Document:

Exhibit 10.04

                                 PROMISSORY NOTE

$25,500,000.00                                                       May 9, 2002

         FOR VALUE RECEIVED, the undersigned, Mid-Power Service Corporation, a
Nevada corporation, and Mid-Power Resource Corporation, a Nevada corporation and
wholly-owned subsidiary of Mid-Power Service Corporation (together, "Makers"),
with their principal executive offices located at 3800 Howard Hughes Parkway,
Suite 860, Las Vegas, Nevada 89109, jointly and severally, promise to pay to the
order of SCRS Investors, LLC, a Delaware limited liability company ("Holder"),
the principal sum of TWENTY-FIVE MILLION, FIVE HUNDRED THOUSAND DOLLARS
($25,500,000.00), or such lesser amount as has been advanced by Holder to Makers
pursuant to the Loan Agreement of even date herewith (the "Loan Agreement") by
and between Makers and Holder, together with interest on funds on the amount
actually advanced from and after the date of such respective advances at 10% per
annum.

         1. Loan Agreement. This Note is being issued pursuant to, and is
entitled to the benefits of, the Loan Agreement. All of the terms and conditions
of the Loan Agreement are hereby incorporated by reference, including, without
limitation, provisions with respect to prepayments, acceleration, defaults and
remedies.

         2. Security for Payment. In accordance with the Loan Agreement, Makers
have provided certain security for payment of the Note and the obligation
evidenced thereby. Reference is made to the security agreements executed by
Makers for a description of the nature and extent of the liens, encumbrances and
security interests provided thereby and the rights of Holder in respect thereto.

         3. Payment. All amounts advanced by Maker to Holder under the Loan
Agreement shall be repayable, with interest at 10% per annum on the amount
actually advanced from and after the date of such respective advances, in 20
consecutive equal quarterly payments of principal and interest, commencing on
the last day of December 2007 and continuing on the last day of each calendar
quarter thereafter, until December 31, 2012, at which time all unpaid principal
and accrued but unpaid interest shall be paid in full.

         4. Time and Place of Payment. Payments of principal and interest due
and payable hereunder shall be made to Holder at its offices at 3800 Howard
Hughes Parkway, Suite 860, Las Vegas, Nevada 89109, or at such other place as
Holder shall have designated to Makers in writing.

         5. Prepayment. This Note may be prepaid, in whole or in part, at any
time by Makers without premium or penalty. Simultaneously with any repayment in
full of this Note, Holder shall deliver to Makers a receipt for such payment,
together with the original executed copy of this Note, which shall be marked
cancelled.

         6. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder: (a) Makers
shall fail to pay, as and when due, any principal of or accrued interest under
this Note within five days after the date on which such payment is due; (b)
Makers shall fail to comply with any material provision of the Loan Agreement,
this Note or any of the other security agreements executed in connection with
the Loan Agreement, which failure shall remain uncured for a period of 30 days

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or more after Makers have received notice thereof; (c) any representation or
warranty made by Makers in the Loan Agreement, this Note or any of the other
security agreements executed in connection with the Loan Agreement shall fail to
be true and correct in all material respects; (d) Makers shall make an
assignment for the benefit of creditors; (e) an order, judgment or decree shall
be entered adjudicating Makers, or either of them, bankrupt or insolvent; or (f)
Makers, or either of them, shall commence proceedings under any bankruptcy or
insolvency laws, or a third party shall commence such proceedings against
Makers, or either of them, and such proceedings shall not be dismissed within 90
days after commencement.

         7. Conversion.

                  (a) Conversion of Note. At any time, Holder shall have the
         right, at Holder's option, to convert the principal and accrued
         interest on this Note, in whole or in part, into common stock, par
         value $0.001, of Mid-Power Service Corporation ("Conversion Stock"), at
         a price of $1.50 per share, subject to adjustment as provided below
         ("Note Conversion Price"). Conversion under this section shall occur
         only upon surrender of this Note for conversion at the principal
         offices of Mid-Power Service Corporation, accompanied by a written
         notice of election to convert, provided, however, that pursuant to the
         limitations set forth in that certain promissory note in the aggregate
         principal amount of $10,000,000 dated as of June 13, 2002, made and
         delivered by Makers, as makers, to Edward Mike Davis ("Davis"), as
         payee (the "Davis Note"), as part of the merger consideration under
         that certain "Acquisition Agreement and Plan of Merger" dated as of
         June 14, 2002, by and between Makers, Red Star, Inc., a Nevada
         corporation, and for the limited purposes set forth therein, Davis, a
         copy of which has been delivered to Payee and to which this Note is
         subject, Holder shall not have any right to convert any principal of or
         interest accrued under the Note if, upon such conversion:

                  (i)      at any time before the Davis Note is paid in full,
                           Holder would have the right to receive any more than
                           3,666,667 shares of Conversion Stock hereunder;

                  (ii)     at any time after the Davis Note is paid in full and
                           before June 13, 2003, the issuance of such Conversion
                           Stock would cause the ownership of Davis to become
                           less than fifty-one percent (51%) of the ownership,
                           beneficial or legal, of Mid-Power Service
                           Corporation; or

                  (ii)     at any time after June 13, 2003, and before the close
                           of business on June 13, 2007, the issuance of such
                           Conversion Stock would cause the ownership of Davis
                           to become less than thirty-six percent (36%) of the
                           ownership, beneficial or legal, of Mid-Power Service
                           Corporation; save and except, in each case, such
                           conversion has been consented to in writing by Davis,
                           in his sole and absolute discretion.

                  (b) Conversion in the Event of Prepayment or Payment of Note.
         At such time that Makers have funds immediately available and elect to
         pay the entire principal balance and accrued interest (whether as a
         prepayment or payment at or after maturity of this Note), Holder shall
         have the option to convert the Note into Conversion Stock at the Note
         Conversion Price on or before 15 days from the receipt of notice of
         Makers' election to pay off the Note. Holder shall have no obligation
         to accept any payment less than the entire principal balance, plus
         accrued interest.

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<PAGE>

                  (c) Certain Transactions. Makers shall give written notice to
         Holder of any "Change of Control Transaction" at least 20 business days
         prior to the date on which such Change of Control Transaction shall
         take place. Prior to the closing of such Change of Control Transaction,
         Makers shall, at Holder's election, either repay all unpaid principal
         and interest under this Note or convert this Note into Conversion Stock
         at the Note Conversion Price, subject to the limitations set forth
         herein.

                  (d) Issuance of Conversion Stock. As soon as practicable after
         conversion of this Note, Mid-Power Service Corporation, at its expense,
         will cause to be issued in the name of and delivered to Holder of this
         Note, a certificate or certificates for the number of shares of
         Conversion Stock to which Holder shall be entitled upon such conversion
         (bearing such legends as may be required by applicable state and
         federal securities laws in the opinion of legal counsel of Mid-Power
         Service Corporation), together with any other securities and property
         to which Holder is entitled upon such conversion under the terms of
         this Note. Such conversion shall be deemed to have been made under this
         section 6 and immediately prior to the close of business on the date
         that the Note shall have been surrendered for conversion, accompanied
         by written notice of election to convert. No fractional shares will be
         issued upon conversion of this Note. If, upon any conversion of this
         Note, a fraction of a share would otherwise result, then, in lieu of
         such fractional share, Mid-Power Service Corporation will pay the cash
         value of that fractional share, calculated on the basis of the
         applicable Note Conversion Price.

                  (e) Adjustment of Number of Shares. The number and character
         of shares of Conversion Stock issuable upon conversion of this Note (or
         any shares of stock or other securities or property at the time
         receivable or issuable upon conversion of this Note) are subject to
         adjustment upon the occurrence of any of the following events:

                           (i)      Adjustment for Stock Splits, Stock
                                    Dividends, Recapitalization, etc. In the
                                    event that Mid-Power Service Corporation
                                    shall fix a record date for the
                                    determination of holders of securities
                                    affected by any stock split, stock dividend,
                                    reclassification, recapitalization or other
                                    similar event that will, in the future,
                                    affect the number of outstanding shares of
                                    Mid-Power Service Corporation's capital
                                    stock, then, and in each such case, Holder,
                                    upon conversion of this Note at any time
                                    after Mid-Power Service Corporation shall
                                    fix the record date for such event, shall
                                    receive, in addition to the shares of
                                    Conversion Stock issuable upon conversion on
                                    the Conversion Date, the right to receive
                                    the securities of Mid-Power Service
                                    Corporation to which Holder would have been
                                    entitled if Holder had converted this Note
                                    immediately prior to such record date (all
                                    subject to further adjustment as provided in
                                    this Note).

                           (ii)     Adjustment for Dividends and Distributions.
                                    In the event that Mid-Power Service
                                    Corporation shall make or issue, or shall
                                    fix a record date for the determination of
                                    eligible holders of securities entitled to
                                    receive, a dividend or other distribution
                                    payable with respect to the Conversion Stock
                                    (or any shares of stock or other securities
                                    at the time issuable upon conversion of this
                                    Note) that is payable in securities of
                                    Mid-Power Service Corporation, other than

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                                    capital stock, or any other assets, then,
                                    and in each such case, Holder, upon
                                    conversion of this Note at any time after
                                    the consummation, effective date or record
                                    date of such event, shall receive, in
                                    addition to the shares of Conversion Stock
                                    (or such other stock or securities) issuable
                                    upon such conversion prior to such date, the
                                    securities or such other assets of Mid-Power
                                    Service Corporation to which Holder would
                                    have been entitled upon such date if Holder
                                    had converted this Note immediately prior
                                    thereto (all subject to further adjustment
                                    as provided in this Note).

                           (iii)    Adjustment for Reorganization,
                                    Consolidation, Merger. In the event of any
                                    reorganization not considered a Change of
                                    Control Transaction of Mid-Power Service
                                    Corporation (or any other corporation the
                                    stock or other securities of which are at
                                    the time receivable upon the conversion of
                                    this Note) after the date of this Note, or
                                    in the event, after such date, Mid-Power
                                    Service Corporation (or any such
                                    corporation) shall consolidate with or merge
                                    into another corporation or convey all or
                                    substantially all of its assets to another
                                    corporation and such transaction is not
                                    considered a Change of Control Transaction,
                                    then, and in each such case, Holder, upon
                                    the conversion of this Note (as provided in
                                    this section 6) at any time after the
                                    consummation of such reorganization,
                                    consolidation, merger or conveyance, shall
                                    be entitled to receive, in lieu of the stock
                                    or other securities and property receivable
                                    upon the conversion of this Note prior to
                                    such consummation, the stock or other
                                    securities or property to which Holder would
                                    have been entitled upon the consummation of
                                    such reorganization, consolidation, merger
                                    or conveyance if Holder had converted this
                                    Note immediately prior thereto, all subject
                                    to further adjustment as provided in this
                                    section 6, and the successor or purchasing
                                    corporation in such reorganization,
                                    consolidation, merger or conveyance (if
                                    other than Mid-Power Service Corporation)
                                    shall duly execute and deliver to Holder a
                                    supplement hereto acknowledging such
                                    corporation's obligations under this Note.
                                    In each such case, the terms of the Note
                                    shall be applicable to the shares of stock
                                    or other securities or property receivable
                                    upon the conversion of this Note after the
                                    consummation of such reorganization,
                                    consolidation, merger or conveyance.

                           (iv)     Conversion of Stock. In the event that all
                                    of the authorized Conversion Stock of
                                    Mid-Power Service Corporation is converted,
                                    pursuant to its articles of incorporation,
                                    into other capital stock or securities or
                                    property, or the Conversion Stock otherwise
                                    ceases to exist, then Holder, upon
                                    conversion of this Note at any time after
                                    the date on which the Conversion Stock is so
                                    converted or ceases to exist (the
                                    "Termination Date"), shall receive, in lieu
                                    of the number of shares of Conversion Stock
                                    that would have been issuable upon such
                                    conversion immediately prior to the
                                    Termination Date (the "Former Number of
                                    Shares of Conversion Stock"), the stock and
                                    other securities and property to which
                                    Holder would have been entitled to receive
                                    upon the Termination Date if Holder had
                                    converted this Note with respect to the
                                    Former Number of Shares of Conversion Stock
                                    immediately prior to the Termination Date
                                    (all subject to further adjustment as
                                    provided in this Note).

                           (v)      Notice of Adjustments. Mid-Power Service
                                    Corporation shall promptly give written
                                    notice of each adjustment or readjustment of
                                    the number of shares of Conversion Stock or
                                    other securities issuable upon conversion of

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<PAGE>

                                    this Note, by first class mail, postage
                                    prepaid, to Holder of this Note at Holder's
                                    address as shown on Mid-Power Service
                                    Corporation's books. The notice shall
                                    describe the adjustment or readjustment and
                                    show in reasonable detail the facts on which
                                    the adjustment or readjustment is based.

                           (vi)     No Change Necessary. The form of this Note
                                    need not be changed because of any
                                    adjustment in the number of shares of
                                    Conversion Stock issuable upon its
                                    conversion.

                           (vii)    Reservation of Stock. Mid-Power Service
                                    Corporation has taken all necessary
                                    corporate action and obtained all necessary
                                    government consents and approvals to
                                    authorize the issuance of this Note and,
                                    prior to the conversion hereof, the shares
                                    of Conversion Stock issuable upon conversion
                                    of this Note. If at any time the number of
                                    authorized but unissued common stock or
                                    other securities shall not be sufficient to
                                    effect the conversion of this Note, then
                                    Mid-Power Service Corporation will take such
                                    corporate action as may, in the opinion of
                                    its legal counsel, be necessary to increase
                                    its authorized but unissued common stock or
                                    other securities as shall be sufficient for
                                    such purpose.

                  (f) Fully Paid Shares. All shares of Conversion Stock issued
         upon the conversion of this Note shall be validly issued, fully paid,
         and nonassessable.

                  (g) No Rights or Liabilities as Stockholder. This Note does
         not by itself entitle Holder to any voting rights or other rights as a
         stockholder of Mid-Power Service Corporation. In the absence of
         conversion of this Note, no provisions of this Note, and no enumeration
         herein of the rights or privileges of Holder, shall cause Holder to be
         a stockholder of Mid-Power Service Corporation for any purpose.

                  (h) Corporate Action; No Impairment. Makers will not, by
         amendment of their articles of incorporation or bylaws, or through
         reorganization, consolidation, merger, dissolution, issuance or sale of
         securities, repurchase of securities, sale of assets or any other
         action, avoid or seek to avoid the observance or performance of any of
         the terms of this Note, but will at all times in good faith assist in
         the carrying out of all such terms and in the taking of all such action
         as may be necessary or appropriate, or as reasonably requested by
         Holder, in order to protect the rights of Holder under this Note
         against wrongful impairment.

         8. Notice. Any notice, presentation or demand to or upon Makers in
respect of this Note shall be given in writing and shall be deemed to be duly
made (a) if personally delivered with receipt acknowledged, (b) if mailed by
registered or certified mail, first class postage prepaid, and return receipt
requested, (c) if delivered by a nationally recognized overnight courier
service, or (d) if transmitted by confirmed fax, in each case, to the address
set forth above or, if any other address shall be designated for this purpose by
Makers in writing to Holder, to such other address.

         9. Organization. Holder recognizes and acknowledges that each Maker is
a corporation formed under the laws of the state of Nevada, and that no past,
present or future directors, officers, employees, agents or representatives of
Makers shall have any personal liability for any obligation whatsoever or
howsoever arising (including, without limitation, under contract or in tort or
equity) under or with respect to this Note or applicable law. Holder shall not
(a) assert or seek to assert any claim against, (b) name in any civil action or
proceeding or arbitration, or (c) seek or obtain any judgment, order or decree

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<PAGE>

against any director, officer, employee, agent or representative of Makers,
their successors or assigns, or any of their respective properties or assets.

         10. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the state of Nevada.

         IN WITNESS WHEREOF, Makers have duly executed this Note on the day and
year first above written.

                                         Mid-Power Service Corporation

                                         By:  /s/ James W. Scott
                                             -----------------------------------
                                         Name:  James W. Scott
                                         Title: President

Scrs.promissorynote.050902.2

                                       6
<PAGE>

STATE OF NEVADA                     )
                                    :   ss.
COUNTY OF CLARK                     )

         I, a notary of said county and state, do certify that James W. Scott,
who signed the instrument above bearing the date of May 9, 2002, on behalf of
Mid-Power Service Corporation, a Nevada corporation, has this day in my said
county, before me, acknowledged the said instrument to be the act and deed of
said company.

         IN WITNESS WHEREOF, I have hereunder set my hand and official seal in
the City of Las Vegas, County of Clark, State of Nevada, this 25th day of June,
2002.

                                     /s/ Susana D. McGee
                                    --------------------------------------------
                                    Notary Public in and for the State of Nevada

Printed Name: Susana D. McGee
Address of Notary Public:
3800 Howard Hughes Pkway
Ste 860
Las Vegas, NV 89109
My Commission Expires: Nov. 15, 2005

                                       7
<PAGE>

                                         Mid-Power Resource Corporation

                                         By: /s/ James W. Scott
                                             ---------------------------------
                                         Name:  James W. Scott
                                         Title: President

STATE OF NEVADA                     )
                                    :   ss.
COUNTY OF CLARK                     )

         I, a notary of said county and state, do certify that James W. Scott,
who signed the instrument above bearing the date of June 25, 2002, on behalf of
Mid-Power Resource Corporation, a Nevada corporation, has this day in my said
county, before me, acknowledged the said instrument to be the act and deed of
said company.

         IN WITNESS WHEREOF, I have hereunder set my hand and official seal in
the City of Las Vegas, County of Clark, State of Nevada, this 25th day of June,
2002.

                                     /s/ Susana D. McGee
                                    --------------------------------------------
                                    Notary Public in and for the State of Nevada

Printed Name: Susana D. McGee
Address of Notary Public:
3800 Howard Hughes Pkway
Ste 860
Las Vegas, NV 89109
My Commission Expires: Nov. 15, 2005

                                       8Exhibit 10.05

                               SECURITY AGREEMENT

         THIS SECURITY AGREEMENT ("Agreement") is made as of May 9, 2002, by and
between Mid-Power Resource Corporation, a Nevada corporation, with its principal
executive offices at 3800 Howard Hughes Parkway, Suite 860, Las Vegas, Nevada
89109 ("Debtor"), and SCRS Investors, LLC, a Delaware limited liability company
("Secured Party").

                                    RECITALS

A. Pursuant to that certain "Acquisition Agreement and Plan of Merger" dated as
of June 13, 2002, made by and among Mid-Power Service Corporation, a Nevada
corporation and corporate parent of Debtor ("Parent"), Red Star, Inc., a Nevada
corporation, and Debtor, Debtor has succeeded by a corporate merger to the
tangible and intangible personal and real properties comprising certain
producing, nonproducing and unexplored coalbed methane gas properties located in
Carbon and Emery Counties, Utah, and commonly referred to by the parties as the
Clear Creek property (the "Property").

B. B. In order to obtain funds for a portion of the acquisition consideration
paid and payable under the Acquisition Agreement and Plan of Merger, as well as
funds for contemplated further expenditures on or respecting the Property,
Parent and Debtor have entered into a Loan Agreement dated effective as of May
9, 2002 (the "Loan Agreement"), under which Secured Party has agreed to loan up
to $25,500,000 to Parent and Debtor, upon the terms and subject to the
conditions set forth therein (the "Loan"). The obligation to repay the Loan is
evidenced by a Promissory Note of even date with the Loan Agreement (the
"Promissory Note"), executed by Parent and Debtor and delivered to Secured
Party.

C. As a condition to Secured Party's agreement to make the Loan to Parent and
Debtor and to secure the payment of the obligations under the Loan Agreement and
Promissory Note, Secured Party has requested that Debtor grant to Secured Party
a security interest in the Clear Creek property and any and all inventory and
receivables therefrom.

D. Debtor, which has received and will receive good and valuable consideration
as a result of Secured Party's Loan to Parent and Debtor, has agreed to grant a
security interest in the Clear Creek property, subject to the terms and
conditions set forth herein.

         NOW, THEREFORE, upon these premises, which are incorporated herein by
reference, in consideration of the mutual covenants and agreements contained
herein, the parties hereto agree as follows:

         1. Collateral. Debtor hereby grants to Secured Party a first priority
security interest (the "Security Interest") in all of Debtor's right, title and
interest in and to (a) the Property, including all items of tangible personal
property constituting a part of, or used or useful in connection with the
operation of, the Clear Creek property, all as more specifically identified on
Exhibit A hereto; and (b) any and all inventory and receivables of Debtor
related to the Clear Creek property (collectively, the "Collateral").

<PAGE>

         2. Obligations Secured. The Collateral shall secure (a) the full and
prompt payment of all amounts due or to become due under the Promissory Note,
together with all costs and expenses (including reasonable attorneys' fees) that
may be reasonably incurred by Secured Party in the collection or enforcement of
the Promissory Note; (b) all obligations of Debtor and Parent under the Loan
Agreement and this Agreement; and (c) all amounts that are owed to Secured Party
under any extension, renewal or modification of the foregoing (collectively, the
"Obligations").

         3. Covenants. Debtor agrees that, so long as any Obligations remain
unpaid, it will (a) join with Secured Party in executing such financing
statements (including amendments thereto and continuation statements thereof),
assignments or other documents, in form satisfactory to Secured Party, as
Secured Party may reasonably specify to create, perfect, continue, protect or
enforce the Security Interest or the priority of the Security Interest; (b) give
Secured Party notice of any change in its name or its principal executive
offices, or the establishment or change of any location where the Collateral or
its records pertaining to the Collateral will be located, in each case, within
10 days of such change or establishment; (c) maintain the Collateral in good
operating condition and repair and be responsible for any loss or damage to the
Collateral; (d) pay when due all taxes, registration fees, license fees, permit
fees, and other charges that may be assessed or become owing on or in connection
with the Collateral, other than those being contested by Debtor in good faith;
(e) not misuse, unlawfully use or conceal the Collateral; (f) allow Secured
Party to inspect the Collateral during normal business hours and upon reasonable
prior notice; (g) maintain insurance coverage with respect to the Collateral in
such amounts and covering such risks as are customarily maintained by entities
owning facilities that are comparable to the Property; (h) comply with all of
the terms, conditions and covenants contained in the Loan Agreement (i) not
sell, assign, lease, transfer, or otherwise dispose of or encumber the
Collateral (a "disposition"), other than (A) dispositions in the ordinary course
of business (which does not include the disposition of major items of equipment,
except to the extent such items of equipment are replaced by equivalent
property), (B) dispositions of property that is replaced by equivalent property,
or (C) dispositions of property that is no longer useful in Debtor's operations;
or (D) for "Permitted Security Interests." When used herein, "Permitted Security
Interest" means (w) any security interest arising by operation of law in the
ordinary course of business and securing amounts not more than 90 days overdue;
(x) security interests expressly permitted in writing by Lender; (y) easements,
rights-of-way, servitudes, permits, surface leases and other rights affecting
the surface that do not interfere with the use, operation, value or unrestricted
alienability of the affected property and do not interfere with the ability of
the Lender to enforce any rights under the Promissory Note or any
Borrower-Related Agreements nor in any way materially and adversely affect the
ongoing interests of Borrowers; and (z) purchase money security interests
securing amounts no greater than $1,000,000 incurred in the ordinary course of
business.

         4. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder: (a) Debtor
and/or Parent shall fail to pay, as and when due, any principal of or accrued
interest on the Promissory Note within five days after the date on which such
payment is due; (b) Debtor and/or Parent shall fail to comply with any material
provision of the Loan Agreement, this Agreement, the Promissory Note, or any of
the other security agreements executed in connection with the Loan Agreement,
which failure shall remain uncured for a period of 30 days or more after Debtor
and Parent have received notice thereof; (c) any representation or warranty made
by Debtor and/or Parent in the Loan Agreement, this Agreement, the Promissory
Note, or any of the other security agreements executed in connection with the
Loan Agreement shall fail to be true and correct in all material respects; (d)
Debtor and/or Parent shall make an assignment for the benefit of creditors; (e)
an order, judgment or decree shall be entered adjudicating Debtor and/or Parent
bankrupt or insolvent; or (f) Debtor and/or Parent shall commence proceedings
under any bankruptcy or insolvency laws, or a third party shall commence such
proceedings against Debtor and/or Parent, and such proceedings shall not be
dismissed within 90 days after commencement.

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<PAGE>

         5. Remedies. Upon the occurrence of an Event of Default, or at any time
thereafter that an Event of Default shall be continuing, Secured Party may, at
its option (a) declare the unpaid principal balance of the Promissory Note,
together with interest accrued thereon, to be immediately due and payable and
proceed to enforce payment of the same; (b) take, retain and receive the
payments, receipts, income and profits arising from the Collateral, and all
proceeds of the Collateral, until the Obligations are paid and satisfied in
full; or (c) sell the Collateral or exercise any other remedy available to it
under the Uniform Commercial Code as enacted in the state of Nevada.

         6. Deficiency. In the event that the proceeds of any sale, collection
or realization of or upon the Collateral are insufficient to satisfy all of the
Obligations, Debtor and Parent shall remain liable to Secured Party for any such
deficiency. Notwithstanding the foregoing, Secured Party recognizes that Debtor
and Parent are corporations and that no past, present or future directors,
officers, employees, agents or representatives of Debtor and/or Parent shall
have any personal liability for any obligation whatsoever or howsoever arising
(including, without limitation, under contract or in tort or equity) under or
with respect to the Promissory Note, the Loan Agreement, this Agreement, the
Obligations, the transactions contemplated hereby or thereby, or applicable law.
Secured Party shall not (a) assert or seek to assert any claim against; (b) name
in any civil action or proceeding or arbitration; or (c) seek or obtain any
judgment, order or decree against any director, officer, employee, agent or
representative of Debtor and/or Parent or any of their respective properties or
assets.

         7. Remedies Cumulative. Each right, power and remedy of Secured Party
as provided for in the Loan Agreement or this Agreement, or now or hereafter
existing at law, in equity, by statute or otherwise, shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for in the Loan Agreement and this Agreement, and the exercise by
Secured Party of any one or more of such rights, powers or remedies shall not
preclude the simultaneous or later exercise by Secured Party of any or all such
other rights, powers or remedies.

         8. Notices. All notices, demands, requests and other communications
hereunder shall be in writing and shall be delivered by hand, or sent by
certified or registered United States mail, postage prepaid and return receipt
requested, or by prepaid nationally recognized overnight express service or by
fax. Notices shall be sent to the parties at the following addresses (or at such
other addresses for a party as shall be specified by like notice; provided that
such notice shall be effective only upon receipt thereof):

         (a)      If to Debtor:                Mid-Power Resource Corporation
                                               3800 Howard Hughes Parkway
                                               Suite 860
                                               Las Vegas, Nevada, 89109

         (b)      If to Secured Party:         SCRS Investors, LLC
                                               3800 Howard Hughes Parkway
                                               Suite 860
                                               Las Vegas, Nevada, 89109

All such notices shall be deemed to have been received on the date of delivery
if delivered by hand or by confirmed fax, one day after the date of mailing if
given by overnight express service, and four days after the date of mailing if
given by certified or registered U.S. mail.

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<PAGE>

         9. No Waiver. No failure or delay by Secured Party in demanding the
strict performance of any term, condition, covenant or agreement herein, in the
Loan Agreement or in the Promissory Note, or in exercising any right, power or
remedy consequent upon a breach thereof, shall constitute a waiver of any such
term, condition, covenant or agreement or of any such breach, or preclude
Secured Party from exercising any such right, power or remedy at any later time
or times. By accepting payment after the due date of any amount payable under
the Promissory Note, Secured Party shall not be deemed to waive the right either
to require prompt payment when due of all other amounts payable under the
Promissory Note, or to declare a default for failure to effect prompt payment of
any such other amount.

         10. Release of Collateral. Upon payment in full of all of the
Obligations, Secured Party shall release the Collateral to Debtor, or as Debtor
may direct, and this Agreement and the Security Interest shall terminate. Upon
such event, Secured Party shall execute and deliver to Debtor and Parent such
documents as Debtor and/or Parent shall reasonably request to evidence such
termination.

         11. Limitation by Law; Severability. All rights, remedies and powers
provided in this Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the provisions
of this Agreement are intended to be subject to all applicable provisions of law
that may be controlling and be limited to the extent necessary so that they will
not render this Agreement invalid or unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law. If any provision hereof is invalid and unenforceable in any
jurisdiction then, to the fullest extent permitted by law (a) the other
provisions hereof shall remain in full force and effect in such jurisdiction in
order to carry out the intentions of the parties hereto as nearly as may be
possible; and (b) the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.

         12. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned without the written
consent of the parties hereto.

         13. Titles and Headings. Titles and headings to sections hereof are
inserted for convenience of reference only and are not intended to be a part of,
or to affect the meaning or interpretation of, this Agreement.

         14. Amendments, Supplements, etc. Neither this Agreement nor any term,
condition, covenant or agreement hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the parties
hereto.

         15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Nevada, except as required by mandatory
provisions of law, and except to the extent that the perfection and the effect
of perfection or nonperfection of the Security Interest are governed by the laws
of a jurisdiction other than the state of Nevada.

         16. No Third-Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in, or on
behalf of, any person other than the parties hereto. 17. Execution in
Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Delivery of the executed signature pages by
facsimile transmission shall constitute effective and binding execution and
delivery of this Agreement.

                                       4
<PAGE>

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

                                     DEBTOR:

                                                Mid-Power Resource Corporation

                                                By: /s/ James W. Scott
                                                   -----------------------------
                                                   Name:  James W. Scott
                                                   Title: President

                                    SECURED PARTY:

                                                SCRS Investors, LLC

                                                By: /s/ James W. Scott
                                                   -----------------------------
                                                   Name:  James W. Scott
                                                   Title: Managing Member

Scrs.securityagrmt.050902.2

                                       5
<PAGE>

STATE OF  Nevada               )
                               ss.
COUNTY OF Clark                )

         I, a notary of said county and state, do certify that James W. Scott,
who signed the instrument above bearing the date of May __, 2002, on behalf of
Mid-Power Resource Corporation, a Nevada corporation, has this day in my said
county, before me, acknowledged the said instrument to be the act and deed of
said company.

         IN WITNESS WHEREOF, I have hereunder set my hand and official seal in
the City of Las Vegas, County of Clark, State of Nevada, this 25th day of June,
2002.

                                             /s/ Susana D. McGee
                                            -----------------------------------
                                            Notary Public in and for the
                                            State of Nevada

                                             /s/ Susana D. McGee
                                            -----------------------------------
                                            Printed Name

                                            Address of Notary Public:

                                            3800 Howard Hughes Pkwy
                                            Ste 860
                                            Las Vegas, Neveda 89109

                                            My Commission Expires: Nov. 15, 2005

                                       6
<PAGE>

                                  Exhibit A to
                               Security Agreement

       Description of Personal Property Constituting Clear Creek Property

                                       7

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