Document:

THIS WARRANT AND THE SECURITIES  ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN  REGISTERED  FOR RESALE UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY
STATE  SECURITIES  LAWS AND MAY NOT BE OFFERED,  SOLD,  TRANSFERRED,  PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF ANY EFFECTIVE  REGISTRATION  STATEMENT AS TO SUCH
SECURITIES  FILED  UNDER  THE  ACT,  OR  AN  EXEMPTION  FROM  REGISTRATION,  AND
COMPLIANCE  WITH  APPLICABLE  STATE  SECURITIES  LAWS. THE ISSUER MAY REQUIRE AN
OPINION OF COUNSEL  SATISFACTORY TO THE ISSUER HEREOF THAT SUCH  REGISTRATION IS
NOT REQUIRED AND THAT SUCH LAWS ARE COMPLIED WITH. THE REGISTERED HOLDER OF THIS
WARRANT,  BY  ITS/HIS/HER  ACCEPTANCE  HEREOF,  AGREES  THAT IT WILL  NOT  SELL,
TRANSFER OR ASSIGN THIS WARRANT PRIOR TO THAT DATE.

VOID AFTER 12:00 P.M., SPOKANE, WASHINGTON TIME, ON                    , 2006
                                                    -------------------

Warrant to subscribe for and purchase           shares of Common Stock, $0.001
par value, of                         ----------

                     INTERNATIONAL TEST SYSTEMS, INC., INC.

This is to Certify That,

FOR VALUE RECEIVED,  PUBLIC  SECURITIES,  INC., a Washington  Corporation,  (the
"Holder") is entitled to purchase,  subject to the  provisions  of this Warrant,
from INTERNATIONAL TEST SYSTEMS,  INC., a Delaware Corporation  ("Company"),  at
any time on or after , 2002, and not later than 12:00 p.m., Spokane,  Washington
Time,  on ,  2006,  a total of  XXXXX  shares  of  Common  Stock of the  Company
("Securities") exercisable at a purchase price of $0.56 for the Securities which
is 140% of the public  offering  price.  The number of Securities to be received
upon the  exercise of this  Warrant and the price to be paid for the  Securities
may be adjusted from time to time as hereinafter  set forth.  The purchase price
of a  Security  in  effect  at any time  and as  adjusted  from  time to time is
hereinafter  sometimes  referred to as the "Exercise  Price." This Warrant is or
may be one of a series of  Warrants  identical  in form issued by the Company to
purchase an aggregate of Shares of Common  Stock.  The  Securities,  as adjusted
from time to time, underlying the Warrants are hereinafter sometimes referred to
as "Warrant Securities". The Securities issuable upon the exercise hereof are in
all respects  identical to the securities being purchased by the Underwriter for
resale to the public  pursuant to the terms and  conditions of the  Underwriting
Agreement entered into on this date between the Company and Holder.

(1.) Exercise of Warrant.  Subject to the provisions of Section (7) hereof, this
     Warrant  may be  exercised  in whole or in part at  anytime or from time to
     time on or after , 2003, but not later than 12:00 p.m., Spokane, Washington
     Time   on  ,   2007,   or  if   -------------------------------------------
     ----------------------------  , 2007 is a day on which banking institutions
     are authorized by law to close, then on the next succeeding day which shall
     not be such a day, by presentation  and surrender  hereof to the Company or
     at the office of its stock transfer  agent,  if any, with the Purchase Form
     annexed  hereto duly  executed and  accompanied  by payment of the Exercise
     Price for the number of shares of Common Stock or Redeemable  Warrants,  as
     the case may be as  specified in such Form,  together  with all federal and
     state taxes  applicable  upon such exercise.  The Company agrees to provide
     notice to the Holder that any tender offer is being made for the Securities
     no later  than the first  business  day after the day the  Company  becomes
     aware  that any  tender  offer is being  made for the  Securities.  If this
     Warrant should be exercised in part only, the Company shall, upon surrender
     of this  Warrant  for  cancellation,  execute  and  deliver  a new  Warrant
     evidencing  the right of the Holder to  purchase  the balance of the shares
     purchasable  hereunder  along with any additional  Redeemable  Warrants not
     exercised. Upon receipt by the Company of this Warrant at the office of the
     Company or at the office of the Company's  stock transfer  agent, in proper
     form for exercise and accompanied by the total Exercise  Price,  the Holder
     shall be deemed to be the holder of record of the Securities  issuable upon
     such exercise, notwithstanding that the stock transfer books of the Company
     shall  then be closed or that  certificates  representing  such  Securities
     shall not then be actually delivered to the Holder.
<PAGE>

(2.) Reservation  of  Securities.  The Company  hereby  agrees that at all times
     there shall be reserved for issuance  and/or delivery upon exercise of this
     Warrant  such  number of  shares of  Securities  as shall be  required  for
     issuance or delivery upon exercise of this Warrant.  The Company  covenants
     and agrees that,  upon exercise of the Warrants and payment of the Exercise
     Price  therefor,  all  Securities and other  securities  issuable upon such
     exercise shall be duly and validly issued,  fully paid,  non-assessable and
     not subject to the  preemptive  rights of any  stockholder.  As long as the
     Warrants  shall be  outstanding,  the Company shall use its best efforts to
     cause all  Securities  issuable  upon the  exercise  of the  Warrants to be
     listed (subject to official notice of issuance) on all securities exchanges
     on which the Common Stock issued to the public in  connection  herewith may
     then be listed and/or quoted on NASDAQ.

(3.) Fractional  Shares. No fractional shares or scrip  representing  fractional
     shares shall be issued upon the exercise of this  Warrant.  With respect to
     any fraction of a share called for upon any  exercise  hereof,  the Company
     shall pay to the Holder an amount in cash equal to such fraction multiplied
     by the  current  market  value  of such  fractional  share,  determined  as
     follows:

     (a)  If the  Securities  are listed on a national  securities  exchange  or
          admitted to unlisted trading privileges on such exchange,  the current
          value  shall be the last  reported  sale price of the Common  Stock on
          such  exchange on the last  business day prior to the date of exercise
          of this Warrant or if no such sale is made on such day, the average of
          the closing bid and asked prices for such day on such exchange; or,

     (b)  If the  Securities  are not so listed or admitted to unlisted  trading
          privileges,  the current  value shall be the mean of the last reported
          bid  and  asked  prices  reported  by  the  National   Association  of
          Securities Dealers Automated Quotation System (or, if not so quoted on
          NASDAQ or quoted by the National  Quotation Bureau,  Inc.) on the last
          business day prior to the date of the exercise of this Warrant; or (c)
          If the  Securities  are not so listed or admitted to unlisted  trading
          privileges  and bid and asked prices are not so reported,  the current
          value shall be an amount, not less than book value, determined in such
          reasonable  manner as may be  prescribed  by the Board of Directors of
          the Company, such determination to be final and binding on the Holder.
<PAGE>

(4.) Exchange,  Assignment  or Loss of Warrant.  This  Warrant is  exchangeable,
     without  expense,  at the  option  of the  Holder,  upon  presentation  and
     surrender  hereof to the  Company  or at the  office of its stock  transfer
     agent, if any, for other Warrants of different  denominations entitling the
     Holder thereof to purchase (under the same terms and conditions as provided
     by this Warrant) in the aggregate the same number of Securities purchasable
     hereunder.  This  Warrant  may  not  be  sold,  transferred,  assigned,  or
     hypothecated   until  after  one  year  from  the  effective  date  of  the
     registration  statement  except that it may be (i)  assigned in whole or in
     part to the officers of the  "Underwriter(s)",  and (ii) transferred to any
     successor  to the  business of the  "Underwriter(s)."  Any such  assignment
     shall be made by surrender of this Warrant to the Company, or at the office
     of its stock  transfer  agent,  if any,  with the  Assignment  Form annexed
     hereto duly  executed and with funds  sufficient  to pay any transfer  tax;
     whereupon  the Company  shall,  without  charge,  execute and deliver a new
     Warrant in the name of the assignee named in-such instrument of assignment,
     and this Warrant shall promptly be canceled. This Warrant may be divided or
     combined with other Warrants which carry the same rights upon  presentation
     hereof at the office of the Company or at the office of its stock  transfer
     agent,  if any,  together with a written  notice  specifying  the names and
     denominations  in which new  Warrants  are to be issued  and  signed by the
     Holder  hereof.  The term  "Warrant"  as used herein  includes any Warrants
     issued in  substitution  for or replacement of this Warrant,  or into which
     this  Warrant may be divided or  exchanged.  Upon receipt by the Company of
     evidence  satisfactory to it of the loss, theft,  destruction or mutilation
     of this  Warrant,  and (in the  case of  loss,  theft  or  destruction)  of
     reasonably   satisfactory   indemnification,   and   upon   surrender   and
     cancellation  of this Warrant,  if mutilated,  the Company will execute and
     deliver a new Warrant of like tenor and date. Any such new Warrant executed
     and delivered shall constitute an additional  contractual obligation on the
     part of the Company, whether or not the Warrant so lost, stolen, destroyed,
     or mutilated shall be at any time enforceable by anyone.

(5.) Rights of the Holder.  The Holder shall not, by virtue hereof,  be entitled
     to any rights of a stockholder in the Company, either at law or equity, and
     the rights of the Holder are limited to those  expressed in the Warrant and
     are not  enforceable  against  the  Company  except to the extent set forth
     herein.

(6.) Notices to Warrant  Holders.  So long as this Warrant shall be  outstanding
     and  unexercised  (i) if the Company shall pay any dividend  exclusive of a
     cash dividend,  or make any distribution  upon the Common Stock, or (ii) if
     the Company shall offer to the holders of Common Stock for  subscription or
     purchase by them any shares of stock of any class or any other  rights,  or
     (iii) if any capital reorganization of the Company, reclassification of the
     capital stock of the Company,  consolidation  or merger of the Company with
     or  into  another   corporation,   sale,   lease  or  transfer  of  all  or
     substantially  all of the  property  and  assets of the  Company to another
     corporation,  or  voluntary  or  involuntary  dissolution,  liquidation  or
     winding up of the Company shall be effected,  then,  in any such case,  the
     Company  shall cause to be delivered to the Holder,  at least ten (10) days
     prior  to the date  specified  in (x) or (y)  below,  as the case may be, a
     notice  containing a brief  description of the proposed  action and stating
     the date on which  (x) a record  is to be  taken  for the  purpose  of such
     dividend,   distribution   or   rights,   or  (y)  such   reclassification,
     reorganization,  consolidation,  merger,  conveyance,  lease,  dissolution,
     liquidation  or winding up is to take place and the date,  if any, is to be
     fixed,  as of which the holders of Common Stock of record shall be entitled
     to exchange their shares of Common Stock for equivalent securities or other
     property   deliverable   upon   such   reclassification,    reorganization,
     consolidation, merger, conveyance, dissolution, liquidation or winding up.
<PAGE>

(7.) Adjustment  of  Exercise  Price  and  Number  of  Shares  of  Common  Stock
     Deliverable.

(A)

     (i)  Except as hereinafter provided, in the event the Company shall, at any
          time or from time to time after the date  hereof,  issue any shares of
          Common Stock as a stock  dividend to the holders of Common  Stock,  or
          subdivide  or combine the  outstanding  shares of Common  Stock into a
          greater or lesser number of shares (any such issuance,  subdivision or
          combination  being  herein  call a  "Change  of  Shares"),  then,  and
          thereafter  upon each further Change of Shares,  the Exercise Price of
          the Common  Stock  issuable  upon the  exercise of the Warrant and the
          Redeemable  Warrant  in  effect  immediately  prior to such  Change of
          Shares shall be changed to a price (including any applicable  fraction
          of a cent to the nearest  cent)  determined by dividing (i) the sum of
          (a) the total number of shares of Common Stock outstanding immediately
          prior to such Change of Shares,  multiplied  by the Exercise  Price in
          effect  immediately  prior  to  such  Change  of  Shares,  and (b) the
          consideration,  if any,  received by the Company  upon such  issuance,
          subdivision  or  combination  by (ii) the  total  number  of shares of
          Common  Stock  outstanding  immediately  after such  Change of Shares;
          provided,  however,  that in no  event  shall  the  Exercise  Price be
          adjusted  pursuant to this  computation  to an amount in excess of the
          Exercise Price in effect immediately prior to such computation, except
          in the case of a combination of outstanding shares of Common Stock.

          For the purposes of any adjustment to be made in accordance  with this
          Section (7) the following provisions shall be applicable:

     (I)  Shares  of  Common  Stock   issuable  by  way  of  dividend  or  other
          distribution  on any capital  stock of the Company  shall be deemed to
          have been issued  immediately after the opening of business on the day
          following  the  record  date  for the  determination  of  shareholders
          entitled to receive such dividend or other  distribution  and shall be
          deemed to have been issued without consideration.
<PAGE>

     (II) The number of shares of Common Stock at any one time outstanding shall
          not be deemed to include  the number of shares  issuable  (subject  to
          readjustment  upon the actual  issuance  thereof) upon the exercise of
          options,  rights or warrants  and upon the  conversion  or exchange of
          convertible or exchangeable securities.

     (ii) Upon each  adjustment of the Exercise  Price  pursuant to this Section
          (7),  the  number of shares of Common  Stock and  Redeemable  Warrants
          purchasable  upon the  exercise  of each  Warrant  shall be the number
          derived  by  multiplying  the  number of  shares  of Common  Stock and
          Redeemable Warrants  purchasable  immediately prior to such adjustment
          by the Exercise Price in effect prior to such  adjustment and dividing
          the product so obtained by the applicable adjusted Exercise Price.

(B)  In  case  of any  reclassification  or  change  of  outstanding  Securities
     issuable upon  exercise of the Warrants  (other than a change in par value,
     or from par value to no par value,  or from no par value to par value or as
     a result of a subdivision or combination),  or in case of any consolidation
     or merger of the  Company  with or into  another  corporation  other than a
     merger  with  a   "Subsidiary"   (which  shall  mean  any   corporation  or
     corporations,  as the case may be, of which capital  stock having  ordinary
     power to elect a majority  of the Board of  Directors  of such  corporation
     (regardless  of whether or not at the time capital stock of any other class
     or  classes of such  corporation  shall  have or may have  voting  power by
     reason of the  happening  of any  contingency)  is at the time  directly or
     indirectly  owned by the Company or by one or more  Subsidiaries) or by the
     Company  and one or more  Subsidiaries  in which  merger the Company is the
     continuing corporation and which does not result in any reclassification or
     change of the then  outstanding  shares of  Common  Stock or other  capital
     stock  issuable upon  exercise of the Warrants  (other than a change in par
     value, or from par value to no par value, or from no par value to par value
     or as a result of  subdivision  or  combination)  or in case of any sale or
     conveyance  to another  corporation  of the  property  of the Company as an
     entirety or  substantially  as an  entirety,  then,  as a condition of such
     reclassification,  change,  consolidation,  merger, sale or conveyance, the
     Company, or such successor or purchasing  corporation,  as the case may be,
     shall make lawful and adequate provision whereby the Holder of each Warrant
     then outstanding  shall have the right thereafter to receive on exercise of
     such Warrant the kind and amount of securities and property receivable upon
     such reclassification, change, consolidation, merger, sale or conveyance by
     a holder of the number of securities issuable upon exercise of such Warrant
     immediately prior to such reclassification,  change, consolidation, merger,
     sale or conveyance and shall forthwith file at the principal  office of the
     Company  a  statement  signed  on its  behalf  by its  President  or a Vice
     President and by its  Treasurer or an Assistant  Treasurer or its Secretary
     or an Assistant Secretary evidencing such provision.  Such provisions shall
     include  provision for adjustments  which shall be as nearly  equivalent as
     may be practicable to the adjustments  provided for in Section (7)(A).  The
     above provisions of this Section (7)(B) shall similarly apply to successive
     reclassifications  and changes of shares of Common Stock and to  successive
     consolidations, mergers, sales or conveyances.
<PAGE>

(C)  Irrespective  of any  adjustments  or changes in the Exercise  Price or the
     number of Securities purchasable upon exercise of the Warrants, the Warrant
     Certificates  theretofore  and thereafter  issued shall (unless the Company
     shall  exercise  its  option to issue  new  Warrant  Certificates  pursuant
     hereto)  continue to express the Exercise Price per share and the number of
     shares  purchasable  thereunder  as the  Exercise  Price  per share and the
     number  of  shares  purchasable  thereunder  as  expressed  in the  Warrant
     Certificates when the same were originally issued.

(D)  After each  adjustment of the Exercise  Price pursuant to this Section (7),
     the Company will promptly prepare a certificate signed on its behalf by the
     President or Vice President, and by the Treasurer or an Assistant Treasurer
     or the Secretary or an Assistant  Secretary,  of the Company setting forth:
     (i) the  Exercise  Price as so  adjusted,  (ii) the  number  of  Securities
     purchasable upon exercise of each Warrant, after such adjustment, and (iii)
     a brief statement of the facts accounting for such adjustment.  The Company
     will promptly file such certificate in the Company's minute books and cause
     a brief  summary  thereof to be sent by  ordinary  first class mail to each
     Holder at his last address as it shall appear on the registry  books of the
     Company.  No failure to mail such  notice nor any defect  therein or in the
     mailing  thereof shall affect the validity  thereof except as to the holder
     to whom the Company failed to mail such notice,  or except as to the holder
     whose notice was defective. The affidavit of an officer or the Secretary or
     an  Assistant  Secretary  of the  Company  that such notice has been mailed
     shall, in the absence of fraud, be prima facie evidence of the facts stated
     therein.

     (i)  Intent of Provisions.  Notwithstanding  any provision to the contrary,
          if any  event  occurs  as to  which,  in the  opinion  of the Board of
          Directors of the Company,  the other  provisions of this Section 7 are
          not strictly  applicable or if strictly  applicable,  would not fairly
          protect  the rights of the  Holders'  Warrant in  accordance  with the
          essential intent and principles of such provisions, then such Board of
          Directors  shall  appoint  a  firm  of  independent  certified  public
          accountants  (which may be the regular  auditors of the Company) which
          shall give  their  opinion  upon the  adjustment,  if any,  on a basis
          consistent  with such essential  intent and  principles,  necessary to
          preserve, without dilution, the rights of the Holders. Upon receipt of
          such opinion by the Board of  Directors  of the  Company,  the Company
          shall forthwith make the adjustments described therein
<PAGE>

(E)  No  adjustment  of the  Exercise  Price  shall be made as a result of or in
     connection  with the issuance or sale of  Securities  if the amount of said
     adjustment shall be less than $0.10, provided,  however, that in such case,
     any  adjustment  that would  otherwise be required then to be made shall be
     carried forward and shall be made at the time of and together with the next
     subsequent  adjustment  that shall amount,  together with any adjustment so
     carried  forward,  to at least  $.10.  In  addition,  Holders  shall not be
     entitled to cash dividends paid by the Company prior to the exercise of any
     Warrant or Warrants held by them.

(F)  In the event that the  Company  shall at any time prior to the  exercise of
     all Warrants declare a dividend consisting solely of shares of Common Stock
     or otherwise distribute to its stockholders any assets,  property,  rights,
     or evidences of indebtedness, the Holders of the unexercised Warrants shall
     thereafter be entitled,  in addition to the Securities or other  securities
     and property  receivable upon the exercise  thereof,  to receive,  upon the
     exercise of such Warrants, the same property,  assets, rights, or evidences
     of indebtedness,  that they would have been entitled to receive at the time
     of such  dividend or  distribution  as if the Warrants  had been  exercised
     immediately prior to such dividend or distribution. At the time of any such
     dividend or distribution,  the Company shall make  appropriate  reserves to
     ensure the timely performance of the provisions of this Section (7).

     (G)

     (G.1)Right to Exercise on a Net Issuance  Basis. In lieu of exercising this
          Warrant for cash,  the Holder  shall have the right to  exercise  this
          Warrant or any portion thereof (the "Net Issuance  Right") into Common
          Stock as provided in this Section G.1 at any time or from time to time
          during the period  specified  on page one of this  Warrant  Agreement,
          hereof by the  surrender  of this  Warrant to the Company  with a duly
          executed and  completed  Exercise  Form marked to reflect net issuance
          exercise.  Upon  exercise of the Net Issuance  Right with respect to a
          particular  number of shares  subject to this Warrant and noted on the
          Exercise Form (the "Net Issuance Warrant  Shares"),  the Company shall
          deliver to the Holder  (without  payment by the Holder of any Exercise
          Price or any cash or other consideration) (X) that number of shares of
          fully  paid and  nonassessable  shares  of Common  Stock  equal to the
          quotient  obtained  by  dividing  the  value of this  Warrant  (or the
          specified  portion  hereof) on the Net Issuance  Exercise Date,  which
          value shall be determined by  subtracting  (A) the aggregate  Exercise
          price of the Net  Issuance  Warrant  Shares  immediately  prior to the
          exercise of the Net Issuance  Right from (B) the aggregate fair market
          value of the Net Issuance  Warrant  Shares  issuable  upon exercise of
          this  Warrant (or the  specified  portion  hereof) on the Net Issuance
          Exercise  Date (as herein  defined) by (Y) the fair  market  value one
          share of Common  Stock on the Net  Issuance  Exercise  Date (as herein
          defined).  Expressed  as a formula as shown  below,  such net issuance
          exercise  shall be computed as  follows:  X = B-A -- Y Where:  X = the
          number of shares of Common  Stock that may be issued to the Holder Y =
          the fair market  value  ("FMV") of one share of Common Stock as of the
          Net Issuance Exercise Date A = the aggregate  Exercise Price (i.e. the
          product  determined by multiplying the Net Issuance  Warrant Shares by
          the Exercise Price) B = the aggregate FMV (i.e. the product determined
          by multiplying the FMV by the Net Issuance Warrant Shares).
<PAGE>

     (G.1.2)  Determination  of Fair Market Value.  For purposes of this Section
          G.1.2,  "fair  market  value" of a share of Common Stock as of the Net
          Issuance Exercise Date shall mean:

          (i)  if the Net Issuance  Right is exercised  in  connection  with and
               contingent  upon  a  Public   Offering,   and  if  the  Company's
               registration  Statement relating to such Public Offering has been
               declared effective by the SEC, then the initial "Price to Public"
               specified in the final Prospectus with respect to such offering.

          (ii) if the Net Issuance Right is not exercised in connection with and
               contingent upon a Public Offering, then as follows:

               (a)  If traded on a securities exchange, the fair market value of
                    the  Common  Stock  shall be deemed to be the last  reported
                    sale price or if no reported  sale takes place,  the average
                    of the last  reported  sale  prices  for the last  three (3)
                    trading days prior to the Net Issuance Date;

               (b)  If traded on the Nasdaq  National Market or the Nasdaq Small
                    Cap Market,  the fair market value of the Common Stock shall
                    be deemed to be the average of the last  reported sale price
                    of the common  Stock on such  Market over the last three (3)
                    trading days prior to the Net Issuance Exercise Date;

               (c)  If traded over-the-counter other than on the Nasdaq National
                    market or the Nasdaq SmallCap Market,  the fair market value
                    of the Common Stock shall be deemed to be the average of the
                    midpoint  between  the  closing  bid and ask  prices  of the
                    Common Stock over the 3-day trading  period prior to the Net
                    Issuance Exercise Date; and,
<PAGE>

               (d)  If there is no public market for the Common Stock,  then the
                    fair market value shall be determined by mutual agreement of
                    the Warrantholder and the Company,  and if the Warrantholder
                    and the  company  are unable to so agree,  at the  Company's
                    sole expense, by an investment banker of national reputation
                    selected  by the Company and  reasonably  acceptable  to the
                    Warrantholder.

(8.) Piggyback  Registration.  If,  at any time  commencing  one  year  from the
     effective  date of the  registration  statement and expiring four (4) years
     thereafter,  the Company  proposes to register any of its securities  under
     the  Securities  Act of  1933,  as  amended  (the  "Act")  (other  than  in
     connection  with a merger or pursuant to Form S-8, S-4 or other  comparable
     registration  statement) it will give written notice by registered mail, at
     least  thirty  (30) days  prior to the  filing  of each  such  registration
     statement,  to the Holders and to all other Holders of the Warrants  and/or
     the Warrant  Securities  of its  intention to do so. If the Holder or other
     Holders of the Warrants and/or Warrant Securities notify the Company within
     twenty (20) days after receipt of any such notice of its or their desire to
     include any such securities in such proposed  registration  statement,  the
     Company  shall  afford  each of the  Underwriter  and such  Holders  of the
     Warrants and/or Warrant Securities the opportunity to have any such Warrant
     Securities registered under such registration  statement.  In the event any
     underwriter   underwriting  the  sale  of  securities  registered  by  such
     registration  statement shall limit the number of securities  includable in
     such  registration  by  shareholders  of the  Company,  the  number of such
     securities  shall be  allocated  pro rata among the holders of Warrants and
     the holders of other securities entitled to piggyback  registration rights.
     Notwithstanding the provisions of this Section,  the Company shall have the
     right at any time after it shall have given written notice pursuant to this
     Section  (irrespective  of whether a written  request for  inclusion of any
     such  securities  shall  have  been  made)  to  elect  not to file any such
     proposed registration  statement,  or to withdraw the same after the filing
     but prior to the effective date thereof.

(9.) Demand Registration.

     (a)  At any  time  commencing  one  year  from  the  effective  date of the
          registration  statement  and expiring four (4) years  thereafter,  the
          Holders of the  Warrants  and/or  Warrant  Securities  representing  a
          "Majority" (as hereinafter  defined) of such securities  (assuming the
          exercise of all of the Warrants)  shall have the right (which right is
          in addition to the  registration  rights  under  Section (i)  hereof),
          exercisable  by written  notice to the  Company,  to have the  Company
          prepare and file with the  Securities  and  Exchange  Commission  (the
          "Commission"),  on one  occasion,  a  registration  statement and such
          other  documents,  including a prospectus,  as may be necessary in the
          opinion  of  both   counsel  for  the  Company  and  counsel  for  the
          Underwriter and Holders, in order to comply with the provisions of the
          Act, so as to permit a public  offering  and sale of their  respective
          Warrant Securities for nine (9) consecutive months by such Holders and
          any other holders of the Warrants and/or Warrant Securities who notify
          the  Company  within ten (10) days  after  receiving  notice  from the
          Company of such request.
<PAGE>

     (b)  The  Company  covenants  and  agrees  to give  written  notice  of any
          registration  request  under this Section (i) by any Holder or Holders
          to all  other  registered  Holders  of the  Warrants  and the  Warrant
          Securities  within  ten (10) days from the date of the  receipt of any
          such registration request.

     (c)  In addition to the  registration  rights under this Section (9) at any
          time commencing one year after the effective date of the  registration
          statement  and  expiring  four (4) years  thereafter,  the  Holders of
          Representative's  Warrants  and/or Warrant  Securities  shall have the
          right,  exercisable  by written  request to the  Company,  to have the
          Company  prepare and file,  on one  occasion,  with the  Commission  a
          registration  statement so as to permit a public offering and sale for
          nine (9) consecutive months by such Holders of its Warrant Securities;
          provided,  however, that the provisions of Section (9)(b) hereof shall
          not apply to any such  registration  request and  registration and all
          costs  incident  thereto  shall be at the  expense  of the  Holder  or
          Holders making such request.

(10.)Covenants of the Company With Respect to  Registration.  In connection with
     any registration under Section (8) or (9) hereof, the Company covenants and
     agrees as follows:

     (a)  The  Company  shall  use  its  best  efforts  to  file a  registration
          statement  within thirty (30) days of receipt of any demand  therefor,
          shall use its best efforts to have any registration statement declared
          effective at the earliest possible time, and shall furnish each Holder
          desiring to sell Warrant  Securities  such number of  prospectuses  as
          shall reasonably be requested.

     (b)  The  Company  shall  pay all costs  (excluding  fees and  expenses  of
          Holder(s)' counsel and any underwriting or selling commissions),  fees
          and expenses in  connection  with all  registration  statements  filed
          pursuant  to  Sections  (h),  (i) and (j)  hereof  including,  without
          limitation,   the  Company's  legal  and  accounting  fees,   printing
          expenses,  blue sky fees and  expenses.  If the Company  shall fail to
          comply with the provisions of Section  (10)(a),  the Company shall, in
          addition  to any other  equitable  or other  relief  available  to the
          Holder(s),  extend the Exercise Period by such number of days as shall
          equal the delay caused by the Company's failure.

<PAGE>

     (c)  The Company  will take all  necessary  action which may be required in
          qualifying  or  registering  the  Warrant  Securities  included  in  a
          registration  statement for offering and sale under the  securities or
          blue  sky  laws of such  states  as are  reasonably  requested  by the
          Holder(s), provided that the Company shall not be obligated to execute
          or file any  general  consent to service of process or to qualify as a
          foreign  corporation  to do  business  under  the  laws  of  any  such
          jurisdiction.

     (d)  The Company shall indemnify the Holder(s) of the Warrant Securities to
          be sold pursuant to any  registration  statement  and each person,  if
          any, who controls such Holders within the meaning of Section 15 of the
          Act or  Section  20(a) of the  Securities  Exchange  Act of  1934,  as
          amended  ("Exchange Act"),  from and against all loss, claim,  damage,
          expense or liability  (including all expenses  reasonably  incurred in
          investigating, preparing or defending against any claim whatsoever) to
          which any of them may become  subject  under the Act, the Exchange Act
          or otherwise, arising from such registration statement but only to the
          same  extent and with the same  effect as the  provisions  pursuant to
          which the Company has agreed to indemnify the Underwriter contained in
          Section 7 of the Underwriting Agreement relating to the offering.

     (e)  The  Holder(s)  of the  Warrant  Securities  to be sold  pursuant to a
          registration  statement,  and  their  successors  and  assigns,  shall
          severally,  and not jointly,  indemnify the Company,  its officers and
          directors and each person, if any, who controls the Company within the
          meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
          against all loss, claim, damage or expense or liability (including all
          expenses reasonably incurred in investigating,  preparing or defending
          against any claim  whatsoever)  to which they may become subject under
          the Act,  the  Exchange Act or  otherwise,  arising  from  information
          furnished  by or on behalf of such  Holders,  or their  successors  or
          assigns, for specific inclusion in such registration  statement to the
          same  extent  with the same  effect  as the  provisions  contained  in
          Section  7  of  the  Underwriting  Agreement  pursuant  to  which  the
          Underwriter has agreed to indemnify the Company.

     (f)  The Holder(s) may exercise  their Warrants prior to the initial filing
          of any registration statement or the effectiveness thereof.

     (g)  The Company  shall not permit the  inclusion of any  securities  other
          than  the  Warrant  Securities  to be  included  in  any  registration
          statement  filed  pursuant to Section (9) hereof,  or permit any other
          registration   statement  to  be  or  remain   effective   during  the
          effectiveness  of a registration  statement  filed pursuant to Section
          (9) hereof,  other than a secondary  offering of equity  securities of
          the Company,  without the prior written  consent of the Holders of the
          Warrants  and  Warrant  Securities  representing  a  Majority  of such
          securities.
<PAGE>

     (h)  The Company shall furnish to each Holder participating in the offering
          and to each underwriter,  if any, a signed  counterpart,  addressed to
          such  Holder or  underwriter,  of (x) an  opinion  of  counsel  to the
          Company, dated the effective date of such registration statement (and,
          if such  registration  includes an underwritten  public  offering,  an
          opinion  dated  the  date  of  the  closing  under  the   underwriting
          agreement),  and (y) a "cold comfort"  letter dated the effective date
          of such registration  statement (and, if such registration includes an
          underwritten  public offering,  a letter dated the date of the closing
          under the  underwriting  agreement)  signed by the independent  public
          accountants  who  have  issued  a report  on the  Company's  financial
          statements  included  in such  registration  statement,  in each  case
          covering   substantially   the  same  matters  with  respect  to  such
          registration  statement (and the prospectus  included therein) and, in
          the  case  of  such  accountants'   letter,  with  respect  to  events
          subsequent  to  the  date  of  such  financial   statements,   as  are
          customarily   covered  in  opinions   of   issuer's   counsel  and  in
          accountants'  letters delivered to underwriters in underwritten public
          offerings of securities.

     (i)  The Company shall as soon as  practicable  after the effective date of
          the  registration  statement,  and  in  any  event  within  15  months
          thereafter, make "generally available to its security holders" (within
          the  meaning of Rule 158 under the Act) an earnings  statement  (which
          need  not be  audited)  complying  with  Section  11(a) of the Act and
          covering a period of at least 12 consecutive  months  beginning  after
          the effective date of the registration statement.

     (j)  The Company shall deliver promptly to each Holder participating in the
          offering  requesting the correspondence and memoranda  described below
          and to the managing underwriters, copies of all correspondence between
          the  Commission  and the  Company,  its  counsel or  auditors  and all
          memoranda  relating to  discussions  with the  Commission or its staff
          with respect to the registration  statement and permit each Holder and
          underwriter to do such investigation,  upon reasonable advance notice,
          with  respect  to  information   contained  in  or  omitted  from  the
          registration statement as it deems reasonably necessary to comply with
          applicable  securities  laws or rules of the National  Association  of
          Securities Dealers,  Inc. ("NASD") or an Exchange.  Such investigation
          shall   include   access  to  books,   records  and   properties   and
          opportunities to discuss the business of the Company with its officers
          and independent  auditors,  all to such reasonable  extent and at such
          reasonable times and as often as any such Holder or underwriter  shall
          reasonably request.
<PAGE>

     (k)  The  Company  shall  enter  into an  underwriting  agreement  with the
          managing  underwriters,  which may be the Underwriter.  Such agreement
          shall be satisfactory  in form and substance to the Company,  and such
          managing   underwriters,   and  shall  contain  such  representations,
          warranties  and  covenants  by the Company and such other terms as are
          customarily  contained in agreements of that type used by the managing
          underwriter;  provided  however,  that no Holder  shall be required to
          make  any  representations,  warranties  or  covenants  or  grant  any
          indemnity to which it shall object in any such underwriting agreement.
          The Holders shall be parties to any underwriting agreement relating to
          an  underwritten  sale of their Warrant  Securities  and may, at their
          option,  require that any or all the  representations,  warranties and
          covenants  of the Company to or for the  benefit of such  underwriters
          shall  also  be made to and for  the  benefit  of such  Holders.  Such
          Holders  shall  not  be  required  to  make  any   representations  or
          warranties  to or  agreements  with the  Company  or the  underwriters
          except as they may relate to such Holders and their  intended  methods
          of distribution.

     (l)  For purposes of this  Agreement,  the term  "Majority" in reference to
          the Holders of Warrants or Warrant Securities, shall mean in excess of
          fifty (50%) of the then  outstanding  Warrants and Warrant  Securities
          that (i) are not held by the Company, an affiliate, officer, creditor,
          employee  or  agent  thereof  or any of their  respective  affiliates,
          members of their family,  persons acting as nominees or in conjunction
          therewith  or (ii) have not been  resold to the public  pursuant  to a
          registration statement filed with the Commission under the Act.

(11.)Buy-Out of Registration  Demand. In lieu of carrying out its obligations to
     effect a Piggyback  Registration or Demand  Registration of any registrable
     securities  pursuant  to the  Section,  the  Company  may  carry  out  such
     obligation  by  offering  to  purchase  and  purchasing  such   Registrable
     Securities  requested  to be  registered  in an amount in cash equal to the
     difference  between  (a) 95% of the last sale price of the Common  Stock on
     the day the request for  registration is made and (b) the Exercise Price in
     effect on such day;  the  purchase  transaction  closing  within  three (3)
     business  days;  provided  however,  that the Holder or Holders may decline
     such request rather than accept such offer by the Company.

(12.)Conditions  of  Company's  Obligations.   The  Company's  obligation  under
     Section 10 hereof  shall be  conditioned  as to each such public  offering,
     upon a timely  receipt by the Company in writing of: (a)  Information as to
     the terms of such public offering  furnished by or on behalf of the Holders
     making a public distribution of their Warrant Securities.

(13.)Continuing  Effect of Agreement.  The Company's  agreements with respect to
     the Warrant  Securities in this Warrant will continue in effect  regardless
     of the exercise or surrender of this Warrant.
<PAGE>

(14.)Notices.  Any notices or  certificates  by the Company to the Holder and by
     the Holder to the  Company  shall be deemed  delivered  if in  writing  and
     delivered personally or sent by certified mail, to the Holder, addressed to
     him or sent to 300 North  Argonne  Road,  Suite  202,  Spokane,  Washington
     99212,  or, if the  Holder  has  designated,  by notice in  writing  to the
     Company, any other address, to such other address,  and, if to the Company,
     addressed to Carey  Birmingham,  4703 Shavano Oak,  Suite 102, San Antonio,
     Texas  78249.  The Company may change its address by written  notice to the
     Holder.

(15.)Limited  Transferability.  This Warrant Certificate and the Warrant may not
     be sold, transferred,  assigned or hypothecated for a one-year period after
     the effective date of the Registration  Statement except to underwriters of
     the Offering  referred to in the  Underwriting  Agreement or to individuals
     who are either partners or officers of such an underwriter or by will or by
     operation of law and if transfer occurs after one year, the warrant must be
     exercised  immediately  upon transfer or it shall lapse. The Warrant may be
     divided or  combined,  upon  request to the Company by the Warrant  holder,
     into a certificate or certificates  evidencing the same aggregate number of
     Warrants.  The Warrant may not be offered,  sold,  transferred,  pledged or
     hypothecated in the absence of any effective  registration  statement as to
     such Warrant filed under the Act, or an exemption  from the  requirement of
     such  registration,  and compliance  with the applicable  federal and state
     securities laws. The Company may require an opinion of counsel satisfactory
     to the Company  that such  registration  is not required and that such laws
     are  complied  with.  The Company may treat the  registered  holder of this
     Warrant as he or it appears on the Company's book at any time as the Holder
     for  all  purposes.  The  Company  shall  permit  the  Holder  or his  duly
     authorized  attorney,  upon written request during ordinary business hours,
     to inspect and copy or make extracts from its books showing the  registered
     holders of Warrants.

(16.)Transfer to Comply With the  Securities  Act of 1933. The Company may cause
     the  following  legend,  or one  similar  thereto,  to be set  forth on the
     Warrants and on each certificate  representing  Warrant Securities,  or any
     other  security  issued or  issuable  upon  exercise  of this  Warrant  not
     theretofore   distributed  to  the  public  or  sold  to  underwriters  for
     distribution to the public  pursuant to Sections (8) or (9) hereof;  unless
     counsel  satisfactory  to the  Company  is of the  opinion  as to any  such
     certificate that such legend, or one similar thereto, is unnecessary:  "The
     warrants represented by this certificate are restricted  securities and may
     not be offered for sale, sold or otherwise transferred unless an opinion of
     counsel  satisfactory  to the Company is obtained  stating that such offer,
     sale or transfer is in compliance wrath state and federal securities law.

(17.)Applicable  Law.  This  Warrant  shall be  governed  by, and  construed  in
     accordance with, the laws of the State of Washington, without giving effect
     to conflict of law principles.

(18.)Amendment/Assignability.  This  Warrant  may  not be  amended  except  in a
     writing signed by each Holder and the Company. This Warrant Certificate and
     the  options  evidenced  hereby  may  not be  sold,  transferred,  pledged,
     hypothecated  or otherwise  disposed of except by Will, the Laws of Descent
     and  Distribution,  or other  testamentary  transfer.  Each  Holder of this
     Warrant Certificate,  and any shares of capital stock of the Company issued
     upon exercise of any such warrant,  by taking or holding the same, consents
     to  and  agrees  to  be  bound  by  the   provisions  of  this  Section  7.
     Notwithstanding  the above the Holder may transfer  twelve (12) months from
     the date  herein,  a portion  or all of the  Holder's  Warrants  to certain
     persons,  including  but not limited to the Holder's  officers,  directors,
     shareholders, employees or Registered Representatives,
<PAGE>

(19.)Severability.  If any  provisions  of  this  Warrant  shall  be  held to be
     invalid or  unenforceable,  such  invalidity  or  enforceability  shall not
     affect any other provision of this Warrant.

(20.)Survival of Indemnification  Provisions.  The indemnification provisions of
     this Warrant shall survive until           , 2012.

(21) Company to Provide  Reports.  Etc. While this Warrant  Certificate  remains
     outstanding,  the  Company  shall  mail to the  persons  in whose name this
     Warrant  Certificate is registered copies of all reports and correspondence
     which the Company mails to its stockholders.

(22) Representations  and Warranties of Holder. The Holder hereby represents and
     warrants to the Company:

     (a)  The Holder  understands  that this Warrant  Certificate and the Common
          Shares to be issued  herein,  HAS NOT BEEN APPROVED OR  DlSAPPROVED BY
          TME UNITED  STATES  SECURITIES  AND EXCHANGE  COMMISION,  THE STATE OF
          DELAWARE, OR ANY OTHER STATE SECURITIES AGENCIES.

     (b)  This Warrant  Certificate and the Common Stock to be issued herein may
          not be  transferred,  encumbered,  sold,  hypothecated,  or  otherwise
          disposed of to any person,  without the express prior written  consent
          of the Company and the prior opinion of counsel for the Company,  that
          such  disposition  will not violate  Federal  and/or State  Securities
          Acts.  Disposition  shall  include,  but is not  limited  to  acts  of
          selling,    assigning,     transferring,     pledging,    encumbering,
          hypothecating, giving, and any form of conveying, whether voluntary or
          not.

     (c)  To the extent  that any Federal  and/or  State  Securities  laws shall
          require, the Holder hereby agrees that any shares acquired pursuant to
          this Warrant  Certificate shall be without preference as to dividends,
          assets,  or voting  rights and shall have no greater or lesser  rights
          per share than the securities issued for cash or its equivalent.

     (d)  This Warrant is subject in all respects to the terms and provisions of
          an Underwriting  Agreement between the Company and Public  Securities,
          Inc.,  (the  Underwriter  therein  and  the  initial  Holder  hereof),
          relating to a public  offering of the Common Stock and Warrants of the
          Company dated , 2002.
<PAGE>

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized  officers  and to be sealed with the seal of the Company  this day of
May, 2002.

INTERNATIONAL TEST SYSTEMS, INC., INC.

By
  ------------------------------------
         Carey Birmingham, President
Date:
      --------------------------------
Attest:

Secretary

<PAGE>

                                  PURCHASE FORM

The Undersigned  hereby  exercises the Warrant  Certificate to subscribe for and
purchase  shares  of  Common  Stock,  $0.001  par value  ("Common  Shares"),  of
INTERNATIONAL TEST SYSTEMS, a Delaware Corporation,  evidenced by the within the
Warrant  Certificate  and herewith  makes payment of the Exercise.  Kindly issue
certificates  for the Common Shares in accordance  with the  instructions  given
below.  The  certificate  for the  unexercised  balance,  if any,  of the within
Warrant Certificate will be registered in the name of the undersigned.

Dated:

(Signature)

Instructions for registration of Common Shares

Name (Please print)

Social Security or Other Identifying Number:

Address:

Street

City, State and Zip Code

HOLDER:

PUBLIC SECURITIES, INC.

By:
         --------------------------------------------
Title:   President

Instructions  for  registration  of  certificate  representing  the  unexercised
balance of Warrant (if any)

Name (Please print)

Social Security or Other Identifying Number:

Address:

Street

City, State and Zip Code

<PAGE>

                               FORM OF ASSIGNMENT
                (to be executed by the registered holder hereof)

FOR VALUE  RECEIVED,  does hereby sell,  assign and  transfer  unto the right to
purchase  shares of the Common Stock of the Company,  $0.001 par value  ("Common
Shares"),  of INTERNATIONAL TEST SYSTEMS, a Delaware  Corporation,  evidenced by
the within Warrant, and does hereby irrevocably  constitute and appoint attomey,
to  transfer  such  right  on the  books  of the  Company  with  full  power  of
substitution in the premises.

DATED:                         , 200
      -------------------------      ------

(Signature)

(Signature guaranteed)Exhibit 10.01

                                 PROMISSORY NOTE

$10,000,000.00                                                     June 13, 2002

FOR VALUE RECEIVED, the undersigned ("Borrower"), promise(s) to pay to the order
of EDWARD MIKE DAVIS ("Lender"), at 200 Rancho Circle, Las Vegas, Nevada 89107,
or at such other place as Lender may direct, in lawful money of the United
States of America, without grace or offset, the principal sum of TEN MILLION AND
NO/100 DOLLARS ($10,000,000.00), with interest thereon at the rate provided
below until fully paid.

1.       PAYMENT TERMS

         The entire principal balance, with accrued interest thereon, shall be
due and payable on January 3, 2003 (the "Maturity Date") and is subject to
section 17 hereof.

2.       INTEREST

         Interest on the outstanding principal amount of this Note shall accrue
at a rate equal to one percent (1%) in excess of the "Reference Rate" in effect
on the date of this Promissory Note, but in no event shall this be less than six
percent (6%) per annum (the "Contract Rate"). As used herein, the term
"Reference Rate" means the rate of interest from time to time publicly announced
by Bank of America, N.A. ("Bank"), as its reference rate, even though Bank may
lend to its customers at rates that are at, below or above the reference rate.
Interest hereunder shall be calculated for the actual number of days elapsed on
the basis of a 360-day year.

3.       DEFAULT INTEREST

         If the entire unpaid principal balance of this Promissory Note,
together with accrued and unpaid interest thereon, is not paid when due, whether
on the Maturity Date or any earlier date as a result of acceleration of this
Promissory Note after a default hereunder (after passage of any applicable grace
or cure period), then the amount unpaid shall bear interest from the Maturity
Date or such earlier date, as the case may be, at the per annum interest rate
(the "Default Rate") equal to the sum of ten percent (10%) plus the Contract
Rate. The Default Rate shall continue until payment in full of any sums due
hereunder.

4.       APPLICATION OF PAYMENTS

         Each payment received by Lender shall be applied in the following
order:

A. First, to attorney's fees, costs and expenses or any other amount due
hereunder save for the amounts described in (B) and (C) immediately below;

B. Next, to accrued interest due hereunder; and

C. Finally, to the principal balance hereof.

Notwithstanding the foregoing, in the event that Borrower does not pay the
outstanding principal balance and accrued interest due under this Promissory
Note, when due, whether on the Maturity Date or on any earlier date as a result
of acceleration of this Promissory Note, the Lender at its option shall apply
any payments it then receives in such order as Lender deems appropriate in its
sole discretion.

                                                            [Initials: JWS & KE]
<PAGE>

5.       DEFAULT AND ACCELERATION

         Upon the Borrower's failure to make any payment required under this
Promissory Note, as and when due, or the failure of Borrower to comply with any
term, covenant or condition of that certain Acquisition Agreement and Plan of
Merger, of even date herewith between Borrower, Red Star, Inc. and Mid-Power
Resources Corporation (the "Acquisition Agreement") within the time provided,
Lender may, at any time thereafter, together or singly,

         (i) declare the entire outstanding principal balance due hereunder,
         together with all accrued and unpaid interest thereon, to be
         immediately due and payable, thereby accelerating this Promissory Note;
         and

         (ii) exercise immediately and without notice, any and all other rights
         and remedies available under this Note or the Acquisition Agreement or
         at law or in equity.

6.       DEFINITIONS

         Any terms used in this Promissory Note requiring a definition shall
have the definition given in this Section, unless elsewhere defined in this
Promissory Note. The term "Business Day" as used herein shall mean any day other
than a Saturday, Sunday or other day on which national banks in the State of
Nevada are not open for business.

7.       PREPAYMENT

There are no full or partial prepayment privileges of the principal amount due
under this Promissory Note.

8.       WAIVERS AND EXTENSIONS

         Borrower and all endorsers and guarantors and any and all others who
may at any time be or become liable for payment of all or any part of the loan
evidenced hereby severally waive presentment for payment, demand, notice of
dishonor or nonpayment, protest and notice of protest, notice of acceleration
and of intention to accelerate the Maturity Date, and any and all lack of
diligence or delays in collection or enforcement hereof, and agree that Lender
from time to time may extend the time for payment of any sums due under this
Promissory Note and grant releases to all endorsers and guarantors hereof,
without in any way affecting the liability of such parties hereunder.

9.       USURY

         No amounts under this Promissory Note shall be charged, paid or
collected from Borrower if the result of such charge payment or collection would
be to cause the loan evidenced hereby to be usurious under applicable law. If,
however, an amount is paid or collected which would otherwise cause the loan to
be usurious, such excess causing the Loan to be usurious shall be deemed a
payment of principal and shall be applied against and shall reduce the then
outstanding principal balance of the loan by a corresponding amount, and no
Prepayment Premium shall be charged on any such excess amount applied to
principal.

10.      SEVERABILITY

         In the event any one or more of the provisions contained in this
Promissory Note shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Promissory Note, but this
Promissory Note

                                                            [Initials: JWS & KE]

                                                                          Page 2
<PAGE>

shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein or therein.

11.      WAIVER OF TRIAL BY JURY

         BORROWER AND LENDER, BY ACCEPTANCE OF THIS PROMISSORY NOTE, HEREBY
INTENTIONALLY, VOLUNTARILY AND KNOWINGLY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, WAIVE TRIAL BY JURY IN ANY COURT ACTION, PROCEEDING OR COUNTERCLAIM
WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE
LOAN EVIDENCED BY THIS PROMISSORY NOTE, THIS PROMISSORY NOTE, OR ANY ACTS OR
OMISSIONS OF LENDER OR ITS AGENTS IN CONNECTION THEREWITH.

12.      JOINT AND SEVERAL LIABILITY

         If there shall be more than one Borrower named in this Promissory Note,
then the obligations and liabilities of such parties as Borrower shall be joint
and several.

13.      REMEDIES CUMULATIVE

         The rights, powers and remedies of Lender permitted by law, equity or
contract or as set forth herein or in the Acquisition Agreement shall be
cumulative and concurrent, and may be pursued singly, successively or together
against Borrower or the Collateral, at the sole discretion of the Lender, and to
the fullest extent permitted by law. Such rights, powers and remedies shall not
be exhausted by any exercise thereof but may be exercised as often as occasion
therefor shall occur. The failure to exercise any such right, power or remedy
shall in no event be construed as a waiver or release of the same. Lender shall
not by any act of omission or commission be deemed to have waived any of its
rights, powers or remedies under this Promissory Note or the Acquisition
Agreement unless such waiver be in writing and signed by Lender, and then only
to the extent specifically set forth therein. A waiver of a right in one event
shall not be construed as continuing or as a bar, or as a waiver of such right
on a subsequent event.

14.      FEES AND COSTS

         Borrower further promises to pay upon demand all reasonable attorney's
fees, costs and expenses (including, without limitation, court costs and
appraisal fees) incurred by Lender in connection with any default under this
Promissory Note and in any proceeding brought to enforce any of the provisions
of this Promissory Note or of the Acquisition Agreement (as applicable),
including probate, appellate and bankruptcy proceedings, any post-judgment
proceedings to collect or enforce any judgment or order relating to this
Promissory Note or the Acquisition Agreement (as applicable). This provision is
separate and several, and shall survive the merger of this provision into any
judgment.

15.      TIME OF THE ESSENCE

         Time shall be of the essence in performance of all obligations of
Borrower under this Promissory Note including, without limitation, the time
periods provided for the curing of defaults.

                                                            [Initials: JWS & KE]

                                                                          Page 3
<PAGE>

16.      HEADINGS FOR CONVENIENCE

         Headings and captions used in this Promissory Note are inserted for
convenience of reference only and neither constitute a part of this Promissory
Note nor are to be used to construe or interpret any of the provisions hereof.

17.      PAYMENT THROUGH ESCROW

          Escrow for the purposes of this Promissory Note shall mean Escrow #
02-06-0503-DTL at Nevada Title Company, 2500 North Buffalo, Las Vegas, Nevada
Attention: Troy Lochhead (251-5280). The principal and interest due on this
Promissory Note shall be paid in United States Treasury Obligations ("T-Bills").
On or before 12:00 noon on December 10, 2002, Borrower shall deposit T-Bills
into the Escrow in an amount sufficient to pay the principal and interest hereon
as of the Maturity Date. On such Maturity Date, Lender shall present this
Promissory Note, accepting payment hereof by accepting the T-Bills on deposit in
exchange for this Promissory Note marked "PAID IN FULL", with Nevada Title
Company delivering this Promissory Note, marked "PAID IN FULL" to Borrower.

18.      NO ORAL CHANGE

         This Promissory Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of the Borrower or Lender, but only by an agreement in writing, intended
for that specific purpose and signed by the party against whom enforcement of
any modification, amendment, waiver, extension, change, discharge or termination
is sought.

19.      APPLICABLE STATE LAW

         This Promissory Note shall be governed, construed, applied and enforced
in accordance with the laws of the State of Nevada.

Federal Taxpayer I.D. No.                         Borrower:

03 98403                                          MID-POWER SERVICE CORPORATION,
                                                  a Nevada corporation

                                                  By: /s/  James W. Scott
                                                     ---------------------------
                                                         James W. Scott
                                                         Its President

                                                  By: /s/ Kenneth M. Emter
                                                     ---------------------------
                                                          Kenneth M. Emter
                                                          Its Secretary

                                                            [Initials: JWS & KE]

                                                                          Page 4

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