<PAGE>


                          SECURITIES PURCHASE AGREEMENT

         Securities  Purchase  Agreement  dated as of  October  ___,  2003 (this
"AGREEMENT")  by and between  Integrated  Performance  Systems  Inc., a New York
corporation,  with  principal  executive  offices  located at 17300 North Dallas
Parkway,  Suite 2040,  Dallas,  Texas 75248 (the  "COMPANY"),  and La Jolla Cove
Investors, Inc. ("BUYER").

         WHEREAS,  Buyer desires to purchase  from the Company,  and the Company
desires to issue and sell to Buyer, upon the terms and subject to the conditions
of this Agreement, the 8 % Convertible Debenture of the Company in the aggregate
principal amount of $250,000 (the "DEBENTURE"); and

         WHEREAS,  in conjunction  with the Debenture,  the Company has issued a
Warrant to  Purchase  Common  Stock to the Buyer  (the  "WARRANT  OR  CONVERSION
WARRANT"); and

         WHEREAS,  upon the terms and subject to the conditions set forth in the
Debenture  and the  Warrant,  the  Debenture  and  Warrant are  convertible  and
exercisable,  respectively,  into  shares of the  Company's  Common  Stock  (the
"COMMON STOCK");

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  contained herein, the parties hereto,  intending to be legally bound,
hereby agree as follows:

         I. PURCHASE AND SALE OF DEBENTURE

         A. TRANSACTION.  Buyer hereby agrees to purchase from the Company,  and
the  Company  has  offered  and  hereby  agrees  to issue and sell to Buyer in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), the Debenture.

         B.  PURCHASE  PRICE;  FORM  OF  PAYMENT.  The  purchase  price  for the
Debenture to be purchased by Buyer  hereunder  shall be $250,000 (the  "PURCHASE
PRICE").  Simultaneously  with the execution of this Agreement,  Buyer shall pay
$250,000 of the Purchase Price (the" Initial  Purchase  Price") by wire transfer
of immediately available funds to the Company. Simultaneously with the execution
of this Agreement,  the Company shall deliver the Convertible  Debenture and the
Conversion Warrants (which shall have been duly authorized,  issued and executed
I/N/O  Buyer or, if the  Company  otherwise  has been  notified,  I/N/O  Buyer's
nominee).

         II. BUYER'S REPRESENTATIONS AND WARRANTIES

         Buyer  represents  and  warrants to and  covenants  and agrees with the
Company as follows:

         A. Buyer is purchasing the Debenture and the Common Stock issuable upon
conversion  or  redemption  of  the  Debenture  (the  "CONVERSION  SHARES"  and,
collectively  with the Debenture and the Warrant Shares,  the  "SECURITIES") for
its own account,  for investment purposes only and not with a view towards or in
connection  with the public sale or  distribution  thereof in  violation  of the
Securities Act.


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<PAGE>

         B. Buyer is (i) an "accredited investor" within the meaning of Rule 501
of Regulation D under the Securities Act, (ii) experienced in making investments
of the kind  contemplated  by this  Agreement,  (iii) capable,  by reason of its
business and financial  experience,  of evaluating the relative merits and risks
of an  investment  in the  Securities,  and (iv) able to afford  the loss of its
investment in the Securities.

         C. Buyer  understands that the Securities are being offered and sold by
the Company in reliance on an exemption from the  registration  requirements  of
the Securities Act and equivalent state securities and "blue sky" laws, and that
the  Company is relying  upon the  accuracy  of, and  Buyer's  compliance  with,
Buyer's representations, warranties and covenants set forth in this Agreement to
determine the  availability  of such  exemption and the  eligibility of Buyer to
purchase the Securities;

         D. Buyer  understands  that the  Securities  have not been  approved or
disapproved by the Securities and Exchange  Commission (the "COMMISSION") or any
state or provincial securities commission.

         E. This  Agreement has been duly and validly  authorized,  executed and
delivered  by Buyer and is a valid and binding  agreement  of Buyer  enforceable
against it in  accordance  with its terms,  subject  to  applicable  bankruptcy,
insolvency, fraudulent conveyance,  reorganization,  moratorium and similar laws
affecting  creditors'  rights  and  remedies  generally  and except as rights to
indemnity and contribution may be limited by federal or state securities laws or
the public policy underlying such laws.

         III. THE COMPANY'S REPRESENTATIONS

         The Company represents and warrants to Buyer that:

         A. CAPITALIZATION.

         1. The authorized  capital stock of the Company consists of 100,000,000
shares of Common Stock and 1,000,000 shares of Series A Preferred Stock of which
14,716,224 shares and 16,318 shares, respectively, are issued and outstanding as
of the date hereof and are fully paid and nonassessable.  The amount,  exercise,
conversion or subscription  price for each outstanding option and other security
or  agreement  to purchase  shares of Common  Stock is  accurately  set forth on
Schedule III.A.1.

         2. The  Conversion  Shares and the  Warrant  Shares  have been duly and
validly authorized and reserved for issuance by the Company, and, when issued by
the Company upon  conversion of the Debenture,  will be duly and validly issued,
fully paid and nonassessable and will not subject the holder thereof to personal
liability by reason of being such holder.

         3. Except as disclosed on Schedule  III.A.3.,  there are no preemptive,
subscription,  "call," right of first refusal or other similar rights to acquire
any capital stock of the Company or other voting  securities of the Company that
have been  issued or  granted  to any  person  and no other  obligations  of the
Company s to issue, grant, extend or enter into any security,  option,  warrant,
"call," right, commitment, agreement, arrangement or undertaking with respect to
any of their respective capital stock.


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<PAGE>


         B. ORGANIZATION; REPORTING COMPANY STATUS.

         1. The Company is a corporation duly organized, validly existing and in
good  standing  under  the  laws of the  state  or  jurisdiction  in which it is
incorporated and is duly qualified as a foreign corporation in all jurisdictions
in which the  failure so to  qualify  would  reasonably  be  expected  to have a
material  adverse  effect  on the  business,  properties,  prospects,  condition
(financial  or  otherwise)  or results of  operations  of the  Company or on the
consummation  of any of the  transactions  contemplated  by  this  Agreement  (a
"MATERIAL ADVERSE EFFECT").

         2.  The  Company  is  subject  to  the  reporting  requirements  of the
Securities  Exchange Act of 1934, as amended (the  "EXCHANGE  ACT").  The Common
Stock is traded on the OTC Bulletin Board service of the National Association of
Securities  Dealers,  Inc. ("OTCBB") and the Company has not received any notice
regarding,  and to its  knowledge  there is no threat  of,  the  termination  or
discontinuance  of the  eligibility  of the Common  Stock for such  trading.

         C.  AUTHORIZATION.  The Company (i) has duly and validly authorized and
reserved for issuance shares of Common Stock,  which is a number  sufficient for
the conversion of the Debenture and the exercise of the  Conversion  Warrant and
(ii) at all times from and after the date hereof shall have a sufficient  number
of shares of Common Stock duly and validly  authorized and reserved for issuance
to satisfy  the  conversion  of the  Debenture  in full and the  exercise of the
Conversion  Warrant.  The Company  understands and  acknowledges the potentially
dilutive effect on the Common Stock of the issuance of the Conversion Shares and
the Warrant  Shares.  The Company  further  acknowledges  that its obligation to
issue Conversion Shares upon conversion of the Debenture and the exercise of the
Conversion  Warrant and the Initial Warrant in accordance with this Agreement is
absolute and unconditional  regardless of the dilutive effect that such issuance
may have on the  ownership  interests of other  stockholders  of the Company and
notwithstanding  the  commencement  of any case under 11 U.S.C.  ss. 101 et seq.
(the  "BANKRUPTCY  Code").  In the  event  the  Company  is a debtor  under  the
Bankruptcy  Code, the Company hereby waives to the fullest extent  permitted any
rights  to  relief  it may have  under  11  U.S.C.  ss.  362 in  respect  of the
conversion  of thE  Debenture.  The Company  agrees,  without cost or expense to
Buyer, to take or consent to any and all action  necessary to effectuate  relief
under 11 U.S.C. ss. 362.

         D.  AUTHORITY;  VALIDITY  AND  ENFORCEABILITY.   The  Company  has  the
requisite  corporate  power and  authority to enter into the  Documents (as such
term is hereinafter defined) and to perform all of its obligations hereunder and
thereunder  (including  the  issuance,   sale  and  delivery  to  Buyer  of  the
Securities).  The  execution,  delivery  and  performance  by the Company of the
Documents and the consummation by the Company of the  transactions  contemplated
hereby and thereby (including, without limitation, the issuance of the Debenture
and the issuance and reservation  for issuance of the Conversion  Shares and the
Warrant Shares) have been duly and validly authorized by all necessary corporate
action  on the part of the  Company.  Each of the  Documents  has been  duly and
validly  executed and delivered by the Company and each  Document  constitutes a
valid and binding obligation of the Company enforceable against it in accordance
with  its  terms,  subject  to  applicable  bankruptcy,  insolvency,  fraudulent
conveyance,  reorganization,  moratorium and similar laws  affecting  creditors'
rights and remedies generally and except as rights to indemnity and contribution
may be  limited  by  federal  or  state  securities  laws or the  public  policy
underlying such laws. The Securities  have been duly and validly  authorized for
issuance by the Company and, when executed and delivered by the Company, will be
valid  and  binding  obligations  of  the  Company  enforceable  against  it  in
accordance  with  their  respective  terms,  subject to  applicable  bankruptcy,
insolvency, fraudulent conveyance,  reorganization,  moratorium and similar laws
affecting  creditors'  rights  and  remedies  generally.  For  purposes  of this
Agreement, the term "DOCUMENTS" means (i) this Agreement;  (ii) the Registration
Rights  Agreement dated as of even date herewith  between the Company and Buyer,
(iii) the Debenture; and (iv) the Conversion Warrant.


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<PAGE>

         E.  VALIDITY  OF  ISSUANCE  OF  THE  SECURITIES.   The  Debenture,  the
Conversion Shares upon their issuance in accordance with the Debenture,  and the
Warrant  Shares  will  be  validly  issued  and  outstanding,   fully  paid  and
nonassessable,  and not  subject  to any  preemptive  rights,  rights  of  first
refusal, tag-along rights, drag-along rights or other similar rights.

         F. NON-CONTRAVENTION.  The execution and delivery by the Company of the
Documents,  the issuance of the Securities,  and the consummation by the Company
of the other transactions contemplated hereby and thereby do not, and compliance
with the  provisions of this Agreement and other  Documents  will not,  conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or result in
the creation of any Lien (as such term is  hereinafter  defined) upon any of the
properties or assets of the Company or any of its Subsidiaries  under, or result
in the  termination of, or require that any consent be obtained or any notice be
given with  respect to (i) the  Articles  or  Certificate  of  Incorporation  or
By-Laws of the Company or the comparable charter or organizational  documents of
any of its Subsidiaries,  in each case as amended to the date of this Agreement,
(ii) any loan or credit agreement,  Debenture, bond, mortgage, indenture, lease,
contract or other agreement,  instrument or permit  applicable to the Company or
any of its  Subsidiaries or their  respective  properties or assets or (iii) any
Law (as such term is hereinafter defined) applicable to, or any judgment, decree
or order of any court or government body having  jurisdiction  over, the Company
or any of its Subsidiaries or any of their respective properties or assets.

         G.  APPROVALS.  No  authorization,  approval or consent of any court or
public or  governmental  authority is required to be obtained by the Company for
the  issuance  and  sale of the  Securities  to Buyer  as  contemplated  by this
Agreement,  except  such  authorizations,  approvals  and  consents as have been
obtained by the Company prior to the date hereof.

         H. COMMISSION  FILINGS.  The Company has properly and timely filed with
the Commission all reports, proxy statements, forms and other documents required
to be filed with the  Commission  under the  Securities Act and the Exchange Act
since  becoming  subject to such Acts (the  "COMMISSION  FILINGS").  As of their
respective  dates, (i) the Commission  Filings complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be,  and the rules and  regulations  of the  Commission  promulgated  thereunder
applicable to such  Commission  Filings and (ii) none of the Commission  Filings
contained at the time of its filing any untrue  statement of a material  fact or
omitted to state a material fact  required to be stated  therein or necessary in
order to make the statements  therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the  Commission  Filings,  as of the dates of such  documents,  were true and
complete in all  material  respects  and  complied  with  applicable  accounting
requirements  and the published  rules and  regulations of the  Commission  with
respect thereto,  were prepared in accordance with generally accepted accounting
principles  in the  United  States  ("GAAP")  (except  in the case of  unaudited
statements  permitted  by  Form  10-Q  under  the  Exchange  Act)  applied  on a
consistent  basis during the periods involved (except as may be indicated in the
Debentures thereto) and fairly presented the consolidated  financial position of
the Company and its  Subsidiaries  as of the dates thereof and the  consolidated
results of their  operations and cash flows for the periods then ended (subject,
in the case of unaudited  statements,  to normal year-end audit adjustments that
in  the  aggregate  are  not  material  and to any  other  adjustment  described
therein).



                                       4
<PAGE>


         I. FULL  DISCLOSURE.  There is no fact known to the Company (other than
general economic or industry  conditions known to the public generally) that has
not been fully disclosed in the Commission  Filings that (i) reasonably could be
expected to have a Material  Adverse Effect or (ii) reasonably could be expected
to materially and adversely  affect the ability of the Company to performing its
obligations  pursuant to the  Documents.

         J.  ABSENCE OF EVENTS OF DEFAULT.  No "EVENT OF DEFAULT" (as defined in
any agreement or instrument to which the Company is a party) and no event which,
with notice,  lapse of time or both, would constitute an Event of Default (as so
defined), has occurred and is continuing.

         K. SECURITIES LAW MATTERS. Assuming the accuracy of the representations
and  warranties  of Buyer set  forth in  Article  II,  the offer and sale by the
Company of the  Securities is exempt from (i) the  registration  and  prospectus
delivery requirements of the Securities Act and the rules and regulations of the
Commission thereunder and (ii) the registration and/or qualification  provisions
of all  applicable  state and  provincial  securities  and "blue sky" laws.  The
Company shall not directly or indirectly  take,  and shall not permit any of its
directors,  officers or Affiliates  directly or  indirectly to take,  any action
(including,  without limitation, any offering or sale to any person or entity of
any security similar to the Debenture) which will make unavailable the exemption
from Securities Act registration  being relied upon by the Company for the offer
and sale to Buyer of the Debenture, the Conversion Shares and the Warrant Shares
as  contemplated  by  this  Agreement.   No  form  of  general  solicitation  or
advertising  has been used or  authorized by the Company or any of its officers,
directors or Affiliates  in  connection  with the offer or sale of the Debenture
(and the  Conversion  Shares) as  contemplated  by this  Agreement  or any other
agreement to which the Company is a party.

         L.  REGISTRATION  RIGHTS.  Except as set forth on Schedule  III.L.,  no
Person  has,  and as of the Closing (as such term is  hereinafter  defined),  no
Person shall have, any demand, "piggy-back" or other rights to cause the Company
to file any  registration  statement under the Securities Act relating to any of
its securities or to participate in any such registration statement.

         M.  INTEREST.  The timely  payment of interest on the  Debenture is not
prohibited by the Articles or  Certificate  of  Incorporation  or By-Laws of the
Company,  in each  case  as  amended  to the  date  of  this  Agreement,  or any
agreement,  contract,  document or other  undertaking  to which the Company is a
party.


                                       5
<PAGE>

         N. NO  MISREPRESENTATION.  No representation or warranty of the Company
contained in this Agreement or any of the other Documents,  any schedule,  annex
or  exhibit  hereto or  thereto  or any  agreement,  instrument  or  certificate
furnished by the Company to Buyer pursuant to this Agreement contains any untrue
statement of a material  fact or omits to state a material  fact  required to be
stated therein or necessary to make the statements therein not misleading.

         O. FINDER'S FEE. There is no finder's fee, brokerage commission or like
payment in connection with the  transactions  contemplated by this Agreement for
which Buyer is liable or responsible.

         IV. CERTAIN COVENANTS AND ACKNOWLEDGMENTS

         A. FILINGS. The Company shall make all necessary Commission Filings and
"blue sky"  filings  required to be made by the Company in  connection  with the
sale of the  Securities to Buyer as required by all  applicable  Laws, and shall
provide a copy thereof to Buyer promptly after such filing.

B. REPORTING STATUS.  So long as Buyer  beneficially owns any of the Securities,
the Company  shall  timely file all reports  required to be filed by it with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act.

         C. LISTING.  Except to the extent the Company lists its Common Stock on
The New York Stock  Exchange,  The American  Stock  Exchange or The Nasdaq Stock
Market,  the Company  shall use its best  efforts to maintain its listing of the
Common Stock on OTCBB.  If the Common Stock is delisted from OTCBB,  the Company
will use its best efforts to list the Common  Stock on the most liquid  national
securities exchange or quotation system that the Common Stock is qualified to be
listed on.

         D. RESERVED  CONVERSION COMMON STOCK. The Company at all times from and
after the date hereof  shall have such number of shares of Common Stock duly and
validly  authorized  and reserved for  issuance as shall be  sufficient  for the
conversion in full of the Debenture and the exercise of the Conversion  Warrant.

         E. INFORMATION. Each of the parties hereto acknowledges and agrees that
Buyer  shall  not be  provided  with,  nor be  given  access  to,  any  material
non-public  information relating to the Company.

         F.  ACCOUNTING AND RESERVES.  The Company shall maintain a standard and
uniform  system of  accounting  and shall  keep  proper  books and  records  and
accounts  in  which  full,  true,  and  correct  entries  shall  be  made of its
transactions,  all in accordance  with GAAP applied on consistent  basis through
all  periods,  and shall set aside on such books for each  fiscal  year all such
reserves  for  depreciation,  obsolescence,  amortization,  bad  debts and other
purposes in connection with its operations as are required by such principles so
applied.

         G.  TRANSACTIONS   WITH  AFFILIATES.   So  long  as  the  Debenture  is
outstanding,  neither the Company nor any of its Subsidiaries shall, directly or
indirectly,   enter  into  any  material   transaction  or  agreement  with  any
stockholder,  officer,  director or Affiliate of the Company or family member of
any officer,  director or Affiliate of the Company,  unless the  transaction  or
agreement is (i)  reviewed  and approved by a majority of directors  and (ii) on
terms no less favorable to the Company or the applicable  Subsidiary  than those
obtainable from a nonaffiliated person.


                                       6
<PAGE>


         H. CERTAIN  RESTRICTIONS.  So long as the Debenture is outstanding,  no
capital stock of the Company shall be redeemed,  purchased or otherwise acquired
(other  than a  redemption,  purchase or other  acquisition  of shares of Common
Stock made for purposes of an employee  incentive  or benefit plan  (including a
stock option plan) of the Company or pursuant to any of the security  agreements
listed on Schedule  III.A,  for any  consideration  by the Company,  directly or
indirectly, nor shall any moneys be paid to or made available for a sinking fund
for the redemption of any Common Stock of any such stock.

         I.  SHORT  SELLING.  So  long  as  the  Debenture  or  the  Warrant  is
outstanding,  Buyer  agrees  and  covenants  on its  behalf and on behalf of its
affiliates that neither Buyer nor its affiliates shall at any time engage in any
short sales with respect to the Company's  Common Stock,  or sell put options or
similar instruments with respect to the Company's Common Stock.

         V. ISSUANCE OF COMMON STOCK

         A. The Company undertakes and agrees that no instruction other than the
instructions  referred  to  in  this  Article  V  and  customary  stop  transfer
instructions  prior to the registration and sale of the Common Stock pursuant to
an  effective  Securities  Act  registration  statement  shall  be  given to its
transfer  agent for the  Conversion  Shares and the Warrant  Shares and that the
Conversion Shares and the Warrant Shares shall otherwise be freely  transferable
on the books and  records of the  Company as and to the extent  provided in this
Agreement,  the  Registration  Rights  Agreement  and  applicable  law.  Nothing
contained in this Section V.A. shall affect in any way Buyer's  obligations  and
agreement  to comply  with all  applicable  securities  laws upon resale of such
Common Stock.

         B. Buyer shall have the right to convert the Debenture and exercise the
Warrant by telecopying an executed and completed Conversion Notice (as such term
is defined in the  Debenture)  or Warrant  Notice of  Exercise  (as such term is
defined in the Warrant) to the Company.  Each date on which a Conversion  Notice
or Warrant  Notice of Exercise is  telecopied  to and received by the Company in
accordance with the provisions hereof shall be deemed a Conversion Date (as such
term is defined in the Debenture). The Company shall cause the transfer agent to
transmit the  certificates  evidencing the Common Stock issuable upon conversion
of the  Debenture  (together  with a new  debenture,  if any,  representing  the
principal  amount of the  Debenture  not being so  converted) or exercise of the
Warrant  (together with a new Warrant,  if any,  representing  the amount of the
Warrant  not  being  so  exercised)  to  Buyer  via  express  courier,  or  if a
Registration  Statement covering the Common Stock has been declared effective by
the SEC by electronic transfer,  within three (3) business days after receipt by
the Company of the Conversion Notice or Warrant Notice of Exercise(the "DELIVERY
DATE").


                                       7
<PAGE>


         C. Upon the  conversion  of the Debenture or exercise of the Warrant or
part thereof, the Company shall, at its own cost and expense, take all necessary
action  (including  the  issuance  of an opinion of  counsel) to assure that the
Company's transfer agent shall issue stock certificates in the name of Buyer (or
its  nominee)  or  such  other  persons  as  designated  by  Buyer  and in  such
denominations  to be specified at conversion  representing  the number of Common
Stock of common stock  issuable upon such  conversion  or exercise.  The Company
warrants  that the  Conversion  Shares and Warrant  Shares  will be  unlegended,
free-trading, and freely transferable, and will not contain a legend restricting
the  resale  or  transferability  of  the  Company  Common  Stock  provided  the
Conversion  Shares and Warrant  Shares are being sold  pursuant to an  effective
registration  statement  covering  the Common  Stock to be sold or is  otherwise
exempt from registration when sold.

         D. The Company  understands  that a delay in the delivery of the Common
Stock in the form required pursuant to this section, or the Mandatory Redemption
Amount  described  in Section E hereof,  beyond the  Delivery  Date or Mandatory
Redemption  Payment Date (as hereinafter  defined) could result in economic loss
to the Buyer.  As compensation to the Buyer for such loss, the Company agrees to
pay late  payments to the Buyer for late  issuance  of Common  Stock in the form
required  pursuant to Section C hereof upon  Conversion of the Debenture or late
payment of the Mandatory  Redemption  Amount, in the amount of $100 per business
day (for a maximum of 5 business  days)  after the  Delivery  Date or  Mandatory
Redemption  Payment  Date,  as the case may be, for each  $10,000  of  Debenture
principal amount being converted or redeemed. The Company shall pay any payments
incurred  under  this  Section  in  immediately  available  funds  upon  demand.
Furthermore,  in addition to any other  remedies  which may be  available to the
Buyer,  in the event that the Company fails for any reason to effect delivery of
the  Common  Stock  by the  Delivery  Date  or  make  payment  by the  Mandatory
Redemption Payment Date, the Buyer will be entitled to revoke all or part of the
relevant  Notice of Conversion or rescind all or part of the notice of Mandatory
Redemption  by delivery of a notice to such effect to the Company  whereupon the
Company  and the Buyer  shall each be  restored  to their  respective  positions
immediately prior to the delivery of such notice.

         E. Mandatory  Redemption.  In the event the Company is prohibited  from
issuing  Common Stock,  or fails to deliver Common Stock within 10 business days
after a Delivery Date, or upon the occurrence of an Event of Default (as defined
in the Debenture) or for any reason other than pursuant to the  limitations  set
forth  herein,  or upon the  occurrence of an Event of Default as defined in the
Debenture,  then at the  Buyer's  election,  the Buyer may  pursue  the  default
remedies pursuant to the Debenture.

         F. Buy-In.  In addition to any other rights  available to the Buyer, if
the  Company  fails to deliver  to the Buyer such  Common  Stock  issuable  upon
conversion  of a Debenture or exercise of a Warrant by the Delivery  Date and if
ten (10) days after the  Delivery  Date the Buyer  purchases  (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Buyer of the Common Stock which the Buyer anticipated receiving upon
such  conversion (a  "Buy-In"),  then the Company shall pay in cash to the Buyer
(in addition to any remedies available to or elected by the Buyer) the amount by
which (A) the Buyer's total purchase price (including brokerage commissions,  if
any) for the  shares of Common  Stock so  purchased  exceeds  (B) the  aggregate
principal  and/or  interest  amount of the  Debenture  or Warrant for which such
conversion or exercise was not timely honored, together with interest thereon at
a rate of 15% per annum,  accruing  until such amount and any  accrued  interest
thereon is paid in full (which  amount shall be paid as  liquidated  damages and
not as a penalty).  For example,  if the Buyer purchases  shares of Common Stock
having a total  purchase  price of $11,000 to cover a Buy-In with  respect to an
attempted  conversion  of  $10,000 of  Debenture  or  Warrant  principal  and/or
interest,  the Company shall be required to pay the Buyer $1,000, plus interest.
The Buyer shall  provide  the  Company  written  notice  indicating  the amounts
payable  to the Buyer in  respect  of the  Buy-In.


                                       8
<PAGE>

         G. The  Securities  shall be  delivered  by the  Company  to the  Buyer
pursuant to Section  I.B.  hereof on a  "delivery-against-payment  basis" at the
Closing.

         VI. CLOSING DATE

         The Closing shall occur by the delivery to the Buyer of the certificate
evidencing  the  Debenture  and all  other  Agreements  and to the  Company  the
Purchase Price.

         VII. CONDITIONS TO THE COMPANY'S OBLIGATIONS

         Buyer  understands that the Company's  obligation to sell the Debenture
on the Closing Date to Buyer pursuant to this Agreement is conditioned upon:

         A. Delivery by Buyer of the Initial Purchase Price;

         B.  The  accuracy  on  the  Closing  Date  of the  representations  and
warranties of Buyer  contained in this  Agreement as if made on the Closing Date
(except for  representations and warranties which, by their express terms, speak
as of and  relate to a  specified  date,  in which case such  accuracy  shall be
measured as of such specified date) and the performance by Buyer in all material
respects on or before the Closing Date of all covenants and  agreements of Buyer
required  to be  performed  by it pursuant  to this  Agreement  on or before the
Closing  Date;  and

         C. There shall not be in effect any Law or order,  ruling,  judgment or
writ of any court or public or governmental authority restraining,  enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement.

         VIII. CONDITIONS TO BUYER'S OBLIGATIONS

         The  Company  understands  that  Buyer's  obligation  to  purchase  the
Securities on the Closing Date pursuant to this Agreement is  conditioned  upon:

         A. Delivery by the Company of the Debenture, the Conversion Warrant and
the other Agreements (I/N/O Buyer or I/N/O Buyer's nominee);

         B.  The  accuracy  on  the  Closing  Date  of the  representations  and
warranties of the Company  contained in this Agreement as if made on the Closing
Date (except for  representations  and warranties which, by their express terms,
speak as of and relate to a specified date, in which case such accuracy shall be
measured as of such  specified  date) and the  performance by the Company in all
respects on or before the Closing Date of all  covenants  and  agreements of the
Company  required to be performed by it pursuant to this  Agreement on or before
the  Closing  Date,  all of which  shall be confined to Buyer by delivery of the
certificate  of the chief  executive  officer of the Company to that effect;


                                       9

<PAGE>


         C. There not having occurred (i) any general  suspension of trading in,
or limitation on prices  listed for, the Common Stock on the  OTCBB/Pink  Sheet,
(ii) the  declaration  of a banking  moratorium or any suspension of payments in
respect of banks in the United States,  (iii) the  commencement  of a war, armed
hostilities or other  international or national  calamity directly or indirectly
involving  the  United  States  or  any  of its  territories,  protectorates  or
possessions  or (iv) in the case of the  foregoing  existing at the date of this
Agreement,  a material  acceleration or worsening  thereof,

         D. There not having occurred any event or development,  and there being
in existence no condition, having or which reasonably and foreseeably could have
a  Material  Adverse  Effect;

         E. The Company shall have delivered to Buyer  reimbursement  of Buyer's
reasonable  out-of-pocket  costs and expenses  incurred in  connection  with the
transactions  contemplated by this Agreement

         F. There  shall not be in effect any Law,  order,  ruling,  judgment or
writ of any court or public or governmental authority restraining,  enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement;

         G. The Company shall have  obtained all consents,  approvals or waivers
from  governmental  authorities  and third persons  necessary for the execution,
delivery and  performance  of the  Documents and the  transactions  contemplated
thereby, all without material cost to the Company;.

         H. Buyer shall have received such additional  documents,  certificates,
payment,  assignments,  transfers and other  delivers as it or its legal counsel
may  reasonably  request and as are customary to effect a closing of the matters
herein contemplated.

         I.  Delivery  by the  Company  of an  enforceability  opinion  from its
outside counsel in form and substance satisfactory to Buyer.

         IX. SURVIVAL; INDEMNIFICATION

         A. The  representations,  warranties  and covenants made by each of the
Company and Buyer in this Agreement, the annexes,  schedules and exhibits hereto
and in each instrument,  agreement and certificate entered into and delivered by
them pursuant to this Agreement  shall survive the Closing and the  consummation
of the transactions  contemplated  hereby. In the event of a breach or violation
of any of such representations,  warranties or covenants, the party to whom such
representations,  warranties  or covenants  have been made shall have all rights
and remedies for such breach or violation  available to it under the  provisions
of this Agreement or otherwise, whether at law or in equity, irrespective of any
investigation  made by or on  behalf  of such  party on or prior to the  Closing
Date.


                                       10
<PAGE>


         B. The Company hereby agrees to indemnify and hold harmless Buyer,  its
affiliates  and their  respective  officers,  directors,  partners  and  members
(collectively,  the "BUYER  INDEMNITEES")  from and  against any and all losses,
claims,   damages,   judgments,   penalties,    liabilities   and   deficiencies
(collectively,  "LOSSES")  and agrees to  reimburse  Buyer  Indemnitees  for all
out-of-pocket  expenses  (including the fees and expenses of legal counsel),  in
each case promptly as incurred by Buyer  Indemnitees  and to the extent  arising
out of or in  connection  with:

                  1. any misrepresentation, omission of fact or breach of any of
         the Company's representations or warranties contained in this Agreement
         or the other Documents, or the annexes, schedules or exhibits hereto or
         thereto or any  instrument,  agreement or  certificate  entered into or
         delivered  by the  Company  pursuant  to this  Agreement  or the  other
         Documents;

                  2. any failure by the Company to perform any of its covenants,
         agreements,  undertakings or obligations set forth in this Agreement or
         the other Documents or any instrument, certificate or agreement entered
         into or  delivered  by the Company  pursuant to this  Agreement  or the
         other Documents;

                  3.  the  purchase  of the  Debenture,  the  conversion  of the
         Debenture,  the payment of interest on the  Debenture,  the issuance of
         the Warrant Shares,  the consummation of the transactions  contemplated
         by  this  Agreement  and  the  other  Documents,  the use of any of the
         proceeds  of  the  Purchase  Price  by the  Company,  the  purchase  or
         ownership  of any or all of  the  Securities,  the  performance  by the
         parties hereto of their respective  obligations hereunder and under the
         Documents  or any  claim,  litigation,  investigation,  proceedings  or
         governmental  action  relating to any of the foregoing,  whether or not
         Buyer is a party thereto; or

                  4.  resales of the Common  Stock by Buyer in the manner and as
         contemplated by this Agreement and the Registration Rights Agreement.

         C. Buyer hereby agrees to indemnify and hold harmless the Company,  its
Affiliates  and their  respective  officers,  directors,  partners  and  members
(collectively,  the "COMPANY  INDEMNITEES") from and against any and all Losses,
and agrees to reimburse the Company  Indemnitees for all out-of-pocket  expenses
(including  the fees and expenses of legal  counsel),  in each case  promptly as
incurred  by the  Company  Indemnitees  and to the extent  arising  out of or in
connection with:

                  1. any misrepresentation, omission of fact or breach of any of
         Buyer's  representations  or warranties  contained in this Agreement or
         the other  Documents,  or the annexes,  schedules or exhibits hereto or
         thereto or any  instrument,  agreement or  certificate  entered into or
         delivered by Buyer pursuant to this  Agreement or the other  Documents;
         or

                  2. any failure by Buyer to perform in any material respect any
         of its covenants, agreements,  undertakings or obligations set forth in
         this Agreement or the other Documents or any instrument, certificate or
         agreement entered into or delivered by Buyer pursuant to this Agreement
         or the other Documents.


                                       11
<PAGE>

         D.   Promptly   after   receipt   by  either   party   hereto   seeking
indemnification  pursuant to this Article IX (an "INDEMNIFIED PARTY") of written
notice of any  investigation,  claim,  proceeding  or other action in respect of
which  indemnification is being sought (each, a "CLAIM"),  the Indemnified Party
promptly  shall notify the party against whom  indemnification  pursuant to this
Article  IX is being  sought  (the  "INDEMNIFYING  PARTY")  of the  commencement
thereof,  but the omission so to notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party except
to the extent that the Indemnifying Party is materially  prejudiced and forfeits
substantive rights or defenses by reason of such failure. In connection with any
Claim as to which  both the  Indemnifying  Party and the  Indemnified  Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding  the assumption of the defense of any Claim by the  Indemnifying
Party,  the  Indemnified  Party  shall have the right to employ  separate  legal
counsel and to  participate in the defense of such Claim,  and the  Indemnifying
Party shall bear the reasonable fees,  out-of-pocket  costs and expenses of such
separate  legal  counsel  to the  Indemnified  Party if (and only  if):  (x) the
Indemnifying Party shall have agreed to pay such fees,  out-of-pocket  costs and
expenses,  (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal  counsel would not be  appropriate  due to actual or, as
reasonably  determined by legal counsel to the  Indemnified  Party,  potentially
differing  interests  between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the  Indemnifying  Party
or (z) the  Indemnifying  Party  shall  have  failed  to  employ  legal  counsel
reasonably  satisfactory to the Indemnified  Party within a reasonable period of
time after notice of the  commencement of such Claim.  If the Indemnified  Party
employs  separate  legal  counsel in  circumstances  other than as  described in
clauses  (x),  (y) or (z)  above,  the fees,  costs and  expenses  of such legal
counsel shall be borne exclusively by the Indemnified Party.  Except as provided
above,  the  Indemnifying  Party shall not, in connection  with any Claim in the
same jurisdiction,  be liable for the fees and expenses of more than one firm of
legal  counsel  for the  Indemnified  Party  (together  with  appropriate  local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or  compromise  any Claim or consent to the entry of any judgment  that does not
include an unconditional  release of the Indemnified  Party from all liabilities
with respect to such Claim or judgment.

         E.  In  the  event  one  party  hereunder   should  have  a  claim  for
indemnification  that does not  involve a claim or demand  being  asserted  by a
third party,  the Indemnified  Party promptly shall deliver notice of such claim
to the  Indemnifying  Party. If the Indemnified  Party disputes the claim,  such
dispute shall be resolved by mutual  agreement of the Indemnified  Party and the
Indemnifying  Party or by binding  arbitration  conducted in accordance with the
procedures and rules of the American Arbitration Association.  Judgment upon any
award rendered by any arbitrators  may be entered in any court having  competent
jurisdiction thereof.

         X. GOVERNING LAW

         This Agreement  shall be governed by and interpreted in accordance with
the laws of the State of  California,  without  regard to the  conflicts  of law
principles of such state.


                                       12
<PAGE>

         XI. SUBMISSION TO JURISDICTION

         Each of the parties hereto  consents to the exclusive  jurisdiction  of
the federal courts whose  districts  encompass any part of the City of San Diego
or the state courts of the State of California  sitting in the City of San Diego
in  connection  with any  dispute  arising  under this  Agreement  and the other
Documents.  Each party hereto hereby irrevocably and unconditionally  waives, to
the fullest  extent it may  effectively  do so, any  defense of an  inconvenient
forum or improper  venue to the  maintenance of such action or proceeding in any
such court and any night of jurisdiction on account of its place of residence or
domicile.  Each party hereto  irrevocably  and  unconditionally  consents to the
service of any and all process in any such action or  proceeding  in such courts
by the mailing of copies of such process by registered or certified mail (return
receipt  requested),  postage prepaid, at its address specified in Article XVII.
Each party hereto agrees that a final  judgment in any such action or proceeding
shall be conclusive  and may be enforced in other  jurisdictions  by suit on the
judgment or in any other manner provided by law.

         XII. WAIVER OF JURY TRIAL

         TO THE FULLEST  EXTENT  PERMITTED  BY LAW,  EACH OF THE PARTIES  HERETO
HEREBY KNOWINGLY,  VOLUNTARILY AND INTENTIONALLY WAIVES ITS RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION  BASED UPON OR ARISING  OUT OF THIS
AGREEMENT  OR ANY OTHER  DOCUMENT OR ANY DEALINGS  BETWEEN THEM  RELATING TO THE
SUBJECT  MATTER OF THIS  AGREEMENT  AND OTHER  DOCUMENTS.  EACH PARTY HERETO (I)
CERTIFIES THAT NEITHER OF THEIR RESPECTIVE REPRESENTATIVES,  AGENTS OR ATTORNEYS
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT
OF LITIGATION,  SEEK TO ENFORCE THE FOREGOING WAIVERS AND (II) ACKNOWLEDGES THAT
IT HAS BEEN INDUCED TO ENTER INTO THIS  AGREEMENT  BY, AMONG OTHER  THINGS,  THE
MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.

         XIII. COUNTERPARTS; EXECUTION

         This Agreement may be executed in  counterparts,  each of which when so
executed  and  delivered  shall be an original,  but both of which  counterparts
shall together constitute one and the same instrument.  A facsimile transmission
of this signed Agreement shall be legal and binding on both parties hereto.

         XIV. HEADINGS

         The headings of this  Agreement  are for  convenience  of reference and
shall not form part of, or affect the interpretation of, this Agreement.

         XV. SEVERABILITY

         In the  event  any  one or  more of the  provisions  contained  in this
Agreement  or in  the  other  Documents  should  be  held  invalid,  illegal  or
unenforceable in any respect,  the validity,  legality and enforceability of the
remaining  provisions  contained  herein  or  therein  shall  not in any  way be
affected  or  impaired  thereby.   The  parties  shall  endeavor  in  good-faith
negotiations to replace the invalid,  illegal or  unenforceable  provisions with
valid  provisions,  the  economic  effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.


                                       13
<PAGE>

         XVI. ENTIRE AGREEMENT; REMEDIES, AMENDMENTS AND WAIVERS

         This  Agreement  and the  Documents  constitute  the  entire  agreement
between the parties hereto pertaining to the subject matter hereof and supersede
all prior agreements, understandings, negotiations and discussions, whether oral
or written,  of such  parties.  No  supplement,  modification  or waiver of this
Agreement shall be binding unless executed in writing by both parties. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision  hereof  (whether or not similar),  nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.

         XVII. NOTICES

         Except  as may be  otherwise  provided  herein,  any  notice  or  other
communication  or delivery  required or permitted  hereunder shall be in writing
and  shall  be  delivered  personally,  or sent by  telecopier  machine  or by a
nationally  recognized overnight courier service, and shall be deemed given when
so delivered  personally,  or by telecopier machine or overnight courier service
as follows:

         A.       if to the Company, to:

                  Integrated Performance Systems Inc.
                  17300 North Dallas Parkway, Suite 2040
                  Dallas, Texas 75248
                  Telephone:        972-381-1212
                  Facsimile:        972-381-1211

         B.       if to Buyer, to:

                  La Jolla Cove Investors, Inc.
                  7817 Herschel Avenue, Suite 200
                  La Jolla, California 92037
                  Telephone:        858-551-8789
                  Facsimile:        858-551-0987

The Company or Buyer may change the foregoing  address by notice given  pursuant
to this Article XVII.

         XVIII. CONFIDENTIALITY

         Each of the Company and Buyer  agrees to keep  confidential  and not to
disclose  to or use for  the  benefit  of any  third  party  the  terms  of this
Agreement  or any other  information  which at any time is  communicated  by the
other  party as being  confidential  without the prior  written  approval of the
other  party;  provide,   however,  that  this  provision  shall  not  apply  to
information  which,  at the time of  disclosure,  is already  part of the public
domain (except by breach of this Agreement) and information which is required to
be disclosed by law (including, without limitation,  pursuant to Item 601(b)(10)
of Regulation S-K under the Securities Act and the Exchange Act).


                                       14
<PAGE>

         XIX. ASSIGNMENT

         This Agreement  shall not be assignable by either of the parties hereto
prior to the Closing without the prior written  consent of the other party,  and
any attempted  assignment  contrary to the  provisions  hereby shall be null and
void;  provide,  however,  that Buyer may  assign  its  rights  and  obligations
hereunder, in whole or in part, to any affiliate of Buyer.

         IN WITNESS WHEREOF,  the parties hereto have duly caused this Agreement
to be executed and delivered on the date first above written.



Integrated Performance Systems Inc.         La Jolla Cove Investors, Inc.

By: __________________________              By: __________________________

Title: _________________________            Title: _________________________




                                       15
<PAGE>


                                 SCHEDULE III.L.

                               REGISTRATION RIGHTS

                                      None

                               SCHEDULE III, A. 1

         Warrants to Purchase at $1.50               1,322,755 shares

         Preferred Conversions at $3.00              786,666 shares

         Debenture Conversions at $2.50              20,000 shares



                               SCHEDULE III, A. 3

                                      None


                                       16