Form of Convertible Redeemable Preferred Stock Purchase Agreement between Magnetech
      Industrial Services, Inc. and the purchasers scheduled therein


     

    Exhibit
      10.3


    
      	
               

               

               

               

              CONVERTIBLE
                REDEEMABLE PREFERRED STOCK PURCHASE AGREEMENT

               

               

               

              Between

               

               

               

              MAGNETECH
                INDUSTRIAL SERVICES, INC.

               

               

              and

               

               

              THE
                PURCHASER(S) LISTED ON

               

               

              SCHEDULE
                1 HERETO

               

              February
                __, 2004

               

               

               

            


    

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    THIS
      CONVERTIBLE REDEEMABLE PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”)
      is
      made and entered into as of February __, 2004, between Magnetech Industrial
      Services, Inc, a corporation organized and existing under the laws of the State
      of Indiana (the “Company”),
      and
      the purchaser listed on Schedule 1
      hereto
      (the “Purchaser”).

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement, the Company
      desires to issue and sell to the Purchaser and the Purchaser desires to acquire
      from the Company [
      ]
      shares
      of the Company’s Series A Convertible Redeemable Preferred Stock, (the
“Series A
      Preferred Stock”),
      with
      a Stated Value of one dollar ($1) per share, which is part of a sale of Series
      A
      Preferred Stock with an aggregate Stated Value of seven hundred and fifty
      thousand dollars ($750,000).

     

    IN
      CONSIDERATION of the mutual covenants contained in this Agreement, the Company
      and each Purchaser agree as follows:

     

     

    SECTION
      I 

     

    CERTAIN
      DEFINITIONS


     

    1.1 Certain
      Definitions.
      As used
      in this Agreement, and unless the context requires a different meaning, the
      following terms have the meanings indicated:

     

    “Affiliate”
      means,
      with respect to any Person, any Person that, directly or indirectly, controls,
      is controlled by or is under common control with such Person. For the purposes
      of this definition, “control”
      (including, with correlative meanings, the terms “controlled
      by”
      and
“under
      common control with”)
      shall
      mean the possession, directly or indirectly, of the power to direct or cause
      the
      direction of the management and policies of such Person, whether through the
      ownership of voting securities or by contract or otherwise.

     

    “Agreement”
      shall
      have the meaning set forth in the introductory paragraph of this
      Agreement.

    “Articles
      of Amendment”
      means
      the Amendment of the Company’s Articles of Incorporation that authorizes the
      Series A Preferred Stock annexed as Exhibit
      A
      hereto.

    


    “Business
      Day”
      means
      any day except Saturday, Sunday and any day which shall be a legal holiday
      or a
      day on which banking institutions in the State of New York are authorized or
      required by law or other government actions to close.

    “Change
      of Control”
      means
      the acquisition, directly or indirectly, by any Person of ownership of, or
      the
      power to direct the exercise of voting power with respect to, a majority of
      the
      issued and outstanding voting securities of the Company.

    “Closing”
      shall
      have the meaning set forth in Section
      2.2(a).

    



    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    “Closing
      Date”
      shall
      have the meaning set forth in Section
      2.2(a).

    “Common
      Stock”
      means
      shares now or hereafter authorized of the class of common stock, no par value,
      of the Company and stock of any other class into which such shares may hereafter
      have been reclassified or changed.

    


    “Company”
      shall
      have the meaning set forth in the introductory paragraph.

    


    “Control
      Person”
      shall
      have the meaning set forth in Section
      4.7 (a)
      hereof.

    


    “Conversion
      Date”
      shall
      have the meaning set forth in the Articles of Amendment.

    


    “Conversion
      Price”
      shall
      have the meaning set forth in the Articles of Amendment.

    “Default”
      means
      any event or condition which constitutes an Event of Default or which with
      the
      giving of notice or lapse of time or both would, unless cured or waived, become
      an Event of Default.

    


    “Disclosure
      Documents”
      means
      the documents and materials set forth on Schedule
      1.1
      hereto
      provided to the Purchaser and/or its representatives in connection with the
      Company and this offering.

    


    “Event
      of Default”
      shall
      have the meaning set forth in Section 5.

    


    “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended.

    


    “Indemnified
      Party”
      shall
      have the meaning set forth in Section
      4.7(b)
      hereof.

    


    “Indemnifying
      Party”
      shall
      have the meaning set forth in Section
      4.7(b)
      hereof.

    “Losses”
      shall
      have the meaning set forth in Section
      4.7(a)
      hereof.

    


    “Material”
      shall
      mean having a financial consequence in excess of $25,000.

    


    “Material
      Adverse Effect”
      shall
      have the meaning set forth in Section
      3.1(a).

    “NEWCO”
      shall
      mean the to-be-formed parent entity of the Company.

    “Person”
      means
      an individual or a corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or political subdivision thereof) or
      other entity of any kind.

    


    “Proceeding”
      means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

    



    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    “Purchase
      Price”
      shall
      have the meaning set forth in Section
      2.1(b).

    


    “Purchaser”
      shall
      have the meaning set forth in the introductory paragraph.

    


    “Redemption
      Price”
      shall
      mean an amount equal to the Stated Value of the Shares outstanding that are
      subject to redemption.

    “Reporting
      Issuer”
      means a
      company that is subject to the reporting requirements of Section 13 or 15(d)
      of
      the Exchange Act.

    


    “Required
      Approvals”
      shall
      have the meaning set forth in Section
      3.1(f).

    


    “SEC”
      means
      the Securities and Exchange Commission.

    


    “Securities
      Act”
      means
      the Securities Act of 1933, as amended.

    


    “Series A
      Preferred Stock”
      shall
      have the meaning set forth in the recital.

    


    “Shares”
      shall
      have the meaning set forth in Section
      2.1(a).

    


    “Stated
      Value”
      means
      the sum of One dollar ($1) per Share or seven hundred and fifty thousand dollars
      ($750,000) for all of the Shares.

    


    “Subsidiaries”
      shall
      have the meaning set forth in Section
      3.1(a).

    


    “Transaction
      Documents”
      means
      this Agreement and all exhibits and schedules hereto and all other documents,
      instruments and writings required pursuant to this Agreement.

     

    SECTION
      II 

     

    PURCHASE
      AND SALE OF CONVERTIBLE PREFERRED SHARES 

     

    2.1 Purchase
      and Sale; Purchase Price.

     

    (a) Subject
      to the terms and conditions set forth herein, the Company shall issue and sell
      and the Purchaser shall purchase [ ] shares of the Company’s Series A
      Preferred Stock (the “Shares”). The Series A Preferred Stock shall have the
      respective rights, preferences and privileges as set forth in the Articles
      of
      Amendment to be filed by the Company with the Secretary of State of Indiana
      prior to the Closing Date.

     

    (b) The
      purchase price for each Share shall be One Dollar ($1) (the “Per Share
      Consideration”). The Per Share Consideration multiplied by the number of Shares
      to be purchased by the Purchaser is referred to as the “Purchase
      Price.”

     


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    2.2 Execution
      and Delivery of Documents; The Closing.

     

    (a) The
      Closing of the purchase and sale of the Shares (the “Closing”) shall take place
      simultaneously with the execution and delivery of this Agreement (the “Closing
      Date”). On the Closing Date,

     

    (i) the
      Company shall execute and deliver to the Purchaser the certificates representing
      the Shares, which Shares shall have the respective rights, preferences and
      privileges as set forth in the Articles of Amendment annexed as Exhibit A
      hereto;
      and 

     

    (ii) the
      Purchaser shall deliver to the Company the Purchase Price, payable in cash
      or
      other immediately available funds, for the Shares. 

     

     

    SECTION
      III 

     

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Representations,
      Warranties and Agreements of the Company.
      The
      Company hereby makes the following representations and warranties to the
      Purchaser as of the date of this Agreement, all of which shall survive the
      Closing:

     

    (a) Organization
      and Qualification.
      The
      Company is a corporation, duly incorporated, validly existing and in good
      standing under the laws of the State of Indiana, with the requisite corporate
      power and authority to own and use its properties and assets and to carry on
      its
      business as currently conducted. The Company has no subsidiaries other than
      as
      set forth on Schedule
      3.1(a)
      attached
      hereto (collectively, the “Subsidiaries”).
      Each
      of the Subsidiaries is a corporation or limited liability company, duly
      incorporated or organized, validly existing and in good standing under the
      laws
      of the jurisdiction of its incorporation or organization, as the case may be,
      with the full corporate power and authority to own and use its properties and
      assets and to carry on its business as currently conducted. Each of the Company
      and the Subsidiaries is duly qualified to do business and is in good standing
      as
      a foreign corporation or limited liability company in each jurisdiction in
      which
      the nature of the business conducted or property owned by it makes such
      qualification necessary, except where the failure to be so qualified or in
      good
      standing, as the case may be, would not, individually or in the aggregate,
      have
      a material adverse effect on the results of operations, assets, prospects,
      or
      financial condition of the Company and the Subsidiaries, taken as a whole (a
      “Material
      Adverse Effect”).

     

    (b) Authorization,
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated hereby and by each other Transaction
      Document and to otherwise carry out its obligations hereunder and thereunder.
      The execution and delivery of this Agreement and each of the other Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated hereby and thereby has been duly authorized by all necessary action
      on the part of the Company. Each of this Agreement and each of the other
      Transaction Documents has been or will be duly executed by the Company and
      when
      delivered in accordance with the terms hereof or thereof will constitute the
      valid and binding obligation of the Company enforceable against the


     


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    Company
      in accordance with its terms, except as such enforceability may be limited
      by
      applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
      or
      similar laws relating to, or affecting generally the enforcement of, creditors’
      rights and remedies or by other equitable principles of general
      application.

     

    (c) Capitalization.
      The
      authorized, issued and outstanding capital stock of the Company is set forth
      on
Schedule
      3.1(c).
      No
      shares of the Series A Preferred Stock have been issued as of the date
      hereof. No shares of Common Stock or any other class of the Company’s securities
      are entitled to preemptive or similar rights, nor is any holder of the Common
      Stock entitled to preemptive or similar rights arising out of any agreement
      or
      understanding with the Company by virtue of this Agreement.

     

    (d) Issuance
      of Securities.
      The
      Shares have been duly and validly authorized for issuance, offer and sale
      pursuant to this Agreement and, when issued and delivered as provided hereunder
      against payment in accordance with the terms hereof, shall be valid and binding
      obligations of the Company enforceable in accordance with their respective
      terms. The Company covenants that it will cause NEWCO at the time of its
      incorporation to reserve out of its authorized and unissued common stock solely
      for the purpose of issuance upon conversion of Series A Preferred Stock
      as
      provided in the Articles of Amendment, free from preemptive rights or any other
      actual contingent purchase rights of persons other than the Holders of
      Series A Preferred Stock, such number of shares of NEWCO common stock
      as
      shall be issuable upon the conversion of the aggregate Stated Value of all
      outstanding Series A Preferred Stock. When issued in accordance with
      the
      terms hereof, the Shares will be duly authorized, validly issued, fully paid
      and
      non-assessable. The Company has no equity or equity equivalent security
      outstanding that is convertible into shares of common stock of
      NEWCO.

     

    (e) No
      Conflicts.
      The
      execution, delivery and performance of this Agreement and the other Transaction
      Documents by the Company and the consummation by the Company of the transactions
      contemplated hereby and thereby do not and will not (i) conflict with
      or
      violate any provision of its Articles of Incorporation or bylaws (each as
      amended through the date hereof) or (ii) be subject to obtaining any
      consents except those referred to in Section 3.1(f), conflict with, or
      constitute a default (or an event which with notice or lapse of time or both
      would become a default) under, or give to others any rights of termination,
      amendment, acceleration or cancellation of, any agreement, indenture or
      instrument to which the Company is a party, or (iii) result in a violation
      of any law, rule, regulation, order, judgment, injunction, decree or other
      restriction of any court or governmental authority to which the Company or
      its
      Subsidiaries is subject (including, but not limited to, those of other countries
      and the federal and state securities laws and regulations), or by which any
      property or asset of the Company or its Subsidiaries is bound or affected,
      except in the case of clauses (ii) or (iii), such conflicts, defaults,
      terminations, amendments, accelerations, cancellations and violations as would
      not, individually or in the aggregate, have a Material Adverse Effect. The
      business of the Company and its Subsidiaries is not being conducted in violation
      of any law, ordinance or regulation of any governmental authority, the result
      of
      which would, individually or in the aggregate, have a Material Adverse Effect.
      

     

    (f) Consents
      and Approvals.
      Except
      as specifically set forth in
      Schedule 3.1(f),
      neither
      the Company nor any Subsidiary is required to obtain any consent, 

     


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    waiver,
      authorization or order of, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person,
      in
      connection with the execution, delivery and performance by the Company of this
      Agreement and each of the other Transaction Documents, except for the filing
      of
      the Articles of Amendment with respect to the Series A Preferred Stock,
      which filing will be made with the Secretary of State of the State of Indiana
      prior to the Closing Date (together with the consents, waivers, authorizations,
      orders, notices and filings referred to in Schedule 3.1(f),
      the
“Required
      Approvals”).

     

    (g) Litigation;
      Proceedings.
      Except
      as specifically disclosed in
      Schedule 3.1(g),
      there
      is no action, suit, notice of violation, proceeding or investigation pending
      or,
      to the best knowledge of the Company, threatened against or affecting the
      Company or any of its Subsidiaries or any of their respective properties before
      or by any court, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) which (i) relates to or challenges
      the legality, validity or enforceability of any of the Transaction Documents
      or
      the Shares, (ii) could, individually or in the aggregate, have a Material
      Adverse Effect or (iii) could, individually or in the aggregate, materially
      impair the ability of the Company to perform fully on a timely basis its
      obligations under the Transaction Documents.

     

    (h) No
      Default or Violation.
      Except
      as set forth in Schedule 3.1(h)
      hereto,
      neither the Company nor any Subsidiary (i) is in default under or in vio-lation
      of any indenture, loan or credit agreement or any other agreement or instrument
      to which it is a party or by which it or any of its properties is bound, except
      such conflicts or defaults as do not have a Material Adverse Effect, (ii) is
      in
      violation of any order of any court, arbitrator or governmental body, except
      for
      such violations as do not have a Material Adverse Effect, or (iii) is in
      violation of any statute, rule or regu-lation of any governmental authority
      which could (individually or in the aggregate) (x) adversely affect the
      legality, validity or enforceability of this Agree-ment, (y) have a Material
      Adverse Effect, or (z) adversely impair the Company’s ability or obligation to
      perform fully on a timely basis its obligations under this
      Agreement.

     

    (i) Disclosure
      Documents.
      The
      Disclosure Documents are accurate in all material respects and do not contain
      any untrue statement of a material fact or omit to state any material fact
      necessary in order to make the statements made therein, in light of the
      circumstances under which they were made, not misleading.

     

    (j) Non-Registered
      Offering.
      Neither
      the Company nor any Person acting on its behalf has taken or will take any
      action (including, without limitation, any offering of any securities of the
      Company under circumstances which would require the integration of such offering
      with the offering of the Securities under the Securities Act) which might
      subject the offering, issuance or sale of the Shares to the registration
      requirements of Section 5 of the Securities Act.

     

    3.2 Representations
      and Warranties of the Purchaser.
      The
      Purchaser hereby represents and warrants to the Company as follows:

     

    (a) Authority.
      The
      Purchaser has the requisite power and authority to enter into and to consummate
      the transactions contemplated hereby and by the other Transaction Documents
      and
      to otherwise carry out his obligations hereunder and thereunder. The execution
      

     


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    and
      delivery of this Agreement and the acquisition of the Shares by the Purchaser
      (i) have been duly authorized by all necessary action on the part of the
      Purchaser, and (ii) in cases where Purchaser is not an individual, such
      execution, delivery and acquisition will not violate the provisions of the
      organizational documents of Purchaser or any agreement, obligation, law, rule,
      regulation or order to which Purchaser is a party or by which it is bound.
      If
      Purchaser is an individual, the Purchaser represents that he is at least
      twenty-one (21) years of age and has the legal capacity to enter into this
      Agreement, the address set forth Schedule
      1
      is
      Purchaser’s true and correct principal residence, and Purchaser has no present
      intention of relocating such principal residence to any other state or
      jurisdiction. This Agreement has been duly executed and delivered by the
      Purchaser and constitutes the valid and legally binding obligation of the
      Purchaser, enforceable against him in accordance with its terms, except as
      such
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium or similar laws relating to, or affecting generally
      the enforcement of, creditors rights and remedies or by other general principles
      of equity. 

     

    (b) Investment
      Intent.
      The
      Purchaser (i) is acquiring the Shares to be purchased hereunder, and will
      acquire the Shares for his own account for investment purposes only and not
      with
      a view to or for distributing or reselling such Shares, or any part thereof
      or
      interest therein, without prejudice, however, to such Purchaser’s right, subject
      to the provisions of this Agreement, at all times to sell or otherwise dispose
      of all or any part of such Shares pursuant to a registration under federal
      and
      applicable state securities laws, or an exemption therefrom based on an opinion
      of legal counsel acceptable to the Company that an exemption is available;
      and
      (ii) has not attempted to sell or offered for sale any of the Shares. The
      Purchaser is not purchasing the Shares with the funds of any other Person nor
      acting as an underwriter or a conduit for the sale of the Shares to the public
      or to others. The Purchaser is not a member of the National Association of
      Securities Dealers, Inc. (“NASD”) and for a period of 12 months prior to the
      date of this Agreement, has not been affiliated or associated with any company,
      firm, or other entity that is a member of the NASD.

     

    (c) Experience
      of Purchaser.
      The
      Purchaser, either alone or together with his representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of an investment in the Shares
      to be acquired by Purchaser hereunder, and has obtained, in his or her own
      judgment, sufficient information from the Company to evaluate such merits and
      risks. The Purchaser is knowledgeable about and experienced in investments
      in
      the equity securities of non-publicly traded companies. The Purchaser represents
      that he is an “accredited investor” as such term is defined in Rule 501 of
      Regulation D of the Securities Act.

     

    (d) Ability
      of Purchaser to Bear Risk of Investment.
      The
      Purchaser understands that there is no assurance as to the viability or future
      performance of the Company. The Purchaser recognizes that an investment in
      the
      Shares is speculative and involves a high degree of risk including, but not
      limited to, the risk of economic losses from operations of the Company and
      the
      potential loss of investment. The Purchaser understands that no market for
      the
      Shares exists and none may develop in the future. The Purchaser is able to
      bear
      the economic risk of an investment in the Shares to be acquired by him or her
      hereunder and, at the pre-sent time, is able to afford a complete loss of such
      investment. The commitment of the Purchaser to investments which are not readily
      marketable or transferable is not disproportionate to the net 

     


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    worth
      of
      the Purchaser, and investment in the Shares will not cause such commitment
      to
      become excessive. The Purchaser has no need for liquidity with respect to the
      Shares. 

     

    (e) Access
      to Information.
      The
      Purchaser acknowledges that he has been afforded (i) the opportunity to ask
      such
      questions as Purchaser has deemed necessary of, and to receive answers from,
      representatives of the Company concerning the terms and conditions of the Shares
      offered hereunder; (ii) access to information about the Company and the
      Company’s financial condition, results of operations, business, properties,
      management and prospects sufficient to enable Purchaser to evaluate an
      investment in the Shares; and (iii) the opportunity to obtain such additional
      information which the Company possesses or can acquire without unreasonable
      effort or expense that is necessary to make an informed investment decision
      with
      respect to the investment and to verify the accuracy and completeness of the
      information that Purchaser has received about the Company. The Purchaser
      represents that all of his questions concerning the Company and the Shares
      have
      been answered to his full satisfaction.

     

    (f) Investment
      Decision.
      Except
      for the Disclosure Documents, the Purchaser has not received or relied on any
      representation or warranty from the Company or any of its officers, directors,
      employees, agents, attorneys or other representatives (including, but not
      limited to, any representations or warranties from Strasbourger Pearson Tulcin
      Wolff Inc.) in respect of Purchaser’s investment in the Shares, and has relied
      upon his own investigation in evaluating the risks and merits of making a
      decision to purchase the Shares. The Purchaser has had the opportunity to
      discuss the consequences of his investment decision with his legal and tax
      advisors. Without limiting the generality of the foregoing, and notwithstanding
      any other representation or warranty made by the Company, Purchaser acknowledges
      that the Company has not made any representation or warranty with respect to
      any
      projections, estimates, or budgets of future revenues, expenses, or expenditures
      or future results of operations. 

     

    (g) Transferability
      of Shares.
      Purchaser acknowledges that the transferability of the Shares is severely
      limited and that the Purchaser must continue to bear the economic risk of this
      investment for an indefinite period as these Securities have not been registered
      under the Securities Act of 1933, as amended, or any state securities law in
      reliance on an exemption therefrom for transactions not involving a public
      offering and, therefore, cannot be offered or sold without an effective
      registration statement for such Shares under the Securities Act of 1933, as
      amended, and applicable state securities laws or an opinion of counsel for
      the
      Corporation that registration is not required under the Securities Act of 1933,
      as amended, and applicable state securities laws. Further, the Purchaser
      acknowledges that the Purchaser has no right to compel registration and the
      Company has no intention of registering the Securities or to take the action
      required to make Rule 144 under the Securities Act of 1933, as amended,
      available for resale of the Shares.

     

    (h) Legend
      on Shares.
      The
      Purchaser acknowledges that a restrictive legend will be placed on the
      certificate for the Shares, substantially in the following form:

     

    “The
      shares represented by this certificate have not been registered under the
      federal Securities Act of 1933, as amended, or the securities law of any state.
      These shares may not be sold or offered for sale unless they have first been
      so



    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    registered
      or unless the Company receives a written opinion from legal counsel acceptable
      to the Company that such registration is not required.”

    


    (i) Reliance.
      The
      Purchaser understands and acknowledges that (i) the Shares being offered and
      sold to Purchaser hereunder are being offered and sold without registration
      under the Securities Act in a private placement that is exempt from the
      registration provisions of the Securities Act under Rule 506 of Regulation
      D and
      without registration under the securities laws of any states, and (ii) the
      availability of such exemption depends in part on, and that the Company will
      rely upon the accuracy and truthfulness of, the representations made by
      Purchaser in this Agreement as well as any additional information that Purchaser
      has furnished regarding his or her own financial position, business experience
      or any matters, and such Purchaser hereby consents to such
      reliance.

     

    The
      Company acknowledges and agrees that the Purchaser makes no representations
      or
      warranties with respect to the transactions contemplated hereby other than
      those
      specifically set forth in this Section
      3.2.

     

     

    SECTION
      IV 

     

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1 Manner
      of Offering.
      The
      Shares are being issued pursuant to Rule 506 of Regulation D of the Securities
      Act.

     

    4.2 Notice
      of Certain Events.
      The
      Company shall, on a continuing basis prior to Closing, advise the Purchaser
      promptly after obtaining knowledge of, and, if requested by the Purchaser,
      confirm such advice in writing, of  any event that makes any statement
      of a
      material fact made by the Company in Section
      3.1
      or in
      the Disclosure Documents untrue or that requires the making of any additions
      to
      or changes in Section
      3.1
      or in
      the Disclosure Documents in order to make the statements therein, in the light
      of the circumstances under which they are made, not misleading.

     

    4.3 Modification
      to Disclosure Documents.
      If any
      event shall occur prior to Closing as a result of which, in the reasonable
      judgment of the Company or the Purchaser, it becomes necessary or advisable
      to
      amend or supplement any of the Disclosure Documents in order to make the
      statements therein, in the light of the circumstances at the time such
      Disclosure Documents were delivered to the Purchaser, not misleading, or if
      it
      becomes necessary to amend or supplement any of the Disclosure Documents to
      comply with applicable law, the Company shall promptly prepare an appropriate
      amendment or supplement to each such document in form and substance reasonably
      satisfactory to both the Purchaser and Company so that, as so amended or
      supplemented, each such document will not include an untrue statement of
      material fact or omit to state a material fact necessary in order to make the
      statements therein, in the light of the circumstances existing at the time
      it is
      delivered to the Purchaser, not misleading.

     

    4.4 Blue
      Sky Laws.
      The
      Company shall cooperate with the Purchaser in connection with the exemption
      from
      registration of the Shares under the securities or Blue Sky laws of such
      jurisdictions as the Purchasers may request; provided,
      however,
      that
      neither the Company nor its 

     


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    Subsidiaries
      shall be required in connection therewith to qualify as a foreign corporation
      where they are not now so qualified. The Company agrees that it will execute
      all
      necessary documents and pay all necessary state filing or notice fees to enable
      the Company to qualify for an exemption from registration of the Shares and
      sell
      the Shares to the Purchasers.

     

    4.5 Integration.
      The
      Company shall not and shall use its best efforts to ensure that no Affiliate
      shall sell, offer for sale or solicit offers to buy or otherwise negotiate
      in
      respect of any security (as defined in Section 2 of the Securities Act) that
      would be integrated with the offer or sale of the Shares in a manner that would
      require the registration under the Securities Act of the sale of the Shares
      to
      the Purchaser.

     

    4.6 Solicitation
      Materials.
      The
      Company shall not (i) distribute any offering materials in connection with
      the
      offering and sale of the Shares other than the Disclosure Documents and any
      amendments and supplements thereto prepared in compliance herewith or (ii)
      solicit any offer to buy or sell the Shares by means of any form of general
      solicitation or advertising.

     

    4.7 Indemnification.
      

     

    (a) Indemnification

     

    (i) The
      Company shall, notwithstanding termination of this Agreement and without
      limitation as to time, indemnify and hold harmless the Purchaser and its
      officers, directors, agents, employees and affiliates, each Person who controls
      the Purchaser (within the meaning of Section 15 of the Securities Act or Section
      20 of the Exchange Act) (each such Person, a “Control
      Person”)
      and
      the officers, directors, agents, employees and affiliates of each such Control
      Person, to the fullest extent permitted by applicable law, from and against
      any
      and all losses, claims, damages, liabilities, costs (including, without
      limitation, costs of preparation and attorneys’ fees) and expenses
      (collectively, “Losses”),
      as
      incurred, arising out of, or relating to, a breach or breaches of any
      representation, warranty, covenant or agreement by the Company under this
      Agreement or any other Transaction Document.

     

    (ii) The
      Purchaser shall, notwithstanding termination of this Agreement and without
      limitation as to time, indemnify and hold harmless the Company, its officers,
      directors, agents and employees, each Control Person and the officers,
      directors, agents and employees of each Control Person, to the fullest extent
      permitted by application law, from and against any and all Losses, as incurred,
      arising out of, or relating to, a breach or breaches of any representation,
      warranty, covenant or agreement by the Purchaser under this Agreement or the
      other Transaction Documents.

     

    (b) Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party promptly shall notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all fees and expenses incurred in connection with defense
      thereof; provided, that the 

     


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    failure
      of any Indemnified Party to give such notice shall not relieve the Indemnifying
      Party of its obligations or liabilities pursuant to this Agreement, except
      (and
      only) to the extent that it shall be finally determined by a court of competent
      jurisdiction (which determination is not subject to appeal or further review)
      that such failure shall have proximately and materially adversely prejudiced
      the
      Indemnifying Party.

     

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed to pay such fees and expenses;
      or
      (2) the Indemnifying Party shall have failed promptly to assume the defense
      of
      such Proceeding and to employ counsel reasonably satisfactory to such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and such Indemnified Party shall have been advised
      by counsel that a conflict of interest is likely to exist if the same counsel
      were to represent such Indemnified Party and the Indemnifying Party (in which
      case, if such Indemnified Party notifies the Indemnifying Party in writing
      that
      it elects to employ separate counsel at the expense of the Indemnifying Party,
      the Indemnifying Party shall not have the right to assume the defense of the
      claim against the Indemnified Party but will retain the right to control the
      overall Proceedings out of which the claim arose and such counsel employed
      by
      the Indemnified Party shall be at the expense of the Indemnifying Party). The
      Indemnifying Party shall not be liable for any settlement of any such Proceeding
      effected without its written consent, which consent shall not be unreasonably
      withheld. No Indemnifying Party shall, without the prior written consent of
      the
      Indemnified Party, effect any settlement of any pending Proceeding in respect
      of
      which any Indemnified Party is a party, unless such settlement includes an
      unconditional release of such Indemnified Party from all liability on claims
      that are the subject matter of such Proceeding.

     

    All
      fees
      and expenses of the Indemnified Party to which the Indemnified Party is entitled
      hereunder (including reasonable fees and expenses to the extent incurred in
      connection with investigating or preparing to defend such Proceeding in a manner
      not inconsistent with this Section) shall be paid to the Indemnified Party,
      as
      incurred, within ten (10) Business Days of written notice thereof to the
      Indemnifying Party.

     

    No
      right
      of indemnification under this Section shall be available as to a particular
      Indemnified Party if there is a non-appealable final judicial determination
      that
      such Losses arise solely out of the negligence or bad faith of such Indemnified
      Party in performing the obligations of such Indemnified Party under this
      Agreement or a breach by such Indemnified Party of its obligations under this
      Agreement.

     

    (c) Non-Exclusivity.
      The
      indemnity and contribution agreements contained in this Section are in addition
      to any obligation or liability that the Indemnifying Parties may have to the
      Indemnified Parties.

     

    4.8 Notice
      and Consultation Before Securities Issuances..
      Until
      such time as Purchaser shall have converted all of the Shares in a Private
      Placement Offering of NEWCO common stock in the aggregate amount of no less
      than
      three million dollars ($3,000,000), by NEWCO, the Company shall not offer or
      issue any equity, equity equivalent security or debt 

     


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    with
      a
      floating conversion price, or any equity lines of credit (the “New Securities”),
      without first giving thirty (30) days notice thereof to the Purchaser and
      thereafter consulting in good faith with the Purchaser concerning such issuance.
      After such consultation between the Company and the Purchaser, the Company
      may
      offer or sell the New Securities on such terms and conditions as the Company
      deems appropriate.

     

    4.9 No
      Violation of Applicable Law.
      Notwithstanding any provision of this Agreement to the contrary, if the
      redemption of the Shares otherwise required under this Agreement or the Articles
      of Amendment, would be prohibited by the relevant provisions of Indiana law,
      such redemption shall be effected as soon as it is permitted under such law.
      

     

    4.10 Redemption
      Restrictions.
      Notwithstanding any provision of this Agreement to the contrary, if any
      redemption of the Shares otherwise required under this Agreement or the Articles
      of Amendment, would be prohibited in the absence of consent from any lender
      to
      the Company or any of the Subsidiaries, or by the holders of any class of
      securities of the Company, the Company shall use its best efforts to obtain
      such
      consent as promptly as practicable after any such redemption is required.
      Nothing contained in this Section 4.10 shall be construed as a waiver by the
      Purchaser of any rights they may have by virtue of any breach of any
      representation or warranty of the Company herein as to the absence of any
      requirement to obtain any such consent.

     

    4.11 Conversion
      Procedures.
      The
      Articles of Amendment sets forth the procedures, including the forms of Notice
      of Conversion to be provided upon conversion and such other information and
      instructions as may be reasonably necessary to enable the Purchaser or its
      permitted transferee(s) to exercise the right of conversion smoothly and
      expeditiously. 

     

     

    SECTION
      V 

     

    EVENT
      OF DEFAULT, LEGAL FEES AND DEFAULT INTEREST RATE

     

    (a) In
      the
      event any party hereto commences legal action to enforce its rights under this
      Agreement or any other Transaction Document, the non-prevailing party shall
      pay
      all reasonable costs and expenses (including but not limited to reasonable
      attorney’s fees, accountant’s fees, appraiser’s fees and investigative fees)
      incurred by the other party in enforcing such rights. In the event of an uncured
      Event of Default by any party hereunder, interest shall accrue on all unpaid
      amounts due the aggrieved party at the rate of ten percent (10%) per annum,
      compounded annually.

     

    (b) Whenever
      the Company is obligated to purchase or redeem the Purchaser’s Shares under any
      provision of this Agreement or the Articles of Amendment, and the Redemption
      Price is not paid to the Purchaser by the tenth (10th)
      day
      after the Redemption Price is due and payable to the Purchaser, the Company
      shall thereafter pay interest to the Purchaser on the unpaid portion of the
      Redemption Price at the rate of ten percent (10%) per annum, until the
      Redemption Price is paid in full.

     


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    (c) “Event
      of
      Default”, wherever used herein, means the occurrence of any one of the following
      events prior to the conversion of Purchaser’s Shares into shares of common stock
      of NEWCO:

     

    (i) the
      Company shall fail to observe or perform any material covenant, agreement or
      warranty contained in Articles of Amendment, and such failure shall not have
      been remedied within ten (10) Business Days after the date on which written
      notice of such failure shall have been given by Purchaser;

     

    (ii) the
      occurrence of any material breach or event of default by the Company under
      the
      Purchase Agreement or any other Transaction Document (as defined in the Purchase
      Agreement) and such failure or breach shall not have been remedied within the
      applicable cure period provided for therein, if any; 

     

    (iii) the
      Company or any of its subsidiaries shall commence a voluntary case under the
      United States Bankruptcy Code as now or hereafter in effect or any successor
      thereto (the “Bankruptcy Code”); or an involuntary case is commenced against the
      Company under the Bankruptcy Code and the Company fails to pursue dismissal
      of
      the case within sixty (60) days after commencement of the case; or the Company
      commences any other proceeding under any reorganization, arrangement, adjustment
      of debt, relief of debtors, dissolution, insolvency or liquidation or similar
      law of any jurisdiction whether now or hereafter in effect relating to the
      Company or there is commenced against the Company any such proceeding and the
      Company fails to pursue dismissal of the case within sixty (60) days after
      commencement of the case; or the Company suffers any appointment of any
      custodian or the like for it or any substantial part of its property and the
      Company fails to pursue dismissal of the custodian within sixty (60) days after
      the appointment; or the Company makes a general assignment for the benefit
      of
      creditors; or any corporate or other action is taken by the Company for the
      purpose of effecting any of the foregoing.

     

     

    SECTION
      VI 

     

    MISCELLANEOUS

     

    6.1 Fees
      and Expenses.
      Except
      as set forth in this Agreement, each party shall pay the fees and expenses
      of
      its advisers, counsel, accountants and other experts, if any, and all other
      expenses incurred by such party incident to the negotiation, preparation,
      execution, delivery and performance of this Agreement. The Company shall pay
      all
      stamp and other taxes and duties levied in connection with the issuance of
      the
      Shares pursuant hereto. The Purchaser shall be responsible for any taxes payable
      by the Purchaser that may arise as a result of the investment hereunder or
      the
      transactions contemplated by this Agreement or any other Transaction Document.
      The Company shall pay all costs, expenses, fees and all taxes incident to and
      in
      connection with: (A) the issuance and delivery of the Shares, (B) the
      exemption from registration of the Shares for offer and sale to the Purchaser
      under the securities or Blue Sky laws of the applicable jurisdictions, and
      (C) the preparation of certificates for the Shares (including,


     


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    without
      limitation, printing and engraving thereof), and (D) all fees and expenses
      of counsel and accountants of the Company.

     

    6.2 Entire
      Agreement.
      This
      Agreement, together with all of the Exhibits and Schedules annexed hereto,
      and
      any other Transaction Document contains the entire understanding of the parties
      with respect to the subject matter hereof and supersedes all prior agreements
      and understandings, oral or written, with respect to such matters. This
      Agreement shall be deemed to have been drafted and negotiated by both parties
      hereto and no presumptions as to interpretation, construction or enforceability
      shall be made by or against either party in such regard.

     

    6.3 Notices.
      Any
      notice or other communication required or permitted to be given hereunder shall
      be in writing and shall be deemed to have been duly given upon facsimile
      transmission (with written transmission confirmation report) at the number
      designated below (if delivered on a Business Day during normal business hours
      where such notice is to be received), or the first Business Day following such
      delivery (if delivered other than on a Business Day during normal business
      hours
      where such notice is to be received) whichever shall first occur. The addresses
      for such communications shall be:

     

    
      	 	
              If
                to the Company:

            	
              Magnetech
                Industrial Services, Inc 

            
	 	 	
              1125
                S. Walnut Street

            
	 	 	
              South
                Bend, IN 46619

            
	 	 	
              Attn:
                John A. Martell, President and CEO

            
	 	 	
              Tel:
                (574) 234-8131

            
	 	 	
              Fax:
                (574) 232-7648

            
	 	 	 
	 	
              With
                copies to:

            	
              Barnes
                & Thornburg

            
	 	 	
              600
                1st
                Source Bank Building

            
	 	 	
              100
                N. Michigan St.

            
	 	 	
              South
                Bend, IN 46601

            
	 	 	
              Attn:
                Richard L. Mintz, Esq.

            
	 	 	
              Tel:  (574)  233-1171

            
	 	 	
              Fax:
                (574) 237-1125

            
	 	 	 
	 	
              If
                to the Purchaser

               

            	
              See
                Schedule
                1
                attached hereto

               

            


    

    


     

    or
      such
      other address as may be designated hereafter by notice given pursuant to the
      terms of this Section 6.3.

     

    6.4 Amendments;
      Waivers.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by both the Company and the
      Purchaser, or, in the case of a waiver, by the party against whom enforce-ment
      of any such waiver is sought. No waiver of any default with respect to any
      provision, condition or require-ment of this Agreement shall be deemed to be
      a
      continuing waiver in the future or a waiver of any other provision, condition
      or
      requirement hereof, nor shall any delay or omission of either party to exercise
      any right hereunder in any manner impair the exercise of any such right accruing
      to it thereafter.

     


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


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

     

    6.6 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and permitted assigns. The assignment by a party
      of
      this Agreement or any rights hereunder shall not affect the obligations of
      such
      party under this Agreement.

     

    6.7 No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

     

    6.8 Governing
      Law; Venue; Service of Process.
      The
      parties hereto acknowledge that the transactions contemplated by this Agreement
      and the exhibits hereto bear a reasonable relation to the State of Indiana.
      The
      parties hereto agree that the internal laws of the State of Indiana shall govern
      this Agreement and the exhibits hereto, including, but not limited to, all
      issues related to usury. Any action to enforce the terms of this Agreement
      or
      any of its exhibits, or any other Transaction Document shall be brought
      exclusively in the state courts of St. Joseph County, Indiana or the federal
      courts situate in the Northern District of Indiana. Service of process in any
      action by the Purchaser to enforce the terms of this Agreement may be made
      by
      serving a copy of the summons and complaint, in addition to any other relevant
      documents, by commercial overnight courier to the Company at its principal
      address set forth in this Agreement.

     

    6.9 Survival.
      The
      representa-tions and warranties of the Company and the Purchaser contained
      in
      Section III and the agreements and covenants of the parties contained
      in
      Section IV and this Section VI shall survive the Closing.

     

    6.10 Counterpart
      Signatures.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) the same with
      the same force and effect as if such facsimile signature page were an original
      thereof.

     

    6.11 Severability.
      In case
      any one or more of the provisions of this Agreement shall be invalid or
      unenforceable in any respect, the validity and enforceability of the remaining
      terms and provisions of this Agreement shall not in any way be affected or
      impaired thereby and the parties will attempt to agree upon a valid and
      enforceable provision which shall be a reasonable substitute therefore, and
      upon
      so agreeing, shall incorporate such substitute provision in this
      Agreement.

     

    6.12 Limitation
      of Remedies.
      Notwithstanding anything to the contrary contained in this Agreement, with
      respect to claims by the Company or any person acting by or through the Company,
      or by the Purchaser or any person acting through the Purchaser, for remedies
      at
      law or at equity relating to or arising out of a breach of this Agreement,
      liability, if any, shall, in no 

     


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    event,
      include loss of profits or incidental, indirect, exemplary, punitive, special
      or
      consequential damages of any kind.

     

    


    [
      SIGNATURE
      PAGE FOLLOWS ]


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed as of the date first indicated above.

     

    
      	 	
              Company:

            
	 	 	 
	 	
              Magnetech
                Industrial Services, Inc

            
	 	 	 
	 	
              By:

            	 /s/
              John A. Martell
	 	
              Name:

            	 John
              A. Martell
	 	
              Title:

            	 President
&
              CEO
	 	 	 
	 	 	 
	 	 	 
	 	
              Purchaser:

            
	 	 
	 	
              By:

            	 
	 	
              Name:

            	 
	 	
              Title:

            	 


    

    



    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      

        Exhibit
          A

        


        


        ARTICLES
          OF AMENDMENT

        TO
          THE ARTICLES OF INCORPORATION

        OF

        MAGNETECH
          INDUSTRIAL SERVICES, INC.

        


        1. NAME.
          The
          name of the corporation is MAGNETECH INDUSTRIAL SERVICES, INC. (the
          "Corporation").

         

        2. TEXT
          OF AMENDMENT.
          Article
          VI of the Articles of Incorporation of the Corporation is hereby amended
          and
          restated in its entirety to read as follows:

         

        ARTICLE
          VI

        Authorized
          Shares of Stock

         

        Section
          1. Number
          of Shares.
          The
          Corporation is authorized to issue a total of 1,010,000 shares of stock,
          divided
          into the following classes: (a) 10,000 shares of Common Stock, with no
          par
          value; and (b) 1,000,000 shares of Preferred Stock.

         

        Section
          2. Terms
          of Common Stock.
          The
          Common Stock shall have the following rights, restrictions, limitations
          and
          preferences:

         

        (a). No
          Preference.
          None of
          the shares of Common Stock shall be entitled to any preference, and each
          share
          of Common Stock shall be equal to every other share of Common Stock in
          every
          respect.

         

        (b). Dividends.
          After
          payment or declaration of all dividends on any shares having a priority
          over the
          Common Stock as to dividends, dividends on the shares of Common Stock may
          be
          declared and paid, but only when and as determined by the Board of Directors.
          Shares of Common Stock shall share equally as to any dividends
          declared.

         

        (c). Rights
          on Liquidation.
          On any
          liquidation, dissolution or winding up of the Corporation, after there
          shall
          have paid to or set aside for the holders of any shares having priority
          over the
          Common Stock the full preferential amounts, if any, to which they are
          respectively entitled, the holders of the Common Stock shall be entitled
          to
          receive pro rata all the remaining assets of the Corporation available
          for
          distribution to holders of its capital stock in accordance with Section
          4(f)(ii).

         

        (d). Voting.
          Each
          shareholder of Common Stock shall have the right to one (1) vote for each
          share
          of Common Stock standing in his or her name on the books of the Corporation
          on
          each matter submitted to a vote at any meeting of the shareholders.

         

        Section
          3. Terms
          of Preferred Stock.
          The
          Preferred Stock authorized by these Articles of Incorporation (“Articles”) may
          be issued from time to time in one or more series. Seven Hundred Fifty
          Thousand
          (750,000) shares of the 

         


        
          
             

          

          
            1

            
              

            

          

          
             

          

        


        Preferred
          Stock shall be designated as Series A Convertible Redeemable Preferred
          Stock
          (the “Series A Preferred Stock”) and the stated value of the Series A
          Preferred Stock shall be U.S. $1 per share (the “Stated Value”). The rights,
          preferences, privileges and restrictions granted to and imposed on the
          Series A
          Preferred Stock are set forth in Section 4 of this Article VI. Subject
          to
          compliance with any applicable protective voting rights that have been
          or may be
          granted to the Preferred Stock or series thereof in these Articles, as
          the same
          may be amended from time to time (“Protective
          Provisions”),
          the
          Board of Directors is authorized to provide for the issuance of additional
          shares of Preferred Stock in series by filing an amendment to the Articles
          pursuant to the applicable law, to establish from time to time the number
          of
          shares to be included in each such series, and to fix the designation,
          powers,
          preferences and rights of the shares of each such series and the qualifications,
          limitations or restrictions thereof. 

         

        Section
          4. Terms
          of Series A Preferred Stock.
          The
          Series A Preferred Stock shall have the rights, restrictions, limitations
          and
          preferences set forth in this Section 4.

         

        (a). Certain
          Definitions.
          For
          purposes of this Section 4, the
          following terms have the meanings specified or referred to in this Section
          4(a):

         

        (i). “Change
          of Control”
          means
          the acquisition, directly or indirectly, by any Person of ownership of,
          or the
          power to direct the exercise of voting power with respect to, a majority
          of the
          issued and outstanding Common Stock f the Corporation.

         

        (ii). “NewCo
          Common Stock”
          means
          the common stock of NewCo.

         

        (iii). “Issuance
          Date”
          means
          the date of the Closing under the Convertible Preferred Stock Purchase
          Agreement
          with respect to the initial issuance of the Series A Preferred
          Stock.

         

        (iv). “NewCo”means
          an
          entity
          to be formed by the Corporation or the holders of the Common Stock of the
          Corporation to acquire all of the issued and outstanding Common Stock of
          the
          Corporation.

         

        (v). “Person”
          means an
          individual or a corporation, partnership, trust, incorporated or unincorporated
          association, joint venture, limited liability company, joint stock company,
          government (or an agency or political subdivision thereof) or other entity
          of
          any kind.

         

        (vi). “Purchase
          Agreement”
          means
          the Convertible Redeemable Preferred Stock Purchase Agreement dated February
          __,
          2004, by and between the Corporation and the purchasers set forth in
          Schedule 1 thereto (the “Purchaser”).

         


        
          
             

          

          
            2

            
              

            

          

          
             

          

        

        (b). Dividends.
          The
          holder or holders of the shares of Series A Preferred Stock as they
          appear
          on the stock records of the Corporation (“Holder” or “Holders”) shall not be
          entitled to receive any dividends.

         

        (c).  Conversion.

         

        (i). The
          entire amount of issued and outstanding shares of Series A Preferred
          Stock
          shall be convertible into shares of NewCo Common Stock upon the completion
          of a
          Private Placement Offering by NewCo of NewCo Common Stock in the aggregate
          amount of no less than three million dollars ($3,000,000) (the “PPO”). Any
          conversion under this Section 3(c)(i) shall entitle a Holder to
          receive
          6.333333
          shares
          of
          NewCo Common Stock for each share of Series A Preferred Stock (the
          “Conversion Price”). Upon the entire conversion of the Series A Preferred
          Stock, the Series A Preferred Stock shall be returned to the Corporation
          for cancellation. 

         

        (ii). The
          Conversion Date shall be the date of completion of the PPO, as advised
          to the
          Corporation by the placement agent. Within 10 business days of the Conversion
          Date, the Holders of Series A Preferred Stock agree to convert their shares
          of
          Series A Preferred Stock into shares of NewCo Common Stock. Each Holder
          shall
          surrender the certificate or certificates for the shares of Series A Preferred
          Stock owned by such Holder at the office of the Corporation’s transfer agent (or
          at the principal office of the Corporation if the Corporation serves as
          its own
          transfer agent), together with written acceptance that such Holder agrees
          to
          convert all of his or her shares of the Series A Preferred Stock represented
          by
          such certificate or certificates. The Holder shall effect conversion by
          sending
          the form of conversion notice attached hereto as Appendix
          I
          (the
“Notice of Conversion”). If required by the Corporation, certificates
          surrendered for conversion shall be endorsed or accompanied by a written
          instrument or instruments of transfer, in form satisfactory to the Corporation,
          duly executed by the registered holder or his, her, or its attorney duly
          authorized in writing. The Corporation, as soon as practicable after the
          Conversion Date, shall cause to be issued and delivered at such office
          to such
          Holder, a certificate or certificates for the number of shares of NewCo
          Common
          Stock to which such Holder shall be entitled. No fractional shares of NewCo
          Common Stock shall be issuable upon a conversion hereunder and the number
          of
          shares to be issued shall be rounded up to the nearest whole share. If
          a
          fractional share interest arises upon any conversion hereunder, the Corporation
          shall cause the elimination of such fractional share interest by causing
          to be
          issued to Holder an additional full share of NewCo Common Stock. 

         

        Not
          later
          than ten (10) business days after the Corporation’s receipt of the Notice of
          Conversion, the Corporation will cause NewCo to deliver to the Holder a
          certificate or certificates representing the number of shares of 

         


        
          
             

          

          
            3

            
              

            

          

          
             

          

        


        NewCo
          Common Stock being acquired upon the conversion of the Series A
          Preferred
          Stock provided,
          however,
          that
          the Corporation shall not be obligated to issue certificates evidencing
          the
          shares of NewCo Common Stock issuable upon conversion of any Series A
          Preferred Stock until the shares or the Series A Preferred Stock
          are either
          delivered for conversion to the Corporation or any transfer agent for the
          Series A Preferred Stock or NewCo Common Stock, or the Holder notifies
          the
          Corporation that such Series A Preferred Stock have been lost, stolen
          or
          destroyed and provides an agreement reasonably acceptable to the Corporation
          to
          indemnify the Corporation and NewCo from any loss incurred by it in connection
          therewith.

         

        (iii). In
          case
          of any reclassification of the Common Stock that would modify or invalidate
          the
          rights and preferences of the Series A Preferred Stock as provided in this
          Section 4, any consolidation or merger of the Corporation with or into
          another
          person, the sale or transfer of all or substantially all of the assets
          of the
          Corporation or any compulsory share exchange pursuant to which the Common
          Stock
          is converted into other securities, cash or property, all of the issued
          and
          outstanding shares of Series A Preferred Stock shall be converted
          into an
          amount of shares of Common Stock of the Corporation equal to four and
          three-fourths percent (4.75%) of the total issued and outstanding Common
          Stock
          of the Corporation after such conversion. The conversion of the Series
          A
          Preferred Stock shall be deemed to occur immediately prior to such
          reclassification, consolidation, merger, sale, transfer or share exchange.
          Upon
          the conversion of the Series A Preferred Stock, the Holders shall
          return
          all of the Series A Preferred Stock to the Corporation for
          cancellation.

         

        (iv). If
          at any
          time conditions shall arise by reason of action or inaction taken by the
          Corporation which in the opinion of the Board of Directors are not adequately
          covered by the other provisions hereof and which might materially and adversely
          affect the rights of the Holders of Series A Preferred Stock (different
          than or distinguished from the effect generally on rights of holders of
          any
          class of the Corporation’s capital stock), the Corporation shall, at least
          thirty (30) calendar days prior to the effective date of such action, mail
          a
          written notice to each Holder of Series A Preferred Stock briefly
          describing the action contemplated and the material adverse effects of
          such
          action on the rights of such Holders, and an appraiser selected by the
          Holders
          of majority of the outstanding Series A Preferred Stock shall give
          its
          opinion as to the adjustment, if any (not inconsistent with the standards
          established in this Article VI), of the Conversion Price (including, if
          necessary, any adjustment as to the securities into which Series A
          Preferred Stock may thereafter be convertible) and any distribution which
          is or
          would be required to preserve, without diluting, the rights of the Holders
          of
          Series A Preferred Stock; provided,
          however,
          that
          the Corporation, after receipt of the 

         


        
          
             

          

          
            4

            
              

            

          

          
             

          

        


        determination
          by such appraiser, shall have the right to select an additional appraiser,
          in
          which case the adjustment shall be equal to the average of the adjustments
          recommended by each such appraiser. The Board of Directors shall make the
          adjustment recommended forthwith upon the receipt of such opinion or opinions
          or
          the taking of any such action contemplated, as the case may be; provided,
          however,
          that no
          such adjustment of the Conversion Price shall be made which in the opinion
          of
          the appraiser(s) giving the aforesaid opinion or opinions would result
          in an
          increase of the Conversion Price.

         

        (v). The
          Corporation covenants that it will cause NewCo, at the time of its
          incorporation, to reserve and keep available out of the authorized and
          unissued
          NewCo Common Stock, solely for the purpose of issuance upon conversion
          of
          Series A Preferred Stock as herein provided, free from preemptive
          rights or
          any other actual contingent purchase rights of persons other than the Holders
          of
          Series A Preferred Stock, such number of shares of NewCo Common
          Stock as
          shall be issuable upon the conversion of the aggregate Stated Value of
          all
          outstanding Series A Preferred Stock.
          The
          Corporation covenants that all shares of NewCo Common Stock that shall
          be so
          issuable shall, upon issue, be duly and validly authorized, issued and
          fully
          paid and nonassessable.

         

        (vi). The
          issuance of certificates for shares of NewCo Common Stock on conversion
          of
          Series A Preferred Stock shall be made without charge to the Holder
          for any
          documentary stamp or similar taxes that may be payable in respect of the
          issue
          or delivery of such certificate, provided that neither the Corporation
          nor NewCo
          shall be required to pay any tax that may be payable in respect of any
          transfer
          involved in the issuance and delivery of any such certificate upon conversion
          in
          a name other than that of the Holder, and neither the Corporation nor NewCo
          shall be required to issue or deliver such certificates unless or until
          the
          Person or Persons requesting the issuance thereof shall have paid to the
          Corporation the amount of such tax or shall have established to the satisfaction
          of the Corporation that such tax has been paid.

         

        (d). Mandatory
          Redemption.

         

        (i). If
          the
          Corporation has not completed a PPO within one (1) year from the Issuance
          Date
          of the Series A Preferred Stock, the Corporation shall redeem all of the
          Series
          A Preferred Stock owned by each Holder at a price equal pay to the Stated
          Value
          per share for any and all shares of such Series A Preferred Stock, plus
          interest
          on such amount at an annual rate of five and three eighths percent (5.3/8%)
          from
          the Issuance Date to the date of the redemption of the such Series A Preferred
          Stock under this Section 4(d)(i), and (b) convert each Holder’s portion of the
          Series A Preferred Stock into NewCo Common Stock at a rate of 

         


        
          
             

          

          
            5

            
              

            

          

          
             

          

        


        1.333333
          shares of NewCo Common Stock for each share of Series A Preferred
          Stock
          (the “Redemption Price”). The balance of Series A Preferred Stock not
          converted into NewCo Common Stock under this Section 4(d)(i) shall be returned
          to the Corporation for cancellation by NewCo. The Corporation is not obligated
          to provide for redemption of the Series A Preferred Stock through
          a sinking
          fund.

         

        (ii). Shares
          of
          Series A Preferred Stock which have been redeemed or converted shall
          be
          deemed retired and shall thereafter resume the status of authorized and
          unissued
          shares of Preferred Stock, undesignated as to series, and may be redesignated
          and reissued as part of any new series of Preferred Stock other than
          Series A Preferred Stock.

         

        (iii). No
          redemption shall be made and no sum set aside for such redemption at any
          time
          that the terms or provisions of any indenture or agreement of the Corporation,
          including any agreement relating to indebtedness, specifically prohibits
          such
          redemption or setting aside or provides that such redemption or setting
          aside
          would constitute a breach or default thereunder (after notice or lapse
          of time
          or both), except with the written consent of the lender or other parties
          to said
          agreement as the case may be.

         

        (iv). If
          any
          redemption shall at any time be prohibited by any applicable law, the same
          shall
          be deferred until such time as the redemption can occur in full compliance
          with
          such law.

         

        (v). In
          the
          event the Corporation shall redeem shares of Series A Preferred
          Stock as
          provided herein, notice of such redemption shall be given by first class
          mail,
          postage prepaid, or by confirmed facsimile transmission, not less than
          thirty
          (30) business days prior to the date fixed by the Board for redemption
          to each
          holder of Series A Preferred Stock at the address that appears on
          the
          Corporation’s stock record books; provided,
          however,
          that no
          failure to provide such notice nor any defect therein shall affect the
          validity
          of the redemption proceeding except as to the Holder to whom the Corporation
          has
          failed to send such notice or whose notice was defective. Each notice shall
          state (i) the redemption date, (ii) the number of shares
          of
          Series A Preferred Stock to be redeemed; (iii) the Redemption
          Price;
          and (iv) the place or places where certificates for shares of Series A
          Preferred Stock are to be surrendered for payment. When notice has been
          provided
          as aforesaid then from and after the redemption date (unless default shall
          be
          made by the Corporation in providing money for the payment of the Redemption
          Price of the shares called for redemption) said shares shall no longer
          be deemed
          to be outstanding and all rights of the holders thereof shall cease (other
          than
          the right to receive the Redemption Price or NewCo Common Stock with respect
          to
          converted Series A Preferred Stock). Upon surrender of the certificates
          for
          Series A Preferred Stock accompanied by appropriate 

         


        
          
             

          

          
            6

            
              

            

          

          
             

          

        


        stock
          powers, the shares shall be redeemed by the Corporation at the Redemption
          Price.

         

        (vi). Whenever
          the Corporation is obligated to redeem a Holder’s Series A Preferred Stock, and
          the Redemption Price is not paid to the Holder by the tenth (10th)
          business day after the Redemption Price is due and payable to such Holder,
          the
          Corporation shall thereafter pay interest to such Holder on the unpaid
          portion
          of the Redemption Price at the rate of ten percent (10%) per annum, until
          the
          Redemption Price is paid in full.

         

        (vii). If
          any
          shares of Series A Preferred Stock are converted pursuant to this
          Article
          VI, the shares so converted shall be canceled, shall return to the status
          of
          authorized, but unissued preferred stock of no designated series, and shall
          not
          be issuable by the Corporation as Series A Preferred Stock.

         

        (viii). Upon
          receipt by the Corporation of (i) evidence of the loss, theft, destruction
          or mutilation of any Series A Preferred Stock certificate(s) and
          (ii) (y) in the case of loss, theft or destruction, of indemnity
          (without any bond or other security) reasonably satisfactory to the Corporation,
          or (z) in the case of mutilation, upon surrender and cancellation
          of the
          Series A Preferred Stock certificate(s), the Corporation shall execute
          and
          deliver new Series A Preferred Stock certificate(s) of like tenor and date.
          However, the Corporation shall not be obligated to reissue such lost or
          stolen
          Series A Preferred Stock certificate(s) if the Holder contemporaneously
          requests
          the Corporation to convert such Series A Preferred Stock.

         

        (ix). The
          remedies provided in this Section 4 shall be cumulative and in addition
          to all
          other remedies available under these Articles, at law or in equity (including
          a
          decree of specific performance and/or other injunctive relief), and nothing
          herein shall limit a Holder’s right to pursue actual damages for any failure by
          the Corporation to comply with the terms of this Section 4. The Corporation
          acknowledges that a breach by it of its obligations hereunder will cause
          irreparable harm to the Holders of Series A Preferred Stock and
          that the
          remedy at law for any such breach may be inadequate. The Corporation therefore
          agrees, in the event of any such breach or threatened breach, that the
          Holders
          of Series A Preferred Stock shall be entitled, in addition to all
          other
          available remedies, to an injunction restraining any breach, without the
          necessity of showing economic loss and without any bond or other security
          being
          required.

         

        (e). Rank.
          The
          Series A Preferred Stock shall, as to redemptions, and the distribution
          of
          assets upon liquidation, dissolution or winding up of the Corporation,
          rank
          (i) prior to the Corporation’s Common Stock; 

         


        
          
             

          

          
            7

            
              

            

          

          
             

          

        


        (ii) prior
          to any class or series of capital stock of the Corporation hereafter created
          that, by its terms, ranks junior to the Series A Preferred Stock
          (“Junior
          Securities”); (iii) junior to any class or series of capital stock of the
          Corporation hereafter created (with the consent of the holders of a majority
          of
          the outstanding Series A Preferred Stock) which by its terms ranks
          senior
          to the Series A Preferred Stock (“Senior Securities”); and (iv) pari
          passu with any other series of preferred stock of the Corporation hereafter
          created (with the consent of the holders of a majority of the outstanding
          Series A Preferred Stock) which by its terms ranks on a parity (“Pari Passu
          Securities”) with the Series A Preferred Stock.

         

        (f). Liquidation
          Preference.
          

         

        (i). In
          the
          event of any voluntary or involuntary liquidation, dissolution or winding
          up of
          the Corporation, the holders of shares of Series A Preferred Stock then
          outstanding shall be entitled to be paid out of the assets of the Corporation
          available for distribution to its shareholders, after and subject to the
          payment
          in full of all amounts required to be distributed to the holders of any
          class or
          series of stock of the Corporation ranking on liquidation prior and in
          preference to the Series A Preferred Stock, but before any payment shall
          be made
          to the holders of Common Stock or any other Junior Shares, an amount equal
          to $1
          per share of Series A Preferred Stock (subject to appropriate adjustment
          in the
          event of any stock dividend, stock split, combination or other similar
          recapitalization affecting such shares). If upon any such liquidation,
          dissolution or winding up of the Corporation, the remaining assets of the
          Corporation available for distribution to its shareholders shall be insufficient
          to pay the holders of shares of Series A Preferred Stock the full amount
          to
          which they shall be entitled, the holders of shares of Series A Preferred
          Stock
          and any other class or series of stock ranking on liquidation on a parity
          with
          the Series A Preferred Stock shall share ratably in any distribution of
          the
          remaining assets and funds of the Corporation in proportion to the respective
          amounts which would otherwise be payable in respect of the shares held
          by them
          upon such distribution if all amounts payable on or with respect to such
          shares
          were paid in full. The Common Stock shall constitute Junior Shares
          hereunder.

         

        (ii). After
          the
          payment of all preferential amounts required to be paid to the holders
          of any
          class or series of stock of the Corporation ranking on liquidation prior
          and in
          preference to the Series A Preferred Stock and any other class or series
          of
          stock of the Corporation ranking on liquidation on a parity with the Series
          A
          Preferred Stock, upon the dissolution, liquidation or winding up of the
          Corporation, the holders of shares of Common Stock or any other Junior
          Shares
          then outstanding shall be entitled to receive the remaining assets and
          funds of
          the Corporation available for distribution to its shareholders.

         


        
          
             

          

          
            8

            
              

            

          

          
             

          

        


        (g). Voting
          Rights.
          The
          Holders of the Series A Preferred Stock have no voting power whatsoever.
          To
          the extent that under Indiana law, the vote of the Holders of the Series A
          Preferred Stock, voting separately as a class or series, as applicable,
          is
          required to authorize a given action of the Corporation, the affirmative
          vote or
          consent of the Holders of at least a majority of the then outstanding shares
          of
          the Series A Preferred Stock represented at a duly held meeting
          at which a
          quorum is present or by written consent of the Holders of at least a majority
          of
          the then outstanding shares of Series A Preferred Stock (except
          as
          otherwise may be required under Indiana law) shall constitute the approval
          of
          such action by the class. Prompt notice of any such action without a meeting
          by
          less than unanimous written consent shall be given to those shareholder
          who did
          not consent in writing and who would have been entitled to notice of a
          meeting
          if the record date for the meeting was the date on which the first shareholder’s
          signed consent was delivered to the Corporation. Except to the extent required
          by Indiana law, no prior notice of a proposed action by less than unanimous
          written consent must be provided.

         

        3. BOARD
          ACTION.
          The
          Board of Directors of the Corporation unanimously approved these Articles
          of
          Amendment pursuant to unanimous written consent resolutions executed on
          February 18, 2004 and directed that the Articles of Amendment be
          submitted
          to a vote of the shareholders of the Corporation.

         

        4. SHAREHOLDER
          ACTION.
          On
          February 18, 2004, these Articles of Amendment were approved by
          the
          unanimous written consent of the sole shareholder of the
          Corporation.

         

        IN
          WITNESS WHEREOF, the undersigned executes these Articles of Amendment to
          the
          Articles of Incorporation of the Corporation and certifies to the truth
          of the
          facts herein stated this 18th
          day of
          February, 2004.

         

        


         

        
          	 	
                  MAGNETECH
                    INDUSTRIAL SERVICES, INC.

                
	 	 	 
	 	 	 
	 	 	 
	 	
                  By:

                	 
	 	 	
                  John
                    A. Martell, President

                


        

        


        



        
          
             

          

          
            9

            
              

            

          

          
             

          

        


        APPENDIX
          I

        


        NOTICE
          OF CONVERSION

        AT
          THE ELECTION OF THE HOLDER

        


        (To
          be
          Executed by the Registered Holder in order to Convert the Series A Preferred
          Stock of Magnetech Industrial Services, Inc.)

        


        The
          undersigned hereby irrevocably elects to convert the Series A Preferred
          Stock
          into shares of NewCo Common Stock, as of the date written below. If shares
          are
          to be issued in the name of a person other than undersigned, the undersigned
          will pay all transfer taxes payable with respect thereto and is delivering
          herewith such certificates and opinions as reasonably requested by the
          Company
          in accordance therewith.

        


        


        
          	
                  Conversion
                    calculations:

                	 
	 	
                  Date
                    to Effect Conversion

                
	 	
                   

                   

                
	 	
                  Number
                    of Series A Preferred shares to be Converted

                
	 	 
	 	 
	 	
                  Number
                    of NewCo Common Stock Shares to be Issued Upon
                    Conversion

                
	 	
                   

                   

                
	 	
                  Signature
                    

                
	 	
                   

                   

                
	 	
                  Name

                
	 	
                   

                   

                
	 	
                  Address

                


        

         

      

    

    
 

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Schedule
      1

    


    Purchaser(s)

     

    
      MAGNETECH
        INDUSTRIAL SERVICES, INC.

      
        Private
          Placement of Convertible Redeemable Preferred Stock


      


      
        	
                Name

              	
                Issue
                  Date

              	
                No.
                  of Shares

              
	 	
                 

              	 
	
                Dr.
                  Domenic Strazzulla

              	
                2/26/2004

              	
                50,000

              
	
                Jody
                  Nelson

              	
                2/26/2004

              	
                75,000

              
	
                David
                  L. Cohen

              	
                2/26/2004

              	
                100,000

              
	
                William
                  Sybesma

              	
                2/26/2004

              	
                50,000

              
	
                Dr.
                  Frank Lake, III

              	
                2/26/2004

              	
                50,000

              
	
                Jay
                  Shrager & Carole Shrager JTWROS

              	
                2/26/2004

              	
                50,000

              
	
                RS
                  & VS Ltd.

              	
                2/26/2004

              	
                100,000

              
	
                Michael
                  Goldfarb

              	
                2/26/2004

              	
                50,000

              
	
                Matthew
                  A. Dancy

              	
                2/26/2004

              	
                25,000

              
	
                David
                  Dercher

              	
                2/26/2004

              	
                50,000

              
	
                Greenfield
                  Plumbing & Heating

              	
                2/26/2004

              	
                25,000

              
	
                Robert
                  C. Ingram, III

              	
                2/26/2004

              	
                50,000

              
	
                Fredrick
                  B. Epstein

              	
                2/26/2004

              	
                50,000

              
	
                Roger
                  Stacey

              	
                2/26/2004

              	
                25,000

              
	 	 	 
	
                TOTAL

              	 	
                750,000

              


      

    

    



    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    


    Schedule
      1.1

    


    Disclosure
      Documents

    


    None,
      other than this Agreement.


    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    


    Schedule
      3.1(a)

    


    Subsidiaries

    


    


    Martell
      Electric LLC 


    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    


    


    Schedule
      3.1(c)

     

    Capitalization
      and Registration Rights

    


    As
      of the
      date hereof, the Company is authorized to issues one thousand (1,000) shares
      of
      common stock with no par value. 

    



    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    


    Schedule
      3.1(e)

    


    Conflicts

    


    


    


    None.


    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    


    Schedule
      3.1(f)

    


    Consents
      and Approvals

    


    


    


    None.


    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    


    Schedule
      3.1(g)

    


    Litigation

    


    


    


    None.


    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    


    Schedule
      3.1(h)

    


    Defaults
      and Violations

    


    


    


    None.