Tenant shall attorn to the purchaser or 
transferee.

    11.3    Estoppel Certificate.  Either party will, within 20 days after 
notice from the other, execute and deliver to the other party a certificate 
stating whether or not this Lease has been modified and is in full force and 
effect and specifying any modifications or alleged breaches by the other 
party. The certificate shall also state the amount of monthly Base Rent, the 
dates to which Base Rent and any other Rent payments have been paid in 
advance, and 

                                        -11-

<PAGE>

the amount of any security deposit or prepaid Rent. Failure to deliver the 
certificate within the specified time shall be conclusive upon the party from 
whom the certificate was requested that this Lease is in full force and 
effect and has not been modified except as represented in the notice 
requesting the certificate.

Section 12. Assignment and Subletting.

    12.1    Landlord hereby agrees that Tenant may assign this Lease or 
sublease all or a portion of the Premises in writing to any other party, with 
the prior written consent of Landlord, provided that:

            (1)  Landlord shall have the right to pre-approve each and every 
proposed subtenant and assignee, which approval shall not be unreasonably 
withheld or delayed.

            (2)  Any attempt by Tenant to assign, transfer, or sublet without 
Landlord's prior written consent shall be void and shall constitute a 
material default by Tenant.

            (3)  Regardless of Landlord's consent to an assignment or 
sublease, Tenant shall not be released from any of its obligations and 
liabilities under this Lease, except as may be set forth in Landlord's 
written consent.

            (4)  Landlord's acceptance of Rent from any other person or 
entity pending a determination of whether to consent to an assignment or 
sublease shall not constitute a waiver of Landlord's right to approve or 
disapprove such assignment or sublease.

            (5)  A default by an assignee, sublessee, or transferee shall 
constitute a default by Tenant and in the event of such default, Landlord may 
proceed directly against Tenant.

            (6)  Tenant shall grant to Landlord a security interest in all of 
its right, title and interest in all rents and income from an assignment or 
sublease to secure the payment of Rent owed under this Lease.

            (7)  Tenant shall pay all reasonable costs and fees incurred by 
Landlord in connection with evaluating whether to give its consent and/or in 
giving its consent to a proposed assignment or sublease, including 
attorneys', architects', engineers' and consultants' fees, not to exceed 
$2500.

    12.2    Notwithstanding any provision to the contrary, Tenant may assign 
this Lease or sublet all or part of the Premises, without Landlord's 
approval, to a parent corporation, any subsidiary, any affiliate, any 
partnership, limited liability company or other business entity where Tenant 
or any affiliate of Tenant is the managing or general partner, manager or the 
equivalent, as the case may be, or in connection with a merger, acquisition, 
reorganization or consolidation of Tenant, or in connection with the sale or 
transfer of all or substantially 

                                        -12-

<PAGE>

all of Tenant's (or its parent's or affiliates') stock or assets. The term 
"affiliate" as used herein shall mean any entity in which Tenant or its 
parent corporation holds fifty percent (50%) or more of the ownership 
interests. Notwithstanding a transfer pursuant to this Section 12.2, Tenant 
shall not be released from liability under this Lease upon the assignment or 
subletting of all or part of the Premises to such parent corporation, 
subsidiary, affiliate, partnership, limited liability company or other 
business entity.

Section 13. Default

    The following shall be events of default:

    13.1    Default in Rent.  Failure of Tenant to pay any installment of 
Rent within ten (10) days after written notice by Landlord specifying the 
nature of the default with reasonable particularity.

    13.2    Default in other covenants.  Failure of Tenant to comply with any 
other term or condition or fulfill any other obligation of this Lease within 
20 days after written notice by Landlord specifying the nature of the default 
with reasonable particularity. If the default is of such a nature that it 
cannot be completely remedied within the 20-day period, an event of default 
shall not have occurred if Tenant begins correction of the default within the 
20-day period and thereafter proceeds with reasonable diligence and in good 
faith to effect the remedy as soon as practicable.

    13.3    Insolvency.  Insolvency of Tenant; an assignment by Tenant for 
the benefit of creditors; the filing by Tenant of a voluntary petition in 
bankruptcy; an adjudication that Tenant is bankrupt or the appointment of a 
receiver of the properties of Tenant; or the filing of any involuntary 
petition of bankruptcy and failure of Tenant to secure a dismissal of the 
petition within 90 days after filing shall constitute a default. If Tenant 
consists of two or more individuals or business entities, the events of 
default specified in this Section 13.3 shall apply to each individual unless 
within ten (10) days after an event of default occurs, the remaining 
individuals produce evidence satisfactory to Landlord that they have 
unconditionally acquired the interest of the one causing the default. If this 
Lease has been assigned, the events of default so specified shall apply only 
with respect to Tenant and to the one then exercising the rights of Tenant 
under this Lease.

    13.4    Abandonment.  Failure of Tenant for thirty (30) days or more to 
occupy the Premises for one or more of the purposes permitted under this 
Lease, unless such failure is excused under other provisions of this Lease.

Section 14. Remedies on Default

    14.1    Termination.  In the event of a default, the Lease may be 
terminated at the option of Landlord by written notice to Tenant. Whether or 
not the Lease is terminated by the election of Landlord or otherwise, 
Landlord shall be entitled to recover damages from 

                                        -13-

<PAGE>

Tenant for the default, and Landlord may reenter, take possession of the 
Premises, and remove any persons or property by legal action and without 
having accepted a surrender.

    14.2    Reletting.  Following reentry or abandonment, Landlord may relet 
the Premises and in that connection may make any suitable alterations or 
refurbish the Premises, or both, or change the character or use of the 
Premises, but Landlord shall not be required to relet for any use or purpose 
other than that specified in this Lease or which Landlord may reasonably 
consider injurious to the Premises, or to any tenant that Landlord may 
reasonably consider objectionable. Landlord may relet all or part of the 
Premises, alone or in conjunction with other properties, for a term longer or 
shorter than the term of this Lease, upon any reasonable terms and 
conditions, including the granting of reasonable rent-free occupancy or other 
rent concession.     

    14.3    Remedies.  In the event of material breach or default under the 
terms of this Lease, either party shall have all rights and remedies 
available to them under law or equity in the State of Washington and/or City 
of Kent.

    14.4    Landlord's Right to Cure Defaults.  If Tenant fails to perform 
any obligation under this Lease, Landlord shall have the option to do so 
after 30 days' written notice to Tenant. All of Landlords expenditures to 
correct the default shall be reimbursed by Tenant on demand with interest at 
the Interest Rate from the date of expenditure by Landlord. Such action by 
Landlord shall not waive any other remedies available to Landlord because of 
the default.

    14.5    Remedies Cumulative.  The foregoing remedies shall be in addition 
to and shall not exclude any other remedy available to Landlord under 
applicable law.

Section 15. Surrender at Expiration

    15.1    Condition of Premises.  Subject to the provisions of Section 8 
herein, upon expiration of the Term or earlier termination on account of 
default, Tenant shall deliver all keys to Landlord and surrender the Premises 
in first class condition and broom clean, reasonable wear and tear excepted. 
Improvements and alterations constructed by Tenant with permission from 
Landlord shall not be removed, or the Premises restored to the original 
condition, unless the terms of permission for the improvement or alteration 
so require.

    15.2    Fixtures

            (a)  All fixtures placed upon the Premises during the Term, other 
than Tenant's trade fixtures, shall, at Landlord's option, become the 
property of Landlord. Tenant's trade fixtures include, without limitation, 
air compressors in shop area (but excluding air lines that are attached to 
the walls and overhead bridge cranes and hoists attached to the shop ceiling 
or otherwise attached to the walls or floors of the shop area), and those 
additional trade fixtures placed on the Premises during the Term.  If 
Landlord's applicable consent referenced in Section 5 so requires, Tenant 
shall remove any or all 

                                        -14-

<PAGE>

fixtures placed upon the Premises by the Tenant that would otherwise remain 
the property of Landlord, and shall repair any physical damage resulting from 
the removal. If Tenant fails to remove such fixtures, Landlord may do so and 
charge the cost to Tenant with interest at the Interest Rate from the date of 
expenditure.

            (b)  Prior to expiration or other termination of the Term, Tenant 
shall remove all furnishings, furniture, and trade fixtures that remain its 
property and repair any damage to the Premises caused by such removal. If 
Tenant fails to do so, this shall be an abandonment of the property, and 
Landlord may retain the property and all rights of Tenant with respect to it 
shall cease or, by notice in writing given to Tenant within 20 days after 
removal was required, Landlord may elect to hold Tenant to its obligation of 
removal. If Landlord elects to require Tenant to remove, Landlord may effect 
a removal and place the property in public storage for Tenant's account. 
Tenant shall be liable to Landlord for the cost of removal, transportation to 
storage, and storage, with interest at the Interest Rate on all such expenses 
from the date of expenditure by Landlord.

    15.3    Holdover

            (a)  If Tenant does not vacate the Premises at the time required, 
Landlord shall have the option to treat Tenant as a tenant from 
month-to-month, subject to all of the provisions of this Lease except the 
provisions for term and renewal and at a rental rate equal to $30,000.00 per 
month, or to eject Tenant from the Premises and recover damages caused by 
wrongful holdover. Failure of Tenant to remove fixtures, furniture, 
furnishings, or trade fixtures that Tenant is required to remove under this 
Lease shall constitute a failure to vacate to which this Section shall apply 
if the property not removed will substantially interfere with occupancy of 
the Premises by another tenant or with occupancy by Landlord for any purpose 
including preparation for a new tenant.

            (b)  If a month-to-month tenancy results from a holdover by 
Tenant under this Section 15.3, the tenancy shall be terminable at the end of 
any monthly rental period on written notice from Landlord given not less than 
ten (10) days prior to the termination date which shall be specified in the 
notice. Tenant waives any notice that would otherwise be provided by law with 
respect to a month-to-month tenancy.

Section 16. Miscellaneous

    16.1    Nonwaiver.  Waiver by either party of strict performance of any 
provision of this Lease shall not be a waiver of or prejudice to the party's 
right to require strict performance of the same provision in the future or of 
any other provision.

    16.2    Attorney Fees.  If suit or action is instituted in connection 
with any controversy arising out of this Lease, the prevailing party shall be 
entitled to recover in addition to costs such sum as the court may adjudge 
reasonable as attorney fees at trial, on petition for review, and on appeal.

                                        -15-

<PAGE>

    16.3    Notices.  Except as otherwise expressly permitted in this Lease, 
all notices, demands, approvals, consents, requests and other communications 
which under the terms of this Lease, or under any statute, must or may be 
given or made by the parties hereto, must be in writing, and must be made 
either (i) by depositing such notice in registered or certified mail of the 
United States of America, return receipt requested, or (ii) by delivering 
such notice by a commercial courier, which courier provides for delivery with 
receipt guaranteed, addressed to each party at the addresses set forth on the 
first page of this Lease.  All notices, demands, approvals, consents, 
requests and other communications shall be deemed to have been delivered (i) 
if mailed as provided for in this Paragraph, on the date which is three (3) 
business days after mailing or (ii) if sent by commercial courier, on the 
date which is one (1) business day after dispatching.  Either party may 
designate by notice in writing given in the manner herein specified a new or 
other address to which such notice, demand, approval, consent, request and 
other communication shall thereafter be so given or made.  Notwithstanding 
the foregoing all Rent statements, bills and invoices may be given by regular 
mail.

    16.4    Exculpation.  Tenant shall look solely to the estate and property 
of Landlord in the Premises (including Landlord's rights to the rents, 
profits, insurance proceeds and condemnation awards related thereto), for the 
satisfaction of Tenant's remedies for the collection of a judgment (or other 
judicial process) requiring the payment of money by Landlord in the event of 
any default or breach by Landlord with respect to any of the terms, covenants 
and conditions of this Lease to be observed and/or performed by Landlord, and 
no other property or assets of Landlord (or of any direct or indirect, 
disclosed or undisclosed, partner, member, shareholder, officer, director, 
employee or principal in or of Landlord) shall be subject to levy, execution 
or other enforcement procedure for the satisfaction of Tenant's remedies 
under or with respect to this Lease, the relationship of Landlord and Tenant 
hereunder, or Tenant's use and occupancy of the Premises.

    16.5    Succession.  Subject to the above-stated limitations on transfer 
of Tenant's interest, this Lease shall be binding on and inure to the benefit 
of the parties and their respective successors and assigns, heirs, executors 
and administrators.

    16.6    Recordation.  Landlord shall execute and acknowledge a memorandum 
of this lease in a form suitable for recording, and Tenant may record the 
memorandum.

    16.7    Entry for Inspection.  Landlord shall have the right to enter 
upon the Premises upon reasonable advance notice to determine Tenant's 
compliance with this Lease, to make repairs to the Premises which it 
expressly has the right to make under this Lease, or to show the Premises to 
any prospective tenant or purchaser, and in addition shall have the right, at 
any time during the last two (2) months of the term of this Lease, to place 
and maintain upon the Premises notices for leasing or selling of the Premises.

    16.8    Interest on Rent and other Charges.  Any rent or other payment 
required of Tenant by this Lease shall, if not paid within ten (10) days 
after it is due, bear interest at the Interest Rate from the due date until 
paid. In addition, if Tenant fails to make any rent or 

                                        -16-

<PAGE>

other payment required by this Lease to be paid to Landlord within ten (10) 
days after it is due, Landlord shall impose a late charge of five cents 
($.05) per dollar of the overdue payment to reimburse Landlord for the costs 
of collecting the overdue payment. Tenant shall pay the late charge upon 
demand by Landlord. Landlord may levy and collect a late charge in addition 
to all other remedies available for Tenant's default, and collection of a 
late charge shall not waive the breach caused by the late payment.

    16.9    Proration of Rent.  In the event of commencement or termination 
of this Lease at a time other than the beginning or end of one of the 
specified rental periods, then the Rent shall be prorated as of the date of 
commencement or termination and in the event of termination for reasons other 
than default, all pre paid Rent shall be refunded to Tenant or paid on its 
account.

    16.10   Time of Essence.  Time is of the essence of the performance of 
each of Tenant's and Landlord's obligations under this Lease.

Section 17. Arbitration

    17.1    Any dispute arising out of or relating to this Lease that cannot 
be resolved by good faith negotiations between the parties shall be submitted 
to the American Arbitration Association in Portland, Oregon ("AAA") for final 
and binding arbitration pursuant to AAA's rules and procedures.  The 
substantive and procedural law of the State of Washington shall govern this 
Lease and the mediation and arbitration proceedings.  All statutes of 
limitation which would otherwise be applicable will apply to the arbitration 
proceedings.  There will be one arbitrator agreed upon by the parties or, if 
not agreed, selected by the AAA.  The arbitrator shall conduct an arbitration 
hearing within ninety (90) days after the arbitration demand is received by 
the AAA. The arbitrator shall issue a written award within fourteen (14) days 
after the hearing.

    17.2    The arbitrator may award damages, injunctive relief and/or any 
other relief available in law or equity under Washington law.  The prevailing 
party in the arbitration shall be entitled to an award of costs and 
reasonable attorneys' fees in addition to any other award or relief granted. 
The arbitration award shall be final and may be reduced in judgment in any 
court of competent jurisdiction.

    17.3    Absent fraud, collusion or willful misconduct by the arbitrator, 
the award will be final, and judgment may be entered in any court having 
jurisdiction thereof.  The arbitrator may award injunctive relief or any 
other remedy available from a judge, including the joinder of parties or 
consolidation of this arbitration with any other involving common issues of 
law or fact or which may promote judicial economy, and may award attorneys' 
fees and costs to the prevailing party but will not have the power to award 
punitive or exemplary damages. 

                                        -17-

<PAGE>

     17.4 If AAA is no longer in existence at the time of any dispute subject 
to this Section 17, the parties agree to use an alternative arbitration 
service using substantially similar rules and procedures.

     IN WITNESS WHEREOF, the parties hereto have caused this Lease to be 
executed as of the day and year first herein written.

     Landlord:           McLAIN-RUBIN REALTY COMPANY II, L.L.C.,
                             a Delaware limited liability company


                         By:                                   
                            -------------------------------------
                         Its:                                   
                            -------------------------------------

     Tenant:             WESTERN POWER & EQUIPMENT CORP.,
                             an Oregon corporation


                         By:                                        
                            -------------------------------------
                         Its:                                        
                            -------------------------------------


STATE OF WASHINGTON )
                         )  ss.
County of _________      )

     I certify that I know or have satisfactory evidence that 
____________________________ is the person who appeared before me, and said 
person acknowledged that said person signed this instrument, on oath stated 
that said person was authorized to execute the instrument, and acknowledged 
it as the Manager of McLain-Rubin Realty Company II, L.L.C., a Delaware 
limited liability company, to be the free and voluntary act of such company 
for the uses and purposes mentioned in the instrument.

     Dated this __________ day of May, 1997.


                        --------------------------------
                                   (Signature of Notary)

                                                                  
                        --------------------------------
                          (Legibly print or Stamp Name of Notary)

                         Notary Public in and for the state of Washington,
                         residing at                                   
                                     ---------------------------------

                         My Appointment Expires                               
                                               ---------------------------

                                        -18-

<PAGE>

STATE OF WASHINGTON )
                         )  ss.
County of ________       )

     I certify that I know or have satisfactory evidence that 
____________________________ is the person who appeared before me, and said 
person acknowledged that said person signed this instrument, on oath stated 
that said person was authorized to execute the instrument, and acknowledged 
it as the _______________________________ of Western Power & Equipment Corp., 
an Oregon corporation, to be the free and voluntary act of such company for 
the uses and purposes mentioned in the instrument.

     Dated this __________ day of May, 1997.

                        --------------------------------
                                   (Signature of Notary)

                        --------------------------------
                          (Legibly print or Stamp Name of Notary)

                        Notary Public in and for the state of Washington,
                        residing at                           
                                    ----------------------------

                         My Appointment Expires                             
                                                -----------------------


                                        -19-

<PAGE>

                                      EXHIBIT A
                             DESCRIPTION OF REAL PROPERTY































     Commonly known as _____________________________.

                                        -20-

<PAGE>

                                      EXHIBIT B
                                PERMITTED ENCUMBRANCES





























                                        -21-