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Prepared by MERRILL CORPORATION

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Exhibit 10.12    
  

 
 

CONSULTING AGREEMENT    
  

    This CONSULTING AGREEMENT (this "Agreement") is made as of August 1, 2000, by and between WESTERN
POWER & EQUIPMENT CORP., an Oregon corporation (the "Company"), and Robert M. Rubin, an individual residing at
("Consultant"). 

 
 

RECITALS    
  

    Consultant is party to a Consulting Agreement dated August 1, 1998 (the "Old Consulting Agreement") with Western Power & Equipment Corp. The Old
consulting Agreement expires by its terms on July 31, 2000. The Company desires to retain Consultant as a consultant, and Consultant wishes to serve as a consultant to the Company, upon the
terms and subject to the conditions set forth in this Agreement. 

 
 

AGREEMENT    
  

    The parties, intending to be legally bound, agree as follows: 

    1.  DEFINITIONS.  

For
purposes of this Agreement, the following terms have the meanings specified or referred to in this Section 1. 

"Agreement" shall have the meaning set forth in the preamble. 

"Board of Directors" shall mean the board of directors, or similar governing body, of the Company. 

"Bonus Compensation" shall have the meaning set forth in Section 3.2. 

"Company" shall have the meaning set forth in the first paragraph of this Agreement. 

"Consultant" shall have the meaning set forth in the first paragraph of this Agreement. 

"Consulting Payment" shall have the meaning set forth in Section 3.1(a). 

"Disability" shall have the meaning set forth in Section 4.2. 

"Effective Date" shall mean the date first above written. 

"For Cause" shall have the meaning set forth in Section 4.3. 

"Good Reason" shall have the meaning set forth in Section 4.3. 

"Person" shall mean any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization or governmental body. 

"Term" shall have the meaning set forth in Section 2.2. 

    2.  CONSULTING TERMS AND DUTIES.  

    2.1  Consulting Services.  The
Company hereby retains Consultant, and Consultant hereby agrees to provide consulting services to the Company, upon the terms and subject to the conditions set forth in this Agreement. 

    2.2  Term.  The term of this
Agreement shall begin on the Effective Date and shall, unless earlier terminated in accordance with the provisions of Section 4, end on the seventh anniversary of the Effective Date (the
"Term"). 

 

    2.3  Duties.  Consultant shall
assist the Company in acquiring other companies, raising capital and securing financing, and shall report to, and perform such duties as are requested by, the Chief Executive Officer of the Company. 

    3.  COMPENSATION.  

    3.1  Basic Compensation.  

        (a)  Consulting
Payment.  Consultant shall be paid an annual consulting payment of $200,000 through July 31, 2001, and on each August 1
thereafter during the term, Consultant's consulting payment shall be increased by three percent (3%) (the "Consulting Payment"). The Consulting Payment
shall be payable in equal periodic installments, but no less frequently than monthly. 

        (b)  Expenses.  The
Company shall pay on behalf of Consultant (or reimburse Consultant for) reasonable expenses incurred by Consultant at the request of,
or on behalf of, the Company in the performance of Consultant's duties pursuant to this Agreement, and in accordance with the Company's policies. Consultant shall file expense reports with respect to
such expenses in accordance with the Company's policies. Consultant shall submit written requests for such reimbursement together with supporting documents in reasonable detail. 

    3.2  Bonus Compensation.  As
additional compensation for the services to be rendered by Consultant pursuant to this Agreement, the Company shall pay Consultant within three months of the end of each fiscal year during the Term an
annual performance bonus (the "Bonus Compensation") equal to 1.5% of EBITDA. For purposes of this Agreement (other than Section 5.4), EBITDA
shall mean, with respect to any fiscal year during the Term, consolidated earnings of the Company and its subsidiaries before interest, taxes, depreciation, amortization and after deduction of all
operating expenses and incentive compensation, all as calculated in accordance with generally accepted accounting principles consistently applied, and as reflected in the Company's most recently
available audited consolidated financial statements for such fiscal year. 

    4.  TERMINATION.  

    4.1  Events of Termination.  The
Term, Consultant's Consulting Payment and Bonus Compensation and any and all other rights of Consultant under this Agreement or otherwise as a consultant to the Company shall terminate (except as
otherwise provided in this Section 4): 

    (a) upon
the death of Consultant; 

    (b) upon
the Disability of Consultant (as defined in Section 4.2), immediately upon notice from either party to the other; 

    (c) immediately
upon notice from the Company to Consultant that the Company is terminating Consultant's consulting services For Cause (as defined in
Section 4.3), or at such later time as such notice may specify; or 

    (d) immediately
upon notice from Consultant to Company that Consultant is terminating Consultant's contract with company due to a Change in Control or Ownership of
Company (as defined in Section 5.3), or at such later time as such notice may specify. 

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    4.2  Definition of
"Disability".  For purposes of Sections 4.1 and 4.4, Consultant shall be deemed to have a "Disability" if,
for physical or mental reasons, Consultant is unable to perform Consultant's duties under this Agreement for 90 consecutive days, or 120 days during any twelve month period, as determined in
accordance with this Section 4.2. The Disability of Consultant shall be determined by the Board of Directors in consultation with a medical doctor selected by it. Consultant shall submit to a
reasonable number of examinations by the medical doctor making the determination of Disability under this Section 4.2, and Consultant hereby authorizes the disclosure and release to the Company
of such determination and all supporting medical records. If Consultant is not legally competent, Consultant's legal guardian or duly authorized attorney-in-fact shall act in Consultant's stead under
this Section 4.2 for the purposes of submitting Consultant to the examinations, and providing the authorization of disclosure, required under this Section 4.2. 

    4.3  Definitions of "For Cause"; "Good Reason"; "Change of Control of
Ownership".  

    (a) For
purposes of this Agreement, the phrase "For Cause" means: (a) Consultant's willful and repeated failure
to substantially perform his duties hereunder or to adhere to any written Company policy if
Consultant has been given 20 days' prior written notice of such failure and does not cure such failure by the end of such 20-day period; (b) the appropriation (or attempted appropriation) of a
material business opportunity of the Company, including attempting to secure or securing any personal profit in connection with any transaction entered into on behalf of the Company;
(c) Consultant's breach of any of the covenants contained in Section 5 or 6; (d) the misappropriation (or attempted misappropriation) of any of the Company's funds or property;
(e) Consultant's willful engagement in gross misconduct injurious to the Company, or (f) the conviction of, or the entering of a guilty plea or plea of no contest with respect to, a
felony. 

    (b) For
purposes of this Agreement, the phrase "Good Reason" shall mean (i) the failure of the Company to perform
or observe any of the material terms or provisions of this Agreement, and the continued failure of the Company to cure such default within twenty (20) days after written notice of such default given
to the Company by Consultant, (ii) the assignment of duties inconsistent with Consultant's position, duties, responsibilities and status with the Company without Consultant's consent, and the
failure of the Company to rescind such assignment within twenty (20) days after written notice of Consultant's objection to such, which notice shall with respect to the assignment of duties describe
specifically the nature of such inconsistency or (iii) the decrease by the Board of Directors of Consultant's Consulting Payment by more than ten percent (10%). 

    (c) For
purposes of this Agreement, the phrase "Change of Control or Ownership" shall mean a change in control or
ownership of more than 25% of the outstanding stock of Company or Company's parent corporation. 

    4.4  Termination Pay.  Effective
upon the termination of Consultant under this Agreement, the Company shall be obligated to pay Consultant (or, in the event of his death, his designated beneficiary) only such compensation as is
provided in this Section 4.4, and in lieu of all other amounts and in settlement and complete release of all claims Consultant may have against the Company relating to his provision of
consulting services to the Company. 

    (a) Termination
by the Company other than For Cause or by Consultant with Good Reason. If the Company terminates this Agreement (other than For Cause or by reason of
Consultant's Disability or death) or Consultant terminates this Agreement with Good Reason, the Company shall pay Consultant the Consulting Payment through the end of the Term, at the times such
payments would otherwise have been made, and shall pay Consultant on the date of such termination the Bonus Compensation for the full fiscal year during which such termination occurs calculated by
annualizing EBITDA for the period of the fiscal year elapsed 

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prior to the date of termination, determined in good faith by the Board of Directors based upon the Company's books of account. In addition, the Company shall continue to provide medical coverage to
Consultant until the earlier of (x) the end of the Term and (y) the date Consultant begins employment with or consulting for a subsequent company which provides medical coverage;
provided that this
obligation may be fulfilled by the Company's payment of the premiums for "continuation coverage" under the Consolidated Omnibus Budget Reconciliation Act of 1985. For purposes of this
Section 4.4, EBITDA shall mean consolidated earnings of the Company and its subsidiaries before interest, taxes, depreciation, amortization and after deduction of all operating expenses and
incentive compensation, all as calculated in accordance with generally accepted accounting principles consistently applied. 

    (b) Termination
by the Company For Cause or by Consultant without Good Reason. If the Company terminates this Agreement For Cause, or if Consultant terminates his
consulting services without Good Reason, Consultant shall be entitled to receive his Consulting Payment only through the date such termination is effective, and shall not be entitled to any Bonus
Compensation for the fiscal year during which such termination occurs or any subsequent fiscal year. 

    (c) Termination
by Consultant Due to Change in Control or Ownership. If Consultant terminates this Agreement due to a Change in Control or Ownership, Company shall pay
Consultant on the date of such termination the Compensation through the end of the Term, and shall pay Consultant on the date of such termination Bonus Compensation for the full Term calculated by
annualizing EBITDA for the period of the fiscal year elapsed prior to the date of termination, determined in good faith by the Board of Directors based upon the Company's books of account and
multiplying such annualized EBITDA amount by the number years left in the Term as of the date of termination. In addition, Company shall continue to provide medical coverage to Consultant until the
earlier of (x) the end of the Term and (y) the date Consultant begins employment with a subsequent employer; provided that this obligation may be fulfilled by Employer's payment of the
premiums for "continuation coverage" under the Consolidated Omnibus Budget Reconciliation Act of 1985. For purposes of this Section 5.4, EBITDA shall mean consolidated earnings of Employer and
its subsidiaries before interest, taxes, depreciation, amortization and after deduction of all operating expenses and incentive compensation, all as calculated in accordance with generally accepted
accounting principles consistently applied. 

    (d) Termination
upon Death or Disability. If this Agreement is terminated by either party as a result of Consultant's Death or Consultant's Disability, as determined
under Section 4.2, Consultant (or, in the event of his death, his designated beneficiary) shall be entitled to receive (i) his Consulting Payment for one year after such termination, at
the times such payments would otherwise have been made, and (ii) on the date of such termination, the Bonus Compensation for the full fiscal year during which such termination occurs,
calculated by annualizing EBITDA for the period of the fiscal year elapsed prior to the date of termination, determined in good faith by the Board of Directors based upon the Company's books of
account. 

    5.  NON-DISCLOSURE COVENANT.  

    5.1 During
the Term and thereafter, Consultant shall keep secret and retain in strictest confidence all confidential matters of the Company including the Company's
know-how, trade secrets, client and supplier lists, details of client, supplier, subcontractor, and consultant contracts, pricing policies, operational methods, marketing plans and strategies, product
development plans, acquisition or bidding techniques and plans, technical processes, inventions and research project, business acquisition plans, personnel acquisition plans, and other similar
information unless (i) such information is generally available to the public without restriction; (ii) Consultant is 

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requested by the Board of Directors or a committee thereof to disclose such confidential information; (iii) such information is being provided to a customer, vendor, or consultant of the
Company in the ordinary course of business; or (iv) Consultant is compelled to disclose such confidential information by order, inquiry, or request by a court of law, governmental agency, or
other source of authority and prompt notice of such order is given to the Company which may challenge such order. 

    5.2 All
lists, records, and other non-personal documents or papers (including all copies thereof), including such items stored in computer memories, on microfiche, or
any other media made or compiled by or on behalf of Consultant or made available to Consultant relating to the Company are and shall be the property of the Company and shall be delivered to the
Company upon termination of this agreement. All inventions, including any procedures, formulas, methods, processes, uses, apparatuses, patters, designs, drawings, devises, or configurations of any
kind, and all improvements to them which are developed, discovered, made, or produced, trade secrets or information used by any or all of the Company shall be the exclusive property of the Company and
shall be delivered to the Company upon termination of this Agreement. 

    6.  NON-COMPETITION AND NON-INTERFERENCE.  

    6.1 Until
the latest to occur of (i) termination of Consultant; (ii) one year following the date of termination of this Agreement and; (iii) such
period as Consultant shall continue to receive the Consulting Payment under this agreement—Consultant shall not, directly or indirectly, whether individually or as an employee,
stockholder, partner, joint venturer, agent or other representative of any other person, firm, corporation, or other business entity engage in any business which is competitive with the business of
the Company. As used herein, the term "business which is competitive with the businesses of the Company" shall only mean any person, firm, corporation, or other business entity doing business in the
territories serviced by the Company under its dealership agreements with its suppliers if 10% or more of the net revenues of such business are derived from the sale, rental, parts, servicing, or other
distribution of small, medium, or heavy construction equipment of the nature then being sold by the Company including, without limitation, any such equipment manufactured by Case Corporation or any
other corporation manufacturing equipment in competition with the equipment then manufactured by Case Corporation. 

    6.2 If
Consultant is terminated for any reason other than with Good Reason, Consultant shall not, directly or indirectly, solicit any employee or consultant of the
Company, or encourage any such employee or consultant to leave employment with the Company. 

    7.  GENERAL PROVISIONS.  

    7.1  Binding Effect; Delegation of Duties
Prohibited.  This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective successors, assigns, heirs and
legal representatives. The duties and covenants of Consultant under this Agreement, being personal, may not be delegated. This Agreement shall become effective on the Effective Date provided it has
been executed by both parties. 

    7.2  Notices.  All notices,
consents, waivers and other communications under this Agreement shall be made in writing and shall be deemed to have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile (with written confirmation of receipt) or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses and facsimile numbers set forth 

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below (or to such other addresses and facsimile numbers as a party may designate by notice to the other parties): 

    If
to the Company: 

	 	 	 
	 	 	Western Power & Equipment Corp.

4601 N.E. 77th Avenue

Vancouver, WA 98662

Attention: Board of Directors

Telecopy: (360) 892-7927
	

 	
 	

with a copy to:
	

 	
 	

Kaye, Scholer, Fierman, Hays & Handler, LLP

425 Park Avenue

New York, NY 10022

Attention: Rory A. Greiss

Telecopy: (212) 836-8689
	

 	
 	

If to Consultant:
	

 	
 	

To the address set forth in the Preamble.

    7.3  Entire Agreement;
Amendments.  This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral
or written, between the parties hereto with respect to the subject matter hereof, including without limitation, the Old Consulting Agreement, which is hereby terminated. This Agreement may not be
amended orally, but only by an agreement in writing signed by the parties hereto. 

    7.4  Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the State of Washington without regard to conflicts of laws principles. 

    7.5  Jurisdiction.  Any action or
proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against either of the parties in the courts of the State of Washington, County of
Clark or, if it has or can acquire jurisdiction, in the United States District Court for the Western district of Washington, and each of the parties hereto hereby consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or proceeding, and waives any objection to venue laid therein. 

    7.6  Section Headings,
Construction.  The headings of Sections in this Agreement are provided for convenience only and shall not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or Sections of this Agreement unless otherwise specified. All words used in this Agreement shall be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. 

    7.7  Severability.  If any
provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. 

    7.8  Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original copy of this Agreement and all of which, when taken together, shall be deemed to constitute one
and the same agreement. 

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    IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written. 

	WESTERN POWER & EQUIPMENT CORP.	 	 
	

By:	
 	

 	
 	

 
	 	 	
 Name:

Title:	 	
 Robert M. Rubin

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Exhibit 10.12

CONSULTING AGREEMENT

RECITALS

AGREEMENTPrepared by MERRILL CORPORATION

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Exhibit 10.13    
  

 
 

COMMERCIAL LEASE    
  

	 
	 	 
	 	 

	Dated:	 	as of October 1, 2000	 	 
	
Between:	
 	

McLAIN-RUBIN REALTY COMPANY III, L.L.C.,

a Delaware limited liability company	
 	

("Landlord")
	 	 	38207 Northeast Gerber Road

Yacolt, WA 98675	 	 
	
And:	
 	

WESTERN POWER & EQUIPMENT CORP.,

an Oregon corporation	
 	

("Western Power" or "Tenant")
	 	 	4601 N.E. 77th Avenue

Vancouver, Washington 98662	 	 

 
 

RECITALS    
  

    A. Landlord and Tenant have previously entered into that certain Commercial Lease dated December 11, 1997 (the "Prior Lease"), under which Tenant leased from
Landlord the real property described on Exhibit A hereto (which by this reference is made a part hereof), together with all improvements now and hereafter situated on said land (said land, together
with such improvements, being hereinafter
referred to as the "Premises"). The Premises are located at 3199 E. Onstott Road, Yuba City, California. 

    B.
Landlord and Tenant have mutually agreed to terminate the Prior Lease as of the date of this Lease. 

    C.
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises all under the terms and conditions of this Lease. 

 
 

AGREEMENT    
  

    Section 1.  Occupancy  

    1.1  Termination.  The Prior Lease is terminated in its entirety as of the date hereof and neither party
shall have any continuing obligations under the Prior Lease as of the date hereof. 

    1.1  Term.  The term of this Lease (hereinafter referred to as the "Term") shall commence on the date
(the "Commencement Date") on which Landlord acquires fee title to the Premises, and continue through, and expire on, September 30, 2007 (the "Expiration Date"), unless sooner terminated as hereinafter
provided. 

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

    Section 2.  Rent  

    2.1  Base Rent.  Tenant covenants and agrees to pay to Landlord an annual base rent of $66,000.00 (the
"Base Rent"), in equal monthly installments of $5,500.00, in advance, without demand, deduction or set off, at such place as may be designated by Landlord, on the first day of each month throughout
the Term of this Lease. 

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

    Section 3.  Use of the Premises  

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

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

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

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

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

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

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

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

    3.4  Hazardous Substances.  

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

    (b) Tenant Compliance With Hazardous Substance Laws. Neither Tenant or
its officers, employees, agents, invitees, sublessees or assigns shall cause or permit any Hazardous Substance to be spilled, leaked, disposed of, or otherwise released or discharged on or under the
Premises, or cause any Hazardous Substance to be spilled, leaked, disposed of, or otherwise released or discharged on or under any property adjacent to the Premises. Tenant may use or otherwise handle
on the Premises only those Hazardous Substances (hereinafter referred to as "Ordinary Hazardous Substances") typically used or sold in the prudent and safe operation of the business specified in
Section 3.1. Tenant may store such Hazardous 

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Substances on the Premises only in quantities necessary to satisfy Tenant's reasonably anticipated needs. Tenant shall comply with all Hazardous Substance Laws and exercise care in the use, handling,
storage and transportation of Hazardous Substances and shall take all possible measures consistent with the practicable operation of its business to minimize the quantity and toxicity of Hazardous
Substances used, handled, transported or stored on the Premises. Upon the expiration or termination of this Lease, Tenant shall remove from the Premises all Hazardous Substances stored there by Tenant
or its sublessees or assigns. 

    (c) Indemnification by Tenant. Except as provided in Section 3.4(d),
Tenant shall indemnify, defend, and hold Landlord and Landlord's members, managers, employees, agents, and assigns harmless from and against any and all claims, liabilities, losses, material
diminution of value, demands, fines, damages (including incidental and special damages), obligations, costs, and expenses (including attorney fees, investigatory expenses, remediation costs, and
related expenses), arising out of or in any way related to contamination of the Premises by an Hazardous Substance or the failure of compliance of the Premises with any applicable Hazardous Substance
Laws both with respect to matters existing at the time of this lease and with respect to such matters which occur during the Lease. The parties acknowledge a Phase I Environmental Site Assessment
prepared for Tenant by K & S Environmental, Inc., dated December
11, 1998 (Environmental Report). In addition to the foregoing indemnification, Tenant agrees to perform all recommendations contained in the Environmental Report and as disclosed in the Phase I report
referred to in Section 3.4(g) below prior to or immediately upon the expiration or earlier termination of this Lease, and shall indemnify, defend and hold harmless Landlord and Landlord's members,
managers, employees, agents, and assigns therefrom. 

    (d) Limitation of Indemnification. Tenant's indemnification obligations
under this section shall not extend to contamination of the Premises by any Hazardous Substance which has migrated to the Premises from other property through no fault of Tenant or any agent,
employee, contractor, licensee, or invitee of Tenant, and shall not extend to spills by any person or entity other than Tenant, or any agent, employee, contractor, licensee, or invitee of Tenant, and
with respect to which Tenant could not take reasonable steps to prevent. 

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

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

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

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

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

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

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    (f)  Cleanup Activity.

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

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

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

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

    Section 4.  Repairs and Maintenance  

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

    4.2  Repairs to Comply with Laws.  All repairs, alterations, and other improvements on or to the Premises
that are required by any governmental authority having jurisdiction over the Premises or the use thereof shall be performed by Tenant at its sole cost and expense. 

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

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

Section 5. Alterations  

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

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

    Section 6.  Insurance; Indemnification; Subrogation  

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

5

 

bearing endorsements requiring 10 days' written notice to Landlord prior to any change or cancellation shall be furnished to Landlord prior to Tenant's occupancy of the Premises. 

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

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

    6.4  Waiver of Subrogation.  Neither party, nor its officers, directors, employees, agents or invitees,
nor, in the case of Tenant, subtenants, shall be liable to the other party or to any insurance company (by way of subrogation or otherwise) insuring the other party for any loss or damage to any
building, structure or other tangible property, when such loss is caused by any of the perils which are or could be insured against under a standard policy of full replacement cost insurance for fire,
theft and all risk coverage, or losses under workers' compensation laws and benefits, even though such loss or damage might have been occasioned by the negligence of such party, its agents or
employees (Landlord and Tenant agreeing that the preceding clause shall not apply, however, to any damages caused by intentionally wrongful actions or omissions of such party); provided, however, that
if, by reason of the foregoing waiver, either party shall be unable to obtain any such insurance, such waiver shall be deemed not to have been made by such party and, provided further, that if either
party shall be unable to obtain any such insurance without the payment of an additional premium therefor, then, unless the party claiming the benefit of such waiver shall agree to pay such party for
the cost of such additional premium within thirty (30) days after notice setting forth such requirement and the amount of the additional premium, such waiver shall be of no force and effect between
such party and such claiming party. Each party shall use reasonable efforts to obtain such insurance from a company that does not charge an additional premium or, if that is not possible, one that
charges the lowest additional premium. Each party shall give the other party notice at any time when it is unable to obtain insurance with such a waiver of subrogation without the payment of an
additional premium and the foregoing waiver shall be effective until thirty (30) days after notice is given. Notwithstanding anything contained herein, Landlord is not obligated under this Lease to
insure the Premises. 

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    Section 7.  Taxes; Utilities  

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

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

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

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

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

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

    Section 8.  Damage and Destruction  

    8.1  Damaged Premises.  Tenant shall give immediate notice to Landlord in the event of any damage or
destruction affecting the Premises. Subject to the provisions of this Section, Tenant shall immediately proceed to restore the Premises using the proceeds of insurance carried pursuant to Section 6 of
this Lease and any insurance proceeds available from Landlord's insurance. Restoration shall be performed according to architectural designs, plans, and construction drawings and specifications
approved in advance by Landlord, which approval shall not be unreasonably withheld or delayed, and shall restore the Premises to substantially the same condition prior to the damage, including
then-current building code requirements. Tenant shall be responsible for any portion of a loss that is required to be covered in accordance with Section 6.2 but with respect to which the Tenant failed
to obtain coverage. 

    8.2  Damage or Destruction Late in Term.  If within two years before the end of the lease term the
Premises are destroyed or damaged such that the cost of repair exceeds 50% of the value of the structure before the destruction or damage, Tenant may elect to terminate this Lease as of the date of
the damage or destruction by giving notice to Landlord in writing not more than 45 days following the date of destruction or damage. In such event all rights and obligations of the parties shall cease
as of the date of termination, and Tenant shall be entitled to the reimbursement of any prepaid amounts paid by Tenant and attributable to what would have otherwise been the unexpired Term. Tenant
shall surrender possession of the Premises within a reasonable time after such written notice is given, and assign any insurance proceeds paid on account of such damage to Landlord. If Tenant does not
elect to terminate, Tenant shall proceed to restore the Premises to 

7

 

substantially the same form as prior to the damage or destruction using the proceeds of insurance carried pursuant to Section 6 of this Lease and any insurance proceeds available from Landlord's
insurance. Tenant shall be responsible for any portion of a loss that is required to be covered in accordance with Section 6.2 but with respect to which the Tenant failed to obtain coverage. Work
shall
be commenced as soon as reasonably possible and thereafter shall proceed without interruption except for work stoppages on account of labor disputes and other matters beyond Tenant's reasonable
control. 

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

    8.4  Personal Property.  All personal property in said Premises shall be at the risk of Tenant. Except to
the extent caused by the negligent or intentional acts of Landlord, Landlord or Landlord's agents shall not be liable for any damage either to person or property, sustained by Tenant or others, caused
by any defects now in said Premises or hereafter occurring therein, or any part or appurtenance thereof, caused by being out of repair, or caused by the bursting or leaking of water, gas, sewer or
steam pipes. 

    Section 9.  Eminent Domain  

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

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

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

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

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

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

    Section 10.  Liens  

    10.1  Except with respect to activities for which Landlord is responsible, Tenant shall pay as due all claims for work
done on and for services rendered or material furnished to the Premises, and shall keep the Premises free from any liens. If Tenant fails to pay any such claims or to discharge any lien, Landlord may
do so and collect the cost as additional rent. Any amount so added shall bear interest at the Interest Rate (as hereinafter defined) from the date expended by 

8

 

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

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

    Section 11.  Quiet Enjoyment; Mortgage Priority  

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

    11.2  Mortgage Priority.  Tenant acknowledges and agrees that this Lease and Tenant's interest in this
Lease shall be subordinate to the lien of any mortgage or deed of trust (Mortgage) which encumbers the Premises as of the Commencement Date or at any date thereafter while this Lease remains in
effect. Tenants agrees to execute a subordination and attornment agreement, in form and substance reasonably acceptable to Landlord's lender, or any future lender, on the condition that such lender
agree in writing with Tenant that as long as Tenant performs its obligations under this Lease, no foreclosure, deed in lieu of foreclosure, or sale pursuant to the terms of such Mortgage, or other
steps or procedures taken under such Mortgage shall affect Tenant's rights under this Lease. If the Premises are sold as a result of foreclosure of any Mortgage, or otherwise transferred by Landlord
to any successor, Tenant shall attorn to the purchaser or other transferee. 

    11.3  Estoppel Certificate.  Either party will, within 20 days after notice from the other, execute and
deliver to the other party a certificate stating whether or not this Lease has been modified and is in full force and effect and specifying any modifications or alleged breaches by the other party.
The certificate shall also state the amount of monthly Base Rent, the dates to which Base Rent and any other Rent payments have been paid in advance, and the amount of any security deposit or prepaid
Rent. Failure to deliver the certificate within the specified time shall be conclusive upon the party from whom the certificate was requested that this Lease is in full force and effect and has not
been modified except as represented in the notice requesting the certificate. 

    Section 12.  Assignment and Subletting.  

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

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

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

9

  

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

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

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

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

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

    12.2 Notwithstanding any provision to the contrary, Tenant may assign this Lease or sublet all or part of the Premises,
without Landlord's approval, to a parent corporation, any subsidiary, any affiliate, any partnership, limited liability company or other business entity where Tenant or any affiliate of Tenant is the
managing or general partner, manager or the equivalent, as the case may be, or in connection with a merger, acquisition, reorganization or consolidation of Tenant, or in connection with the sale or
transfer of all or substantially all of Tenant's (or its parent's or affiliates') stock or assets. The term "affiliate" as used herein shall mean any entity in which Tenant or its parent corporation
holds fifty percent (50%) or more of the ownership interests. Notwithstanding a transfer pursuant to this Section 12.2, Tenant shall not be released from liability under this Lease upon the assignment
or subletting of all or part of the Premises to such parent corporation, subsidiary, affiliate, partnership, limited liability company or other business entity. 

    Section 13.  Default  

    The
following shall be events of default: 

    13.1  Default in Rent.  Failure of Tenant to pay any installment of Rent within ten (10) days after
written notice by Landlord, provided Landlord shall not be required to give written notice of nonpayment more than twice during any calendar year. After Landlord has twice given notice of nonpayment
during a calendar year, Tenant shall be in default upon failure to pay any installment of Rent within ten (10) days after the due date for such installment, without the requirement of notice and
opportunity to cure. 

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

    13.3  Insolvency.  Insolvency of Tenant; an assignment by Tenant for the benefit of creditors; the filing
by Tenant of a voluntary petition in bankruptcy; an adjudication that Tenant is bankrupt or the appointment of a receiver of the properties of Tenant; or the filing of any involuntary petition of
bankruptcy and failure of Tenant to secure a dismissal of the petition within 90 days after filing shall constitute a default. If Tenant consists of two or more individuals or business 

10

 

entities, the events of default specified in this Section 13.3 shall apply to each individual unless within ten (10) days after an event of default occurs, the remaining individuals produce evidence
satisfactory to Landlord that they have unconditionally acquired the interest of the one causing the default. If this Lease has been assigned, the events of default so specified shall apply only with
respect to Tenant and to the one then exercising the rights of Tenant under this Lease. 

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

    Section 14.  Remedies on Default  

    14.1  Termination.  In the event of a default, the Lease may be terminated at the option of Landlord by
written notice to Tenant. Whether or not the Lease is terminated by the election of Landlord or otherwise, Landlord shall be entitled to recover damages from Tenant for the default, and Landlord may
reenter, take possession of the Premises, and remove any persons or property by legal action and without having accepted a surrender. 

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

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

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

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

    Section 15.  Surrender at Expiration  

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

    15.2  Fixtures  

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

11

 

damage resulting from the removal. If Tenant fails to remove such fixtures, Landlord may do so and charge the cost to Tenant with interest at the Interest Rate from the date of expenditure. 

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

    15.3  Holdover  

    (a) If Tenant does not vacate the Premises at the time required, Landlord shall have the option to treat Tenant as a
tenant from month-to-month, subject to all of the provisions of this Lease except the provisions for term and renewal and at a rental rate equal to $35,000.00 per month, or to eject Tenant from the
Premises and recover damages caused by wrongful holdover. Failure of Tenant to remove fixtures, furniture, furnishings, or trade fixtures that Tenant is required to remove under this Lease shall
constitute a failure to vacate to which this Section shall apply if the property not removed will substantially interfere with occupancy of the Premises by another tenant or with occupancy by Landlord
for any purpose including preparation for a new tenant. 

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

    Section 16.  Miscellaneous  

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

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

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

12

 

thereafter be so given or made. Notwithstanding the foregoing all Rent statements, bills and invoices may be given by regular mail. 

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

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

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

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

    16.8  Interest on Rent and other Charges.  Any rent or other payment required of Tenant by this Lease
shall, if not paid within ten (10) days after it is due, bear interest at the Interest Rate from the due date until paid. In addition, if Tenant fails to make any rent or other payment required by
this Lease to be paid to Landlord within ten (10) days after it is due, Landlord shall impose a late charge of five cents ($.05) per dollar of the overdue payment to reimburse Landlord for the costs
of collecting the overdue payment. Tenant shall pay the late charge upon demand by Landlord. Landlord may levy and collect a late charge in addition to all other remedies available for Tenant's
default, and collection of a late charge shall not waive the breach caused by the late payment. 

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

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

    16.11  Governing Law.  This agreement shall be governed and interpreted according to Nevada law without
reference to the conflict of laws provisions thereof. 

13

 

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

	 
	 	 
	 	 

	Landlord:	 	McLAIN-RUBIN REALTY COMPANY III, L.L.C.,

a Delaware limited liability company
	

 	
 	

By:	
 	

 
	 	 	Its:	 	 
	

Tenant:	
 	
WESTERN POWER & EQUIPMENT CORP.,

an Oregon corporation
	

 	
 	

By:	
 	

 
	 	 	Its:	 	 
	

STATE OF                     	
 	

)	
 	

 
	 	 	) ss.	 	 
	County of                     	 	)	 	 

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

    Dated
this      day of          , 2000. 

	 
	 	 
	 	 

	 	 	(Signature of Notary)
	

 	
 	

(Legibly print or Stamp Name of Notary)
	

 	
 	

Notary Public in and for the state of             ,
	 	 	My Appointment Expires

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

    Dated
this      day of          , 2000. 

	 
	 	 
	 	 

	 	 	(Signature of Notary)
	

 	
 	

(Legibly print or Stamp Name of Notary)
	

 	
 	

Notary Public in and for the state of             ,
	 	 	My Appointment Expires
	

STATE OF                     	
 	

)	
 	

 
	 	 	) ss.	 	 
	County of                     	 	)	 	 

14

 
 
 

EXHIBIT A
  Description of Real Property    
  

    
Commonly known as 1455 Glendale Avenue, Sparks, Nevada. 

15

 
 
 

EXHIBIT B
  Permitted Encumbrances    
  

	1.
	Easements
of record. 

16

QuickLinks

Exhibit 10.13

COMMERCIAL LEASE

RECITALS

AGREEMENT

EXHIBIT A Description of Real Property

EXHIBIT B Permitted Encumbrances

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