Document:

EXHIBIT 10.1
                                                                    ------------

                      SECOND AMENDMENT AND WAIVER AGREEMENT

     This Second Amendment and Waiver Agreement (this "Agreement"), is made and
entered into as of April 17, 2007, by and between Western Power & Equipment
Corp., a Delaware corporation (along with its subsidiaries signatory hereto, the
"Company") and Rockmore Investment Master Fund Ltd (the "Holder").

     WHEREAS, the Company, the Holder and the other investors signatory thereto
(the "Other Holders" and collectively with the Holder, the "Holders") are
parties to that certain Securities Purchase Agreement (the "Purchase
Agreement"), dated June 8, 2005, pursuant to which the Company issued to the
Holder its Series A Variable Rate Secured Convertible Debentures (the
"Debentures") with an aggregate principal amount among all Holders of
$30,000,000, of which $19,330,544.30 in principal currently remains outstanding;

     WHEREAS, an "Event of Default" under the Debentures has occurred pursuant
to Section 8(a)(i) as a result of the Company's untimely payment of the Monthly
Redemption Amount due on January 1, 2007, which was subsequently paid, and March
1, 2007, which shall be deferred pursuant to the terms hereunder (collectively,
the "Existing Defaults");

     WHERAS, as a result of the occurrence of the Existing Defaults and pursuant
to the Purchase Agreement, Debentures and other agreements entered into in
connection therewith, each Holder is entitled, among other things, to enforce
its rights and remedies against the Company and against the collateral (the
"Collateral") securing the obligations thereunder (the "Obligations"),
including, without limitation, to accelerate and immediately demand payment in
full of all Obligations and foreclose on the Collateral;

     WHEREAS, the parties have reached an agreement with respect to the
modification and amendment of certain terms of the Debentures relating to the
early payment of principal under the Debentures and the waiver of the Existing
Defaults, which agreement is reflected in this Agreement and in similar
agreements the Company is entering into with each Other Investor
contemporaneously with this Agreement (the "Other Agreements");

     WHEREAS, the Company and each Holder desire to remove Omicron Master Trust
as Agent and to appoint Rockmore Investment Master Trust Ltd. as Agent under the
Transaction Documents; and

     WHEREAS, capitalized terms used herein, but not otherwise defined, shall
have the meanings ascribed to such terms as set forth in the Purchase Agreement.

     NOW, THEREFORE, in consideration of the terms and conditions contained in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:
<PAGE>
     1.   Incorporation of Preliminary Statements and Acknowledgement. The
preliminary statements set forth above by this reference hereto are hereby
incorporated into this Agreement. Without limiting the foregoing, the Company
hereby acknowledges that the Existing Defaults have occurred and are continuing
under the terms of the Debentures and, notwithstanding anything to the contrary
in this Agreement, the Purchase Agreement, the Debentures or any of the other
Transaction Documents, the Company acknowledges and agrees that upon a breach of
this Agreement by the Company, such breach shall be an Event of Default under
the Debentures and each Holder has the right to immediately enforce payment of
all of the Obligations and, in connection therewith, without further notice, to
enforce its liens on, and security interests in, the Collateral (as defined
under the Security Agreement) and real property subject to the deed of trust
granted to the Holders.

     2.   Waiver of Existing Defaults. The Holder hereby agrees, solely in
connection with the existence of the Existing Defaults, to waive until the
Maturity Date (as defined in the Debentures and amended hereunder) its right to
enforce payment of all of the Obligations and, in connection therewith, enforce
its liens on, and security interest in, the Collateral. Notwithstanding anything
herein to the contrary, this waiver is limited only to the Existing Defaults and
any other past or future Events of Default, including a breach of this
Agreement, shall not be deemed waived hereunder. The Holder has no knowledge of
the existence of any Events of Default other than the Existing Defaults.

     3.   Consideration for Waiver of Existing Defaults. In consideration for
granting the waiver set forth in Section 2 above, the Company shall provide to
the Holder each of the following:

          a. CASH PAYMENT. The Company shall pay, concurrently herewith, to the
     Holder, in cash, the amounts set forth next to the Holder's name on ANNEX A
     attached hereto on or prior to the dates set forth therein. In the event
     that the Debentures held as of the date hereof by the Holder (the "Holder's
     Debentures") are paid in full pursuant to Section 4 on or prior to June 30,
     2007, such amount shall be credited against the principal and interest
     outstanding of the Holder's Debentures at the time of such payment. In the
     event that such payment is not made prior to June 30, 2007, such payment
     shall be deemed a waiver fee and shall not be applied against or offset
     principal, interest or any other amounts owed to the Holder under the
     Holder's Debentures or the Purchase Agreement. In the event that the
     Holder's Debentures are paid in full pursuant to Section 4 on or prior to
     June 30, 2007 and a determination must be made as to whether such payments
     are applied against principal or interest on the Holder's Debentures, such
     payments shall be made first to accrued but unpaid interest and then to
     principal; and

          b. INTEREST IN MINING LLC. The Company shall grant and assign the
     Holder, or its designated assigns, at the election of the Holder, a
     membership interest in Arizona Pacific Material, LLC, an Arizona limited
     liability company (the "LLC"), equal to the percentage of membership
     interest set forth next to the Holder's name on ANNEX B attached hereto.
     Within 10 business days of the date hereof, the Company shall have
     delivered to the Holder satisfactory evidence of such ownership in the LLC
     including a duly executed Transfer Agreement, membership certificates and
     any other documents

                                        2
<PAGE>
     reasonably requested by the Holder in connection with the transfer of
     ownership thereof. The Holder hereby assigns its right to such membership
     interest in the LLC to APM Acquisition Corporation, a Delaware corporation.

     IN THE EVENT THAT THE COMPANY FAILS TO DELIVER THE ITEMS IN CLAUSES A. AND
B. ABOVE WITHIN THE TIME PERIODS SET FORTH THEREIN, AN EVENT OF DEFAULT UNDER
THE HOLDER'S DEBENTURES SHALL BE DEEMED TO HAVE OCCURRED AND THE WAIVER GRANTED
IN SECTION 2 ABOVE SHALL BE NULL AND VOID AND OF NO FURTHER FORCE OR EFFECT.

     4.   Redemption at Option of Company. The Holder hereby consents to the
redemption in full (but not in part) of the Holder's Debentures in cash as
provided below in this Section 4. The Company shall provide the Holder with at
least 5 Trading Days' prior written notice (the "Notice of Redemption") of the
date that payment of the applicable Redemption Price (as defined herein) in full
is to be made, which date of payment must occur on or before June 30, 2007 (the
"Redemption Date"). The redemption price (the "Redemption Price") shall equal
the sum of (a) 100% of the principal amount of the Holder's Debentures
outstanding on the Redemption Date (including the Additional Debentures issued
to the Holder pursuant to Section 5(a) and the Deferred Payments subject to
Section 6 below), (b) accrued but unpaid interest thereon through and including
the Redemption Date and (c) all other fees and other amount due in respect of
the Holder's Debentures and any Additional Debentures held by the Holder.
Payment in full of the Redemption Price in cash must be made on the Redemption
Date. Up until the date that such payment is made in full, the Holder shall have
the right to convert the Holder's Debentures pursuant to the terms thereof.
Failure to make payment of the applicable Redemption Price on the Redemption
Date shall be deemed an Event of Default under the Holder's Debentures. If the
Company elects to cause a redemption pursuant to this Section 4, then it must
simultaneously take the same action with respect to the Debentures held by the
Other Investors pursuant to Section 4 of the Other Agreements.

     5.   Consideration for Company Redemption Right. In consideration for
granting the redemption right set forth in Section 4 above, the Company shall
undertake the following:

          a. ADDITIONAL DEBENTURES. Concurrently herewith, the Company shall
     issue to each Holder a convertible debenture (collectively the "Additional
     Debentures"), substantially in the form of the Debentures, with a principal
     amount equal to 10% of the principal amount of Debentures outstanding and
     held by such Holder on the date hereof. The principal amount of Additional
     Debentures issuable to each Holder are set forth on ANNEX C attached
     hereto. The rights and obligations of the Company with respect to the
     Additional Debentures and the shares of Common Stock issuable pursuant to
     the Additional Debentures (the "Additional Underlying Shares") shall be
     identical in all respects to the rights and obligations of the Company with
     respect to the Debentures and the Underlying Shares issued and issuable
     pursuant to the Transaction Documents. Each Transaction Document is hereby
     amended so that the term "Debentures" includes the Additional Debentures
     and the term "Underlying Shares" includes the Additional Underlying Shares.
     The Company acknowledges and agrees that the obligations of the Company and
     its Subsidiaries under the Additional Debentures and this Agreement shall
     be "Obligations" as defined under the Security Agreement and under the deed
     of trust for the benefit of the Holders granting a first-position lien and
     encumbrance upon certain real

                                        3
<PAGE>
     property owned by the LLC as required under the Purchase Agreement. In the
     event of any redemption pursuant to Section 4 above and Section 4 of the
     Other Agreements, the Additional Debentures must be redeemed in full along
     with the Debentures.

          b. USE OF PROCEEDS FROM CAPITAL RAISE. After the date hereof, in the
     event that the Company raises capital (in one or more financings) through
     the issuance of debt or equity of any kind, the Company shall use the
     proceeds raised thereunder first for the redemption in full of the
     Debentures, the Additional Debentures and all amounts owing thereunder and
     under the Transaction Documents and this Agreement until all such
     obligations are paid in full. Any redemption pursuant to this Section 5(b)
     must occur pro rata among the Holders with respect to the Debentures and
     the Additional Debentures held by all the Holders.

     IN THE EVENT THAT THE COMPANY FAILS TO DELIVER THE ADDITIONAL DEBENTURES
WITHIN 5 BUSINESS DAYS OF THE DATE HEREOF, AN EVENT OF DEFAULT UNDER THE
DEBENTURES SHALL BE DEEMED TO HAVE OCCURRED AND THE COMPANY REDEMPTION RIGHT SET
FORTH IN SECTION 4 SHALL BE NULL AND VOID AND OF NO FURTHER FORCE OR EFFECT.

     6.   Deferral of March and April Monthly Redemption Payments and April 1
Interest Payment. The Holder hereby agrees to defer until the final Maturity
Date (as defined in the Debenture and amended hereunder) its right to enforce
payment of the March 1, 2007 and April 1, 2007 Monthly Redemptions and the April
1, 2007 quarterly interest payment by the Company ("Deferred Payments").
Notwithstanding anything herein to the contrary, this waiver is limited only to
the Deferred Payments and payment of any other Monthly Redemption Amounts or
interest payment shall not be deemed waived hereunder. Payment of the Deferred
Payments shall be made on the earlier of December 31, 2007 or the date that the
Debentures are accelerated pursuant to an Event of Default or paid sooner
pursuant to a redemption hereunder or under the Debentures.

     7.   Amendment to Debentures. In consideration for deferring the right set
forth in Section 6 above, the definition of "Maturity Date" under the Debentures
is hereby amended such that (a) $4 million of principal, in the aggregate and
pro-rata among the Holders in relation to their the outstanding principal amount
of Debentures on June 30, 2007, (b) $3 million of principal, in the aggregate
and pro-rata among the Holders in relation to their then outstanding principal
amount of Debentures, is due and payable on October 31, 2007 and (c) the entire
principal amount of the Debentures is due and payable on December 31, 2007.
Additionally, all regularly scheduled interest payments or Monthly Redemptions
(except with respect to the Deferred Payments) required under the Debentures
shall be paid as scheduled therein. The schedule of payments to each Holder
hereunder and under the respective Debentures is set forth on ANNEX D attached
hereto.

     8.   Appointment of Rockmore as Agent. The appointment of Omicron Master
Trust as Agent pursuant to Section 18 of the Security Agreement or any other
provision of the Transaction Documents is hereby revoked. The appointment of
Rockmore Investment Master Trust Ltd. as Agent pursuant to Section 18 of the
Security Agreement and any other Transaction Document is immediately effective.
Rockmore Investment Master Fund Ltd. is hereby authorized to amend the currently
filed UCC-1s to add Rockmore Investment Master Fund Ltd. and Portside Growth and

                                        4
<PAGE>
Opportunity Fund as secured parties hereunder and to remove Omicron Master Trust
as a secured party.

     9.   RELEASE. THE COMPANY HEREBY RELEASES THE HOLDER AND ITS AFFILIATES,
OFFICERS, EMPLOYEES, DIRECTORS, MEMBERS, AGENTS AND ATTORNEYS (COLLECTIVELY, THE
"RELEASEES") FROM ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, RESPONSIBILITIES,
DISPUTES, CAUSES OF ACTION (WHETHER AT LAW OR EQUITY) AND OBLIGATIONS OF EVERY
NATURE WHATSOEVER, WHETHER LIQUIDATED OR UNLIQUIDATED, KNOWN OR UNKNOWN, MATURED
OR UNMATURED, FIXED OR CONTINGENT (COLLECTIVELY, "CLAIMS") THAT THE COMPANY MAY
HAVE AGAINST THE RELEASEES WHICH ARISE FROM OR RELATE TO ANY ACTIONS, OR
INACTIONS WHICH THE RELEASEES MAY HAVE TAKEN PRIOR TO THE DATE HEREOF.

     10.  Opinion of Company Counsel. In connection with this Agreement, the
Company shall deliver to the Holder an opinion of counsel in form and substance
reasonably satisfactory to the Holder.

     11.  Representations and Warranties of the Company. The Company hereby
makes to the Holder the following representations and warranties:

          i. Authorization; Enforcement. The Company has the requisite corporate
     power and authority to enter into and to consummate the transactions
     contemplated by this Agreement and otherwise to carry out its obligations
     hereunder and thereunder. The execution and delivery of this Agreement by
     the Company and the consummation by it of the transactions contemplated
     hereby have been duly authorized by all necessary action on the part of the
     Company and no further action is required by the Company, its board of
     directors or its stockholders in connection therewith other than in
     connection with the Required Approvals. This Agreement has been duly
     executed by the Company and, when delivered in accordance with the terms
     hereof will constitute the valid and binding obligation of the Company
     enforceable against the Company in accordance with its terms except (i) as
     limited by general equitable principles and applicable bankruptcy,
     insolvency, reorganization, moratorium and other laws of general
     application affecting enforcement of creditors' rights generally, (ii) as
     limited by laws relating to the availability of specific performance,
     injunctive relief or other equitable remedies and (iii) insofar as
     indemnification and contribution provisions may be limited by applicable
     law.

          ii. No Conflicts. The execution, delivery and performance of this
     Agreement by the Company and the consummation by the Company of the
     transactions contemplated hereby do not and will not: (i) conflict with or
     violate any provision of the Company's or any Subsidiary's certificate or
     articles of incorporation, bylaws or other organizational or charter
     documents, or (ii) conflict with, or constitute a default (or an event that
     with notice or lapse of time or both would become a default) under, result
     in the creation of any Lien (except as contemplated by the Security
     Documents) upon any of the properties or assets of the Company or any
     Subsidiary, or give to others any rights of termination, amendment,
     acceleration or cancellation (with or without notice, lapse of time or
     both) of, any material agreement, credit facility, debt or other material
     instrument (evidencing a Company or

                                        5
<PAGE>
     Subsidiary debt or otherwise) or other material understanding to which the
     Company or any Subsidiary is a party or by which any property or asset of
     the Company or any Subsidiary is bound or affected, or (iii) subject to the
     Required Approvals, conflict with or result in a violation of any law,
     rule, regulation, order, judgment, injunction, decree or other restriction
     of any court or governmental authority to which the Company or a Subsidiary
     is subject (including federal and state securities laws and regulations),
     or by which any property or asset of the Company or a Subsidiary is bound
     or affected; except in the case of each of clauses (ii) and (iii), such as
     could not have or reasonably be expected to result in a Material Adverse
     Effect.

          iii. Issuance of the Additional Debentures. The Additional Debentures
     are duly authorized and, upon the execution of this Agreement by the Holder
     and the Other Agreements by the Other Holders, will be duly and validly
     issued, fully paid and nonassessable, free and clear of all Liens imposed
     by the Company other than restrictions on transfer provided for in the
     Transaction Documents. The Additional Underlying Shares, when issued in
     accordance with the terms of the Additional Debentures, will be validly
     issued, fully paid and nonassessable, free and clear of all Liens imposed
     by the Company. The Company has reserved from its duly authorized capital
     stock a number of shares of Common Stock for issuance of the Additional
     Underlying Shares sufficient for the conversion in full of the Additional
     Debentures.

          iv. Equal Consideration. Except as set forth in this Agreement, no
     consideration has been offered or paid to any person to amend or consent to
     a waiver, modification, forbearance or otherwise of any provision of any of
     the Transaction Documents.

          v. Survival and Bring Down. All of the Company's warranties and
     representations contained in this Agreement shall survive the execution,
     delivery and acceptance of this Agreement by the parties hereto. The
     Company expressly reaffirms that each of the representations and warranties
     set forth in the Purchase Agreement, except with respect to the Existing
     Defaults, continues to be true, accurate and complete, and the Company
     hereby remake and incorporate herein by reference each such representation
     and warranty as though made on the date of this Agreement.

     12.  Representations and Warranties of the Holder. The Holder represents
and warrants as of the date hereof to the Company as follows:

          i. Authority. The execution, delivery and performance by the Holder of
     the transactions contemplated by this Agreement have been duly authorized
     by all necessary corporate or similar action on the part of the Holder.
     This Agreement has been duly executed by the Holder, and when delivered by
     the Holder in accordance with the terms hereof, will constitute the valid
     and legally binding obligation of the Holder, enforceable against it in
     accordance with its terms, except (i) as limited by general equitable
     principles and applicable bankruptcy, insolvency, reorganization,
     moratorium and other laws of general application affecting enforcement of
     creditors' rights generally, (ii) as limited by laws relating to the
     availability of specific performance, injunctive relief or other equitable

                                        6
<PAGE>
     remedies and (iii) insofar as indemnification and contribution provisions
     may be limited by applicable law.

          ii. Own Account. The Holder understands that the Additional Debentures
     are "restricted securities" and have not been registered under the
     Securities Act or any applicable state securities law and is acquiring
     Additional Debentures as principal for its own account and not with a view
     to or for distributing or reselling such Additional Debenture or any part
     thereof in violation of the Securities Act or any applicable state
     securities law, has no present intention of distributing any of such
     Securities in violation of the Securities Act or any applicable state
     securities law and has no arrangement or understanding with any other
     persons regarding the distribution of such Additional Debentures (this
     representation and warranty not limiting such Holder's right to sell the
     Additional Underlying Shares pursuant to the Registration Statement or
     otherwise in compliance with applicable federal and state securities laws)
     in violation of the Securities Act or any applicable state securities law.
     The Holder is acquiring Additional Debentures hereunder in the ordinary
     course of its business. The Holder does not have any agreement or
     understanding, directly or indirectly, with any Person to distribute any of
     the Additional Debentures or Additional Underlying Shares.

          iii. Holder Status. The Holder is an "accredited investor" as defined
     in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
     Act. The Holder is not required to be registered as a broker-dealer under
     Section 15 of the Exchange Act.

     13.  Effect on Transaction Documents. Except as expressly set forth above,
all of the terms and conditions of the Transaction Documents shall continue in
full force and effect after the execution of this Agreement and shall not be in
any way changed, modified or superseded by the terms set forth herein, including
but not limited to, any other obligations the Company may have to the Holder
under the Transaction Documents.

     14.  Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holder.

     15.  Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the applicable Transaction Document.

     16.  Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of the Holder. The Company may not assign (except
by merger) its rights or obligations hereunder without the prior written consent
of the Holder. The Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the applicable Transaction
Document.

     17.  Execution and Counterparts. This Agreement may be executed in two or
more counterparts, all of which when taken together shall be considered one and
the same agreement

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<PAGE>
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a ".pdf" format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or ".pdf" signature page were an original thereof.

     18.  Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Transaction Documents.

     19.  Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

     20.  Headings. The headings in this Agreement are for convenience only, do
not constitute a part of the Agreement and shall not be deemed to limit or
affect any of the provisions hereof.

     21.  Effectiveness. The effectiveness of this Agreement shall be expressly
conditioned upon the Holder's receipt, on or before April 20, 2007, of copies of
the Other Agreements in form and substance satisfactory to the Holder duly
executed by all of the Other Holders; (ii) the execution and delivery by the
Company and the LLC of the Membership Interest Transfer Agreements relating to
the transfer and assignment of, in the aggregate among all such agreements, a
10% Class A Membership Interest in the LLC to the Holders, and (iii) Holder's
receipt of a certificate, dated as of the date hereof, executed by the Chief
Executive Officer of the Company certifying that no Event of Default and no
event which with the giving of notice or the passage of time (or both), would
constitute an Event of Default under the Debentures has occurred or is
continuing. No consideration was or will be offered or paid to the Other Holders
in connection with the their execution of the Other Agreements; provided,
however, that the Company shall pay concurrently herewith Rockmore Investment
Master Fund $40,000 for its administrative and legal fees and expenses.

                            [SIGNATURE PAGE FOLLOWS]

                                        8
<PAGE>
     IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
have executed this Agreement as of the date first set forth above.

                                           WESTERN POWER & EQUIPMENT CORP.

                                           By:____________________________
                                           Name:
                                           Title:

                                           WESTERN POWER & EQUIPMENT CORP.
                                           an Oregon corporation and subsidiary
                                           of the Company

                                           By: ________________________________
                                           Name:
                                           Title:

Name of Holder: ________________________________________________________________

SIGNATURE OF AUTHORIZED SIGNATORY OF HOLDER: ___________________________________

Name of Authorized Signatory: __________________________________________________

Title of Authorized Signatory: _________________________________________________

                                        9
<PAGE>
                                     ANNEX A
                                     -------

Holder       Pro-Rata %  Date Hereof   April 1, 2007  May 1, 2007   June 1, 2007
--------------------------------------------------------------------------------

Rockmore       8.89%       $17,952        17,952         17,952         17,952

Portside       19.36%      $38,714        38,714         38,714         38,714

Smithfield     28.33%      $56,667        56,667         56,667         56,667

Bluegrass LP   1.83%       $ 3,667         3,667          3,667          3,667

Iroquois II    1.50%       $ 3,000         3,000          3,000          3,000

Whitecap       11.67%      $23,333        23,333         23,333         23,333

Crestview      15%         $30,000        30,000         30,000         30,000

Iroquois       13.33%      $26,667        26,667         26,667         26,667

TOTAL:         100%        $200,000     $200,000       $200,000       $200,000

                                     ANNEX B
                                     -------

Holder                                     % Membership Interest In LLC
--------------------------------------------------------------------------------
Rockmore                                             0.9%

Portside                                            1.94%

Smithfield                                          2.83%

Bluegrass LP                                        0.18%

Iroquois II                                         0.15%

Whitecap                                            1.17%

Crestview                                            1.5%

Iroquois                                            1.33%

TOTAL:                                                10%

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<PAGE>

                                     ANNEX C
                                     -------

Holder                                             Additional Debenture
--------------------------------------------------------------------------------

Rockmore                                                $173,510.96

Portside                                                $374,187.79

Smithfield                                              $547,698.75

Bluegrass LP                                             $35,439.32

Iroquois II                                              $28,995.82

Whitecap                                                $225,523.02

Crestview                                               $289,958.17

Iroquois                                                $257,740.60

TOTAL:                                                $1,933,054.43

                                       11
<PAGE>
SCHEDULE OF PAYMENTS
CONVERTIBLE DEBENTURES
<TABLE><CAPTION>
                               BLUEGRASS       IROQUIOS       CRESTVIEW         IROQUIOS        ROCKMORE
 DESCRIPTION                    GROWTH            II           CAPITAL           MASTER        INVESTMENT
----------------------------------------------------------------------------------------------------------
<S>                           <C>            <C>            <C>              <C>             <C>
Balance as of 01/31/07         354,393.24     289,958.21     2,899,581.68     2,577,405.96    1,735,109.62
Waiver Penalty                  35,439.32      28,995.82       289,958.17       257,740.60      173,510.96
                              ----------------------------------------------------------------------------
Adjusted Balance with
  Penalty                      389,832.56     318,954.03     3,189,539.85     2,835,146.56    1,908,620.58

Forbearance fee                 14,666.66      12,000.00       120,000.00       106,666.67       71,808.00
                              ----------------------------------------------------------------------------
Total with Forbearance         404,499.22     330,954.03     3,309,539.85     2,941,813.23    1,980,428.58
                              ----------------------------------------------------------------------------

PAYMENTS
3/16/2007                       (3,666.66)     (3,000.00)      (30,000.00)      (26,666.67)     (17,952.00)
3/30/2007                       (3,666.66)     (3,000.00)      (30,000.00)      (26,666.67)     (17,952.00)
4/30/2007                      (13,851.86)    (11,333.33)     (113,333.33)     (100,740.74)     (67,818.67)
5/31/2007                      (13,851.86)    (11,333.33)     (113,333.33)     (100,740.73)     (67,818.67)
6/30/2007                      (73,333.32)    (60,000.01)     (600,000.01)     (533,333.34)    (359,039.99)
7/31/2007                      (10,185.19)     (8,333.33)      (83,333.33)      (74,074.07)     (49,866.67)
8/31/2007                      (10,185.19)     (8,333.33)      (83,333.33)      (74,074.07)     (49,866.67)
9/30/2007                      (10,185.19)     (8,333.33)      (83,333.33)      (74,074.07)     (49,866.67)
10/31/2007                     (54,999.99)    (45,000.01)     (450,000.01)     (400,000.01)    (269,279.99)
11/30/2007                     (10,185.19)     (8,333.33)      (83,333.33)      (74,074.07)     (49,866.67)
12/31/2007                    (200,388.11)   (163,954.03)   (1,639,539.85)   (1,457,368.79)    (981,100.58)
                              ----------------------------------------------------------------------------
Ending Balance                         --             --               --               --              --
                              ============================================================================

                                 PORTSIDE       SMITHFIELD
 DESCRIPTION                      GROWTH         FIDUCIARY         WHITECAP          TOTAL
-----------------------------------------------------------------------------------------------
Balance as of 01/31/07         3,741,877.87     5,476,987.49     2,255,230.23     19,330,544.30
Waiver Penalty                   374,187.79       547,698.75       225,523.02      1,933,054.43
                              -----------------------------------------------------------------
Adjusted Balance with
  Penalty                      4,116,065.66     6,024,686.24     2,480,753.25     21,263,598.73

Forbearance fee                  154,858.67       226,666.66        93,333.34        800,000.00
                              -----------------------------------------------------------------
Total with Forbearance         4,270,924.33     6,251,352.90     2,574,086.59     22,063,598.73
                              -----------------------------------------------------------------

PAYMENTS
3/16/2007                        (38,714.67)      (56,666.67)      (23,333.33)      (200,000.00)
3/30/2007                        (38,714.67)      (56,666.67)      (23,333.33)      (200,000.00)
4/30/2007                       (146,255.41)     (214,074.07)      (88,148.15)      (755,555.56)
5/31/2007                       (146,255.40)     (214,074.07)      (88,148.15)      (755,555.54)
6/30/2007                       (774,293.33)   (1,133,333.32)     (466,666.68)    (4,000,000.00)
7/31/2007                       (107,540.74)     (157,407.41)      (64,814.81)      (555,555.55)
8/31/2007                       (107,540.74)     (157,407.41)      (64,814.81)      (555,555.55)
9/30/2007                       (107,540.74)     (157,407.41)      (64,814.81)      (555,555.55)
10/31/2007                      (580,720.00)     (849,999.98)     (350,000.01)    (3,000,000.00)
11/30/2007                      (107,540.74)     (157,407.41)      (64,814.81)      (555,555.55)
12/31/2007                    (2,115,807.89)   (3,096,908.48)   (1,275,197.70)   (10,930,265.43)
                              -----------------------------------------------------------------
Ending Balance                           --               --               --                --
                              =================================================================
</TABLE>

                                       12EXHIBIT 10.2
                                                                    ------------

                     MEMEBERSHIP INTEREST TRANSFER AGREEMENT

     This Agreement for the transfer and assignment of, in the aggregate, a 10%
Class A Membership Interest in Arizona Pacific Materials, LLC (this
"Agreement"), is entered into on April 17, 2007, by and among the transferor,
WESTERN POWER & EQUIPMENT CORP., a Delaware corporation (the "Transferor"),
Arizona Pacific Material, LLC, an Arizona limited liability company (the
"Company") and the transferees signatory hereto (each a "Transferee" and
collectively the "Transferees"), with respect to the following facts:

                                    RECITALS

     A.   WHEREAS, the Transferor owns 100% of the membership interests in the
Company.

     B.   WHEREAS, in consideration for the Transferees (or their assignor in
interest) agreeing to waive the existence of certain events of defaults pursuant
to those certain Second Amendment and Waiver Agreements with the Transferor
dated as of March __, 2007 (the "Amendment") relating to the Transferor's Series
A Variable Rate Secured Convertible Debentures issued pursuant to that certain
Securities Purchase Agreement, dated June 8, 2005 by and among the Transferor
and the purchasers signatory thereto (the "Purchase Agreement"), the Transferees
desire to receive and the Transferor desires to grant, in the aggregate, a 10%
Class A Membership Interest in the Company, the only class of membership
interests issued and outstanding.

     C.   NOW, THEREFORE, for and in consideration of the mutual agreements set
forth herein, and subject to the terms and conditions set forth below, the
parties agree as follows:

                                    AGREEMENT

     1.   Transfer of Membership Interests: The Transferor hereby transfers,
free and clear of all encumbrances (except for any encumbrances created on
behalf of the Transferees hereunder) to the Transferees, and the Transferees
hereby acquire from the Transferor, in the aggregate, 10% the outstanding Class
A Membership Interests of the Company (the "Membership Interest"). Each
Transferee shall receive a portion of the Membership Interest equal to the
percentage set forth on the signature page of such Transferee attached hereto.
The Transferees shall succeed to 10% of the capital account of the Transferor as
of the date hereof.

     2.   Consideration for Transfer. The transfer of the Membership Interest
pursuant to this Agreement is being granted hereunder in consideration for the
waiver of certain events of default pursuant to the Amendments.
<PAGE>
     3.   Closing. The closing of this transaction shall take place
contemporaneously with the execution of this Agreement. Within 5 business days
of the date hereof the Company shall deliver such membership certificates, if
any, evidencing the membership interests and any assignments of such interests
as may be required by law to transfer said interests. The Transferee(s) shall
also execute and deliver counterpart signature pages for the Operating Agreement
(as defined below in Section 5(c)).

     4.   The Transferors Representations and Warranties: The Transferor
represents and warrants that as of this date:

          (a)  AUTHORIZATION. The Transferor has the power and authority to
     execute and deliver this Agreement and to perform its obligations
     hereunder, all of which have been duly authorized by all requisite action.
     This Agreement has been duly authorized, executed and delivered by it and
     constitutes its valid and binding obligation, enforceable against it in
     accordance with its terms, subject to bankruptcy, insolvency, fraudulent
     transfer, reorganization, moratorium and similar laws of general
     applicability relating to or affecting creditors' rights and to general
     equity principles.

          (b)  NO CONSENTS. No notice to, filing with, or authorization,
     registration, consent or approval of any governmental authority or other
     individual, partnership, corporation, joint stock company, unincorporated
     organization or association, trust or joint venture, or a governmental
     agency or political subdivision thereof (each, a "Person") is necessary for
     the execution, delivery or performance of this Agreement or the
     consummation of the transactions contemplated hereby by it.

          (c)  OWNERSHIP OF THE SECURITIES. The Transferor owns the Membership
     Interest beneficially and of record, free and clear of any liens, claims or
     encumbrances (except for any encumbrances created on behalf of the
     Transferees hereunder) (collectively, "Encumbrances"). The Transferor has
     not entered into any agreement, arrangement or other understanding (i)
     granting any option, warrant or right of first refusal with respect to the
     Membership Interest to any Person, (ii) restricting its right to sell the
     Membership Interest to any Person, or (iii) restricting any other of its
     rights with respect to the Membership Interest. It has the absolute and
     unrestricted right, power and capacity to assign and transfer the
     Membership Interest to the Transferees free and clear of any Encumbrances
     (except for any encumbrances created on behalf of the Transferees
     hereunder). Upon execution of the Amendment and this Agreement, the
     Transferees shall acquire good, valid and marketable title to the
     Membership Interest, free and clear of any Encumbrances (except for any
     encumbrances created on behalf of the Transferees hereunder).

          (d)  BALANCE SHEET: The Company is the owner or lessee, as applicable,
     of the assets listed in the December 31, 2006, Balance Sheet attached
     hereto as Exhibit A.

                                        2
<PAGE>
          (e)  PENDING SUITS: Except as set forth in Schedule 4(e) attached
     hereto, no material suits, actions, or proceedings are pending, or to the
     knowledge of the Transferor are threatened against or affecting the Company
     or its property.

     5.   Covenants of the Transferor and the Company.

          (a)  AMENDMENTS TO ORGANIC DOCUMENTS. The Company shall not, and the
     Transferor shall not permit the Company to, directly or indirectly amend
     its articles of organization, operating agreement or other charter
     documents so as to materially, adversely and disproportionably affect any
     rights of any Transferee.

          (b)  PARTICIPATION IN FUTURE FINANCINGS.

               (i) From the date hereof until the date that a Transferee no
          longer holds any Membership Interest in the Company, upon any grant of
          any additional membership interests in the Company (a "Subsequent
          Grant"), each Transferee (or its designated assigns) shall have the
          right to participate in up to an amount of the Subsequent Grant equal
          to a percentage of the Subsequent Grant equal to the aggregate
          Membership Interest then held by the Transferees (10% as of the date
          hereof) on the same terms, conditions and price provided for in the
          Subsequent Grant.

               (ii) At least 10 Trading Days prior to the closing of the
          Subsequent Grant, the Company shall deliver to each Transferee a
          written notice of its intention to effect a Subsequent Grant (a
          "Subsequent Grant Notice"). The Subsequent Grant Notice shall describe
          in reasonable detail the proposed terms of such Subsequent Grant, the
          amount of proceeds intended to be raised thereunder and the Person or
          Persons through or with whom such Subsequent Grant is proposed to be
          effected and shall include a term sheet or similar document relating
          thereto as an attachment.

               (iii) Any Transferee desiring to participate in such Subsequent
          Grant must provide written notice to the Company by not later than
          5:30 p.m. (New York City time) on the 10th Trading Day after all of
          the Transferees have received the Subsequent Grant Notice that the
          Transferee is willing to participate in the Subsequent Grant, the
          amount of the Transferee's participation, and that the Transferee has
          such funds ready, willing, and available for investment on the terms
          set forth in the Subsequent Grant Notice. If the Company receives no
          notice from a Transferee as of such 10th Trading Day, such Transferee
          shall be deemed to have notified the Company that it does not elect to
          participate.

               (iv) If by 5:30 p.m. (New York City time) on the 10th Trading Day
          after all of the Transferees have received the Subsequent Grant

                                        3
<PAGE>
          Notice, notifications by the Transferees of their willingness to
          participate in the Subsequent Grant (or to cause their designees to
          participate) is, in the aggregate, less than the total amount of the
          Subsequent Grant, then the Company may effect the remaining portion of
          such Subsequent Grant on the terms and with the Persons set forth in
          the Subsequent Grant Notice.

               (v) If by 5:30 p.m. (New York City time) on the 10th Trading Day
          after all of the Transferees have received the Subsequent Grant
          Notice, the Company receives responses to a Subsequent Grant Notice
          from Transferees seeking to purchase more than the aggregate amount of
          the Subsequent Grant, each such Transferee shall have the right to
          purchase its Pro Rata Portion (as defined below) of the Subsequent
          Grant. "Pro Rata Portion" means the ratio of (x) the Membership
          Interest percentage held by a Transferee participating under this
          Section 5(b) and (y) the sum of the aggregate percentage Membership
          Interests held by all Transferees participating under this Section
          5(b).

               (vi) The Company must provide the Transferees with a second
          Subsequent Grant Notice, and the Transferees will again have the right
          of participation set forth above in this Section 5(b), if the
          Subsequent Grant subject to the initial Subsequent Grant Notice is not
          consummated for any reason on the terms set forth in such Subsequent
          Grant Notice within 60 days after the date of the initial Subsequent
          Grant Notice.

          (c)  OPERATING AGREEMENT. The Amended and Restated Operating Agreement
     of the Company, dated June 1, 2000, attached hereto as Exhibit B, is the
     operating agreement of the Company in effect as of the date hereof
     ("Operating Agreement"). Except as expressly provided for under this
     Agreement, the terms and conditions of which shall supersede, modify and
     amend the terms of that Operating Agreement, the terms and conditions of
     Operating Agreement shall remain in effect.

          (d)  TRANSFERABILITY OF MEMBERSHIP INTEREST. Subject to compliance
     with any applicable securities laws the Membership Interest and all rights
     thereunder and hereunder are transferable in whole or in part. Upon a
     surrender of any certificate(s) (if any) representing the transferred
     Membership Interest the Company shall execute and deliver a new certificate
     in the name of the assignee or assignees and in the denomination or
     denominations as requested by the transferor, and shall issue to transferor
     a new certificate evidencing the portion of the Membership Interest not so
     assigned and the surrendered certificate shall be cancelled.
     Notwithstanding anything in the Operating Agreement to the contrary, the
     Transferor shall have no option to purchase the Membership Interest upon a
     transfer of all or part of such interest hereunder under Section VIII of
     the Operating Agreement.

                                        4
<PAGE>
          (e)  CONSENT AS MEMBER. The Transferor hereby consents to the transfer
     of the Membership Interest contemplated hereunder and approves the
     admittance of the Transferees as full members of the Company.

          (f)  ADDITIONAL CAPITAL CONTRIBUTIONS. The Transferees shall not be
     subject to any demand for additional capital contributions to the Company
     pursuant to Section 3.2.2 of the Operating Agreement or any other provision
     thereof; provided, however, if a Transferee does not participate in any
     such capital call (or participates for less than its share), such
     Transferee's Membership Interest shall be diluted in proportion to the size
     of the capital call and the fair market value of the Company at the time of
     such capital call; provided, further, in the event the Transferee disputes
     the fair market value of the Company such Transferee shall have the right
     to retain the services of an independent third party appraiser at its
     expense and reasonably acceptable to the Company to provide a fair market
     valuation of the Company which shall binding on the parties.

          (g)  TAX LIABILITY DISTRIBUTIONS. Notwithstanding anything in the
     Operating Agreement to the contrary, in the event that a Transferee shall
     incur any tax liability on account of any allocations or distributions by
     the Company, the Company, subject to having the available cash, shall
     promptly (and in any event prior to the date such Transferee is required to
     pay such tax liability) make a cash distribution to the Transferees in an
     amount at equal to such tax liability based on an assumed combined federal
     and state tax rate of forty percent (40%).

          (h)  MANAGEMENT, FIDUCIARY DUTY AND DUTY OF LOYALTY.

               (i) NO MANAGEMENT RIGHTS. Notwithstanding anything to the
          contrary in the Operating Agreement, management of the Company shall
          not be vested in all of the Class A Members of the Company but shall
          be vested the holders of a majority of the Class A Members or in a
          manager appointed by a majority of the Class A Members of the Company.

               (ii) NO FIDUCIARY DUTY. Notwithstanding anything in the Operating
          Agreement to the contrary, the Transferees shall have the same status
          and duty as a limited partner in a partnership and therefore shall not
          be accountable to the Company or the other members of the Company as a
          fiduciary.

               (iii) NO DUTY OF LOYALTY. Notwithstanding anything to the
          contrary in the Operating Agreement, the Transferees shall owe no duty
          of loyalty to the Company or the other members of the Company.

     6.   Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, when delivered by courier, three days after
being deposited in the mail (registered or certified mail, postage prepaid,
return receipt

                                        5
<PAGE>
requested), or when received by facsimile transmission upon receipt of a
confirmed transmission report, as follows:

     If to the Transferor:      As set forth in the Purchase Agreement.

     If to the Company:         Same as the Transferor.

     If to the Transferees:     as set forth on the signature page of the
                                Transferees attached hereto.

     Any party hereto, by notice given to the other parties hereto in accordance
with this Section 6 may change the address or facsimile transmission number to
which such notice or other communications are to be sent to such party.

     7.   Expenses. Each of the parties hereto shall pay its own expenses
incident to this Agreement and the transactions contemplated herein.

     8.   Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be determined in accordance with the provisions of the
Purchase Agreement.

     9.   Assignment; Successors and Assigns; No Third Party Rights. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors, permitted assigns and legal
representatives. This Agreement shall be for the sole benefit of the parties to
this Agreement and their respective heirs, successors, permitted assigns and
legal representatives and is not intended, nor shall be construed, to give any
Person, other than the parties hereto and their respective heirs, successors,
assigns and legal representatives, any legal or equitable right, remedy or claim
hereunder.

     10.  Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original agreement, but all of which together shall
constitute one and the same instrument.

     11.  Amendments and Waivers. The terms of this Agreement, along with the
Amendment Agreement and the Transaction Documents referenced in the Amendment
Agreement shall not be otherwise changed, altered, waived or amended without the
prior written consent of a majority in interest of the Transferees.

     12.  Titles and Headings. The titles and headings in this Agreement are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.

     13.  Entire Agreement. This Agreement constitute the entire agreement among
the parties with respect to the matters covered hereby and thereby and supersede
all previous written, oral or implied understandings among them with respect to
such matters.

                                        6
<PAGE>
     14.  Severability. The invalidity of any portion hereof shall not affect
the validity, force or effect of the remaining portions hereof. If it is ever
held that any restriction hereunder is too broad to permit enforcement of such
restriction to its fullest extent, such restriction shall be enforced to the
maximum extent permitted by law.

     15.  Interpretation. Unless otherwise indicated to the contrary herein by
the context or use thereof: (i) the words, "herein," "hereto," "hereof" and
words of similar import refer to this Agreement as a whole and not to any
particular Section or paragraph hereof; (ii) words importing the masculine
gender shall also include the feminine and neutral genders, and vice versa; and
(iii) words importing the singular shall also include the plural, and vice
versa.

     16.  Consent to Spin-off. Each Transferee, severally and not jointly with
the other Transferees, hereby does consent to (a) the conversion of the Company
into a corporation in connection with any spin-off of the Company's securities
to the public stockholders of the Transferor (the "Spin-Off"), (b) the Spin-Off
and (c) the receipt and acceptance of the Company's securities distributed in
connection with Spin-Off on the same terms and subject to the same conditions
applicable to the Transferor's public stockholders. Notwithstanding anything
herein to the contrary, the consent above to not in any way waive the fiduciary
obligations of the Company and the Transferors to the Transferees in undertaking
such actions.

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

     IN WITNESS WHEREOF, the parties have duly executed this Agreement:

TRANSFEROR:

WESTERN POWER & EQUIPMENT CORP.

By:  ______________________________
     Name:
     Title:

COMPANY:

ARIZONA PACIFIC MATERIALS, LLC

By:  ______________________________
     Name:
     Title:

                     [SIGNATURE PAGE OF TRANSFEREES FOLLOW]

                                        7
<PAGE>
                         [SIGNATURE PAGE OF TRANSFEREES]

APM ACQUISITION CORPORATION

By:  ______________________________
     Name: Michael Clateman
     Title: President

% Membership Interest (as a percentage of whole Company): ____%

Address for Notice:
-------------------

c/o Rockmore Capital, LLC
150 East 58t Street, 28th Floor
New York, New York 10155
Attn: Michael Clateman
e-mail: mc@rockmorecapital.com
Tel: (212) 258 2305

PORTSIDE WPEC CORPORATION

By:  ______________________________
     Name:
     Title:

% Membership Interest (as a percentage of whole Company): ____%

Address for Notice:
-------------------

c/o Ramius Capital Group, L.L.C.
666 Third Avenue, 26th Floor
New York, New York 10017
Attn: Jeffrey C. Smith / Owen Littman
e-mail: jsmith@ramius.com / olittman@ramius.com
Tel: (212) 845-7955 / (212) 201-4841

                                        8
<PAGE>
                         [SIGNATURE PAGE OF TRANSFEREES]

CORAL LTD.

By:  ______________________________
     Name: Adam J. Chill
     Title: Authorized Signatory

% Membership Interest (as a percentage of whole Company): ____%

Address for Notice:
-------------------

c/o Highbridge Capital Management, LLC
9 West 57th Street, 27th Floor
New York, New York 10019
Attn: Ari J Storch/Adam J. Chill
e-mail: ari.storch@hcmny.com/adam.chill@hcmny.com
Tel: (212) 287-4720
Fax: (212) 751-0755

                                        9
<PAGE>

                                  Schedule 4(e)
                               Pending Litigation

In April, 2006, Arizona Pacific Materials, L.L.C. ("APM") commenced an action
against Copper Basin Railway, Inc. and others in the Superior Court, Pinal
County, State of Arizona. The First Amended Complaint seeks a declaratory
judgment and injunctive relief. The litigation concerns a dispute over
maintaining access to APM's property via a particular road.

There is a railroad line that runs down the border of APM's property. One of the
roads used to access APM's property runs along the side of the railroad line.
The defendant railroad claims that the road infringes upon its railroad
easement. APM has commenced this action for a declaration that it has an
easement relative to this roadway and to prevent the railroad from taking any
action to disrupt access to APM's property. The railroad has counterclaimed for
a declaration of the railroad's rights, ejectment of APM from use of this road,
and rent for alleged wrongful use of this road by APM.

The case is pending without a trial date. Cross motions for summary judgment
have both been denied. The railroad has filed a motion for reconsideration of
the denial of its motion for summary judgment. A finding for the railroad would
make accessing APM's property more difficult but probably not overly
problematic.

                                       10

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