EXHIBIT 4.3
                                                                     -----------

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITY.

Original Issue Date: June 8, 2005

                                                                $_______________


                    SERIES B VARIABLE RATE SECURED DEBENTURE

            THIS SERIES B VARIABLE RATE SECURED DEBENTURE is one of a series of
duly authorized and issued Series B Variable Rate Secured Debentures of Western
Power & Equipment Corp., a Delaware corporation, a Delaware Company (the
"Company"), having a principal place of business at 4601 N.E. 77th Avenue,
Vancouver, Washington 98662, designated as its Series B Variable Rate Secured
Debenture (this debenture, the "Debenture" and collectively with the other such
series of debentures, the "Debentures").

            FOR VALUE RECEIVED, the Company promises to pay to
________________________ or its registered assigns (the "Holder"), or shall have
paid pursuant to the terms hereunder, the principal sum of $_______________ on
December 7, 2005 or such earlier date as this Debenture is required or permitted
to be repaid as provided hereunder (the "Maturity Date"), and to pay interest to
the Holder on the then outstanding principal amount of this Debenture in
accordance with the provisions hereof. This Debenture is subject to the
following additional provisions:

            Section 1. Definitions. For the purposes hereof, in addition to the
terms defined elsewhere in this Debenture: (a) capitalized terms not otherwise
defined herein have the meanings given to such terms in the Purchase Agreement,
and (b) the following terms shall have the following meanings:

                      "Business Day" means any day except Saturday, Sunday and
            any day which shall be a federal legal holiday in the United States
            or a day on which banking institutions in

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            the State of New York are authorized or required by law or other
            government action to close.

                      "Change of Control Transaction" means the occurrence after
            the date hereof of any of (a) an acquisition after the date hereof
            by an individual or legal entity or "group" (as described in Rule
            13d-5(b)(1) promulgated under the Exchange Act) of effective control
            (whether through legal or beneficial ownership of capital stock of
            the Company, by contract or otherwise) of in excess of 40% of the
            voting securities of the Company, or (b) the Company merges into or
            consolidates with any other Person, or any Person merges into or
            consolidates with the Company and, after giving effect to such
            transaction, the stockholders of the Company immediately prior to
            such transaction own less than 60% of the aggregate voting power of
            the Company or the successor entity of such transaction, or (c) the
            Company sells or transfers its assets, as an entirety or
            substantially as an entirety, to another Person and the stockholders
            of the Company immediately prior to such transaction own less than
            60% of the aggregate voting power of the acquiring entity
            immediately after the transaction, (d) a replacement at one time or
            within a three year period of more than one-half of the members of
            the Company's board of directors which is not approved by a majority
            of those individuals who are members of the board of directors on
            the date hereof (or by those individuals who are serving as members
            of the board of directors on any date whose nomination to the board
            of directors was approved by a majority of the members of the board
            of directors who are members on the date hereof), or (e) the
            execution by the Company of an agreement to which the Company is a
            party or by which it is bound, providing for any of the events set
            forth above in (a) or (d).

                      "Common Stock" means the common stock, par value $0.001
            per share, of the Company and stock of any other class of securities
            into which such securities may hereafter have been reclassified or
            changed into.

                      "Debenture Register" shall have the meaning set forth in
            Section 2(b).

                      "Event of Default" shall have the meaning set forth in
            Section 6.

                      "Exchange Act" means the Securities Exchange Act of 1934,
            as amended, and the rules and regulations promulgated thereunder.

                        "Fundamental Transaction" shall mean (a) the Company
            effects any merger or consolidation of the Company with or into
            another Person, (b) the Company effects any sale of all or
            substantially all of its assets in one or a series of related
            transactions, or (c) any tender offer or exchange offer (whether by
            the Company or another Person) is completed pursuant to which
            holders of Common Stock are permitted to tender or exchange their
            shares for other securities, cash or property.

                      "Interest Payment Date" shall have the meaning set forth
            in Section 2(a).

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                      "Interest Period" means, initially, the period beginning
            on and including the Original Issue Date and ending on and including
            the last day of the month of the Original Issue Date and each
            successive period as follows: the period beginning on and including
            the first day of each successive month and ending on and including
            the last day of each successive month.

                      "Inventory Floor Plan Financing Agreement" means that
            certain Wholesale Financing and Security Agreement, dated November
            17, 1992, between the Company, Case Corporation, and Case Credit
            Corporation, as amended prior to the Original Issue Date, granting
            Case Corporation and Case Credit Corporation a security interest on
            inventory purchased by the Company for resale from Case Corporation

                      "Late Fees" shall have the meaning set forth in Section
            2(c).

                      "LIBOR" means, for each Interest Period (i) the six -month
            London Interbank Offered Rate for deposits in U.S. dollars, as shown
            on such the Trading Day immediately prior to the beginning of such
            Interest Period in The Wall Street Journal (Eastern Edition) under
            the caption "Money Rates - London Interbank Offered Rates (LIBOR)";
            or (ii) if The Wall Street Journal does not publish such rate, the
            offered one-month rate for deposits in U.S. dollars which appears on
            the Reuters Screen LIBO Page as of 10:00 a.m., New York time, the
            Trading Day immediately prior to the beginning of such Interest
            Period, provided that if at least two rates appear on the Reuters
            Screen LIBO Page on any such Trading Day, the "LIBOR" for such day
            shall be the arithmetic mean of such rates.

                      "Mandatory Default Amount" shall equal the sum of 120% of
            the principal amount of this Debenture to be prepaid, plus all
            accrued and unpaid interest thereon and all other amounts, costs,
            expenses and liquidated damages due in respect of such this
            Debenture.

                      "Monthly Redemption" shall mean the redemption of this
            Debenture pursuant to Section 4 hereof.

                      "Monthly Redemption Amount" shall mean $___________(1).

                      "Monthly Redemption Date" means the 1st of each month,
            commencing on the first such date after the Original Issue Date and
            ending upon the full redemption of this Debenture.

                      "New York Courts" shall have the meaning set forth in
            Section 7(e).

                      "Original Issue Date" shall mean the date of the first
            issuance of the Debentures regardless of the number of transfers of
            any Debenture and regardless of the number of instruments which may
            be issued to evidence such Debenture.

------------------------
(1) 1/6th of the original principal amount of this Debenture.

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                      "Permitted Indebtedness" shall mean the individual and
            collective reference to the following: (a) Indebtedness incurred
            pursuant to the Series A Debentures and the Series B Debentures, (b)
            Existing Indebtedness as it exists on the date of the Purchase
            Agreement but excluding any Existing Indebtedness paid off at the
            Closing, including the GE Facility and the APM Purchase Note, (c)
            additional Indebtedness to Case Corporation pursuant to the
            Inventory Floor Plan Financing Agreement, (d) additional
            Indebtedness incurred in connection with the acquisition of capital
            assets and obligations under sale-leaseback arrangements with
            respect to newly acquired or leased assets to Persons, other than
            Case Corporation, up to, in the aggregate at any one time
            outstanding, and together with any then outstanding Existing
            Indebtedness, a maximum of $3,200,000 from the Original Issue Date
            until the 18 month anniversary of the Original Issue Date (with no
            such obligation (other than Existing Indebtedness as it exists on
            the date of the Purchase Agreement but excluding any Existing
            Indebtedness paid off at the Closing, including the GE Facility)
            individually exceeding $100,000); provided such aggregate maximum
            aggregate (subject still to the $100,000 individual maximum amount)
            shall increase to $4,100,000 during the period following such 18
            month anniversary to the 30 month anniversary of the Original Issue
            Date and to $5,000,000 after the 30 month anniversary of the
            Original Issue Date until this Debenture is no longer outstanding
            and (e) Indebtedness incurred by the Company that does not mature
            prior to the four year anniversary of the Original Issue Date and is
            made expressly subordinate in right of payment to the Indebtedness
            evidenced by this Debenture, as reflected in a written agreement
            acceptable to the Holder and approved by the Holder in writing.

                      "Permitted Lien" shall mean the individual and collective
            reference to the following: (a) Liens for taxes, assessments and
            other governmental charges or levies not yet due or Liens for taxes,
            assessments and other governmental charges or levies being contested
            in good faith and by appropriate proceedings for which adequate
            reserves (in the good faith judgment of the management of the
            Company) have been established in accordance with GAAP; (b) any
            Liens incurred in connection with Permitted Indebtedness under
            clause (e) in the definition of Permitted Indebtedness above,
            provided that such liens are not secured by assets of the Company or
            its Subsidiaries other than the assets so acquired or leased; (c)
            Liens imposed by law which were incurred in the ordinary course of
            business, such as carriers', warehousemen's and mechanics' Liens,
            statutory landlords' Liens, and other similar Liens arising in the
            ordinary course of business, and (x) which do not individually or in
            the aggregate materially detract from the value of such property or
            assets or materially impair the use thereof in the operation of the
            business of the Company and its consolidated Subsidiaries or (y)
            which are being contested in good faith by appropriate proceedings,
            which proceedings have the effect of preventing the forfeiture or
            sale of the property or asset subject to such Lien; (d) Liens
            created in favor of the Purchasers pursuant to the Security
            Documents and (e) Existing Liens as they exist on the date of the
            Purchase Agreement, but excluding any Existing Liens on Existing
            Indebtedness paid off at the Closing, including Liens on the GE
            Facility.

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                      "Person" means a corporation, an association, a
            partnership, organization, a business, an individual, a government
            or political subdivision thereof or a governmental agency.

                      "Purchase Agreement" means the Securities Purchase
            Agreement, dated as of June 8, 2005, to which the Company and the
            original Holder are parties, as amended, modified or supplemented
            from time to time in accordance with its terms.

                      "Securities Act" means the Securities Act of 1933, as
            amended, and the rules and regulations promulgated thereunder.

                      "Subsidiary" shall have the meaning given to such term in
            the Purchase Agreement.


            Section 2.  Interest.

                      a) Payment of Interest in Cash. The Company shall pay
            interest, in cash, to the Holder on the then outstanding principal
            amount of this Debenture at the rate per annum equal to LIBOR for
            the applicable Interest Payment Period plus 6.0% or such lesser rate
            as shall be the highest rate permitted by applicable law, payable
            monthly on the first day of each month, beginning on the first such
            date after the Original Issue Date, on each Monthly Redemption Date
            (as to that principal amount then being redeemed) and on the
            Maturity Date (except that, if any such date is not a Business Day,
            then such payment shall be due on the next succeeding Business Day)
            (each such date, an "Interest Payment Date").

                      b) Interest Calculations. Interest shall be calculated on
            the basis of a 360-day year and shall accrue daily commencing on the
            Original Issue Date until payment in full of the principal sum,
            together with all accrued and unpaid interest and other amounts
            which may become due hereunder, has been made. Interest hereunder
            will be paid to the Person in whose name this Debenture is
            registered on the records of the Company regarding registration and
            transfers of Debentures (the "Debenture Register").

                      c) Late Fee. All overdue accrued and unpaid interest to be
            paid hereunder shall entail a late fee at the rate of 18% per annum
            (or such lower maximum amount of interest permitted to be charged
            under applicable law) ("Late Fee") which will accrue daily, from the
            date such interest is due hereunder through and including the date
            of payment.

                      d) Prepayment. Except as otherwise set forth in this
            Debenture, the Company may not prepay any portion of the principal
            amount of this Debenture without the prior written consent of the
            Holder.

            Section 3.   Registration of Transfers and Exchanges.

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<PAGE>

                      a) Different Denominations. This Debenture is exchangeable
            for an equal aggregate principal amount of Debentures of different
            authorized denominations, as requested by the Holder surrendering
            the same. No service charge will be made for such registration of
            transfer or exchange.

                      b) Investment Representations. This Debenture has been
            issued subject to certain investment representations of the original
            Holder set forth in the Purchase Agreement and may be transferred or
            exchanged only in compliance with the Purchase Agreement and
            applicable federal and state securities laws and regulations.

                      c) Reliance on Debenture Register. Prior to due
            presentment to the Company for transfer of this Debenture, the
            Company and any agent of the Company may treat the Person in whose
            name this Debenture is duly registered on the Debenture Register as
            the owner hereof for the purpose of receiving payment as herein
            provided and for all other purposes, whether or not this Debenture
            is overdue, and neither the Company nor any such agent shall be
            affected by notice to the contrary.

            Section 4. Monthly Redemption. On each Monthly Redemption Date, the
            Company shall redeem the Monthly Redemption Amount plus accrued but
            unpaid interest, the sum of all liquidated damages and any other
            amounts then owing to such Holder in respect of this Debenture. The
            Monthly Redemption Amount due on each Monthly Redemption Date shall
            be paid in cash. The payment of cash pursuant to a Monthly
            Redemption shall be made on the Monthly Redemption Date. If any
            portion of the cash payment for a Monthly Redemption shall not be
            paid by the Company by the respective due date, interest shall
            accrue thereon at the rate of 18% per annum (or the maximum rate
            permitted by applicable law, whichever is less) until the payment of
            the Monthly Redemption Amount, plus all amounts owing thereon is
            paid in full.

            Section 5. Negative Covenants. So long as any portion of this
            Debenture is outstanding, the Company will not and will not permit
            any of its Subsidiaries to directly or indirectly:

                      a) except in connection with Permitted Liens, enter into,
            create, incur, assume, guarantee or suffer to exist any
            Indebtedness;

                      b) except in connection with Permitted Liens, enter into,
            create, incur, assume or suffer to exist any Lien;

                      c) amend its certificate of incorporation, bylaws or other
            charter documents so as to materially and adversely affect any
            rights of the Holder;

                      d) repay, repurchase or offer to repay, repurchase or
            otherwise acquire more than a de minimis number of shares of its
            Common Stock or Common Stock Equivalents

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<PAGE>

            other than as to the Conversion Shares to the extent permitted or
            required under the Transaction Documents or as otherwise permitted
            by the Transaction Documents;

                      e) enter into any agreement with respect to any of the
            foregoing; or

                      f) pay cash dividends on any equity securities of the
            Company or effect any reclassification of the Common Stock or any
            compulsory share exchange pursuant to which the Common Stock is
            effectively converted into or exchanged for other securities, cash
            or property.

            Section 6.  Events of Default.

                      a) "Event of Default", wherever used herein, means any one
            of the following events (whatever the reason and whether it shall be
            voluntary or involuntary or effected by operation of law or pursuant
            to any judgment, decree or order of any court, or any order, rule or
            regulation of any administrative or governmental body):

                            i. any default in the payment of (A) the principal
                      amount of any Debenture, or (B) interest (including Late
                      Fees) on, or liquidated damages in respect of, any
                      Debenture, as and when the same shall become due and
                      payable (whether on a Monthly Redemption Date, the
                      Maturity Date or by acceleration or otherwise);

                            ii. the Company shall fail to observe or perform any
                      other covenant or agreement contained in this Debenture or
                      any other Debenture which failure is not cured, if
                      possible to cure, within the earlier to occur of (A) 10
                      calendar days after notice of such default sent by the
                      Holder or by any other Holder and (B)10 Business Days
                      after the Company shall become or should have become aware
                      of such failure;

                            iii. a default or event of default (subject to any
                      grace or cure period provided for in the applicable
                      agreement, document or instrument) shall occur under (A)
                      any of the Transaction Documents, or (B) any other
                      material agreement, lease, document or instrument to which
                      the Company or any Subsidiary of the Company is bound;

                            iv. any representation or warranty made herein, in
                      any other Transaction Documents, in any written statement
                      pursuant hereto or thereto, or in any other report,
                      financial statement or certificate made or delivered to
                      the Holder or any other holder of Debentures shall be
                      untrue or incorrect in any material respect as of the date
                      when made or deemed made;

                            v. if (i) the Company or any of its material
                      Subsidiaries shall commence a case, as debtor, or there
                      shall be commenced against the Company or any material
                      Subsidiary of the Company, a case under any applicable
                      bankruptcy

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                      or insolvency laws as now or hereafter in effect or any
                      successor thereto, or the Company or any such material
                      Subsidiary of the Company commences any other proceeding
                      under any reorganization, arrangement, adjustment of debt,
                      relief of debtors, dissolution, insolvency or liquidation
                      or similar law of any jurisdiction whether now or
                      hereafter in effect relating to the Company or any such
                      Subsidiary of the Company or (ii) there is commenced
                      against the Company or any material Subsidiary of the
                      Company any such bankruptcy, insolvency or other
                      proceeding which remains undismissed for a period of 60
                      days; or (iii) the Company or any material Subsidiary of
                      the Company is adjudicated by a court of competent
                      jurisdiction insolvent or bankrupt; or any order of relief
                      or other order approving any such case or proceeding is
                      entered; or (iv) the Company or any material Subsidiary of
                      the Company suffers any appointment of any custodian or
                      the like for it or any substantial part of its property
                      which continues undischarged or unstayed for a period of
                      60 days; or (v) the Company or any material Subsidiary of
                      the Company makes a general assignment for the benefit of
                      creditors; or (vi) the Company shall fail to pay, or shall
                      state that it is unable to pay, or shall be unable to pay,
                      its debts generally as they become due; or (vii) the
                      Company or any material Subsidiary of the Company thereof
                      shall call a meeting of its creditors with a view to
                      arranging a composition, adjustment or restructuring of
                      its debts; or (viii) the Company or any Subsidiary of the
                      Company thereof shall by any act or failure to act
                      expressly indicate its consent to, approval of or
                      acquiescence in any of the foregoing; or (ix) any
                      corporate or other action is taken by the Company or any
                      material Subsidiary of the Company for the purpose of
                      effecting any of the foregoing;

                            vi. the Company or any Subsidiary of the Company
                      shall default in any of its obligations under any
                      mortgage, credit agreement or other facility, indenture
                      agreement, factoring agreement or other instrument under
                      which there may be issued, or by which there may be
                      secured or evidenced any Indebtedness for borrowed money
                      or money due under any long term leasing or factoring
                      arrangement of the Company in an amount exceeding
                      $300,000, whether such Indebtedness now exists or shall
                      hereafter be created and such default shall result in such
                      Indebtedness becoming or being declared due and payable
                      prior to the date on which it would otherwise become due
                      and payable; or

                            vii. the Company shall be a party to any Change of
                      Control Transaction or Fundamental Transaction, shall
                      agree to sell or dispose of all or in excess of 40% of its
                      assets in one or more transactions (whether or not such
                      sale would constitute a Change of Control Transaction) or
                      shall redeem or repurchase more than a de minimis number
                      of its outstanding shares of Common Stock or other equity
                      securities of the Company (other than repurchases of
                      shares of Common Stock or other equity securities of
                      departing officers and directors of the Company; provided
                      such repurchases shall not exceed $100,000, in the
                      aggregate, for all officers and directors during the term
                      of this Debenture).

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                      b) Remedies Upon Event of Default. If any Event of Default
            occurs, the full principal amount of this Debenture, together with
            interest and other amounts owing in respect thereof, to the date of
            acceleration shall become, at the Holder's election, immediately due
            and payable in cash. The aggregate amount payable upon an Event of
            Default shall be equal to the Mandatory Default Amount. Commencing 5
            days after the occurrence of any Event of Default that results in
            the eventual acceleration of this Debenture, the interest rate on
            this Debenture shall accrue at the rate of 18% per annum, or such
            lower maximum amount of interest permitted to be charged under
            applicable law. Upon the payment in full of the Mandatory Default
            Amount on this entire Debenture the Holder shall promptly surrender
            this Debenture. The Holder need not provide and the Company hereby
            waives any presentment, demand, protest or other notice of any kind,
            and the Holder may immediately and without expiration of any grace
            period enforce any and all of its rights and remedies hereunder and
            all other remedies available to it under applicable law. Such
            declaration may be rescinded and annulled by Holder at any time
            prior to payment hereunder and the Holder shall have all rights as a
            Debenture holder until such time, if any, as the full payment under
            this Section shall have been received by it. No such rescission or
            annulment shall affect any subsequent Event of Default or impair any
            right consequent thereon.

            Section 7.  Miscellaneous.

                      a) Notices. Any and all notices or other communications or
            deliveries to be provided by the Holder hereunder, including,
            without limitation, any Notice of Conversion, shall be in writing
            and delivered personally, by facsimile, sent by a nationally
            recognized overnight courier service, addressed to the Company, at
            the address set forth above, facsimile number (360) 253-4830, ATTN:
            CHIEF EXECUTIVE OFFICER, or such other address or facsimile number
            as the Company may specify for such purposes by notice to the Holder
            delivered in accordance with this Section. Any and all notices or
            other communications or deliveries to be provided by the Company
            hereunder shall be in writing and delivered personally, by
            facsimile, sent by a nationally recognized overnight courier service
            addressed to each Holder at the facsimile telephone number or
            address of such Holder appearing on the books of the Company, or if
            no such facsimile telephone number or address appears, at the
            principal place of business of the Holder. Any notice or other
            communication or deliveries hereunder shall be deemed given and
            effective on the earliest of (i) the date of transmission, if such
            notice or communication is delivered via facsimile at the facsimile
            telephone number specified in this Section prior to 5:30 p.m. (New
            York City time), (ii) the date after the date of transmission, if
            such notice or communication is delivered via facsimile at the
            facsimile telephone number specified in this Section later than 5:30
            p.m. (New York City time) on any date and earlier than 11:59 p.m.
            (New York City time) on such date, (iii) the second Business Day
            following the date of mailing, if sent by nationally recognized
            overnight courier service, or (iv) upon actual receipt by the party
            to whom such notice is required to be given.

                      b) Absolute Obligation. Except as expressly provided
            herein, no provision of this Debenture shall alter or impair the
            obligation of the Company, which is absolute and

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            unconditional, to pay the principal of, interest and liquidated
            damages (if any) on, this Debenture at the time, place, and rate,
            and in the coin or currency, herein prescribed. This Debenture is a
            direct debt obligation of the Company. This Debenture ranks pari
            passu with all other Debentures now or hereafter issued under the
            terms set forth herein.

                      c) Security Interest. This Debenture is a direct debt
            obligation of the Company and pursuant to the Security Agreement
            shall be secured by a perfected security interest in all of the
            assets of the Company for the benefit of the holders of the Series A
            Debentures and the Series B Debentures.

                      d) Lost or Mutilated Debenture. If this Debenture shall be
            mutilated, lost, stolen or destroyed, the Company shall execute and
            deliver, in exchange and substitution for and upon cancellation of a
            mutilated Debenture, or in lieu of or in substitution for a lost,
            stolen or destroyed Debenture, a new Debenture for the principal
            amount of this Debenture so mutilated, lost, stolen or destroyed but
            only upon receipt of evidence of such loss, theft or destruction of
            such Debenture, and of the ownership hereof, and indemnity, if
            requested, all reasonably satisfactory to the Company.

                      e) Governing Law. All questions concerning the
            construction, validity, enforcement and interpretation of this
            Debenture shall be governed by and construed and enforced in
            accordance with the internal laws of the State of New York, without
            regard to the principles of conflicts of law thereof. Each party
            agrees that all legal proceedings concerning the interpretations,
            enforcement and defense of the transactions contemplated by any of
            the Transaction Documents (whether brought against a party hereto or
            its respective affiliates, directors, officers, shareholders,
            employees or agents) shall be commenced in the state and federal
            courts sitting in the City of New York, Borough of Manhattan (the
            "New York Courts"). Each party hereto hereby irrevocably submits to
            the exclusive jurisdiction of the New York Courts for the
            adjudication of any dispute hereunder or in connection herewith or
            with any transaction contemplated hereby or discussed herein
            (including with respect to the enforcement of any of the Transaction
            Documents), and hereby irrevocably waives, and agrees not to assert
            in any suit, action or proceeding, any claim that it is not
            personally subject to the jurisdiction of any such court, or such
            New York Courts are improper or inconvenient venue for such
            proceeding. Each party hereby irrevocably waives personal service of
            process and consents to process being served in any such suit,
            action or proceeding by mailing a copy thereof via registered or
            certified mail or overnight delivery (with evidence of delivery) to
            such party at the address in effect for notices to it under this
            Debenture and agrees that such service shall constitute good and
            sufficient service of process and notice thereof. Nothing contained
            herein shall be deemed to limit in any way any right to serve
            process in any manner permitted by law. Each party hereto hereby
            irrevocably waives, to the fullest extent permitted by applicable
            law, any and all right to trial by jury in any legal proceeding
            arising out of or relating to this Debenture or the transactions
            contemplated hereby. If either party shall commence an action or
            proceeding to enforce any provisions of this Debenture, then the
            prevailing party in such action or proceeding shall be

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<PAGE>

            reimbursed by the other party for its attorneys' fees and other
            costs and expenses incurred with the investigation, preparation and
            prosecution of such action or proceeding.

                      f) Waiver. Any waiver by the Company or the Holder of a
            breach of any provision of this Debenture shall not operate as or be
            construed to be a waiver of any other breach of such provision or of
            any breach of any other provision of this Debenture. The failure of
            the Company or the Holder to insist upon strict adherence to any
            term of this Debenture on one or more occasions shall not be
            considered a waiver or deprive that party of the right thereafter to
            insist upon strict adherence to that term or any other term of this
            Debenture. Any waiver must be in writing.

                      g) Severability. If any provision of this Debenture is
            invalid, illegal or unenforceable, the balance of this Debenture
            shall remain in effect, and if any provision is inapplicable to any
            person or circumstance, it shall nevertheless remain applicable to
            all other persons and circumstances. If it shall be found that any
            interest or other amount deemed interest due hereunder violates
            applicable laws governing usury, the applicable rate of interest due
            hereunder shall automatically be lowered to equal the maximum
            permitted rate of interest. The Company covenants (to the extent
            that it may lawfully do so) that it shall not at any time insist
            upon, plead, or in any manner whatsoever claim or take the benefit
            or advantage of, any stay, extension or usury law or other law which
            would prohibit or forgive the Company from paying all or any portion
            of the principal of or interest on this Debenture as contemplated
            herein, wherever enacted, now or at any time hereafter in force, or
            which may affect the covenants or the performance of this indenture,
            and the Company (to the extent it may lawfully do so) hereby
            expressly waives all benefits or advantage of any such law, and
            covenants that it will not, by resort to any such law, hinder, delay
            or impeded the execution of any power herein granted to the Holder,
            but will suffer and permit the execution of every such as though no
            such law has been enacted.

                      h) Next Business Day. Whenever any payment or other
            obligation hereunder shall be due on a day other than a Business
            Day, such payment shall be made on the next succeeding Business Day.

                      i) Headings. The headings contained herein are for
            convenience only, do not constitute a part of this Debenture and
            shall not be deemed to limit or affect any of the provisions hereof.

                      j) Assumption. Any successor to the Company or surviving
            entity in a Fundamental Transaction shall (i) assume in writing all
            of the obligations of the Company under this Debenture and the other
            Transaction Documents pursuant to written agreements in form and
            substance satisfactory to the Holder (such approval not to be
            unreasonably withheld or delayed) prior to such Fundamental
            Transaction and (ii) to issue to the Holder a new debenture of such
            successor entity evidenced by a written instrument substantially
            similar in form and substance to this Debenture, including, without
            limitation, having a principal amount and interest rate equal to the
            principal

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<PAGE>

            amounts and the interest rates of the Debentures held by the Holder
            and having similar ranking to this Debenture, and satisfactory to
            the Holder (any such approval not to be unreasonably withheld or
            delayed). The provisions of this Section shall apply similarly and
            equally to successive Fundamental Transactions and shall be applied
            without regard to any limitations of this Debenture.


                              *********************






























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<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed by a duly authorized officer as of the date first above indicated.


                                       WESTERN POWER & EQUIPMENT CORP.


                                       By:_____________________________________
                                          Name:
                                          Title:



























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