Secured Convertible Term Note dated August 24, 2005 issued to Laurus Master
      Fund, Ltd.


     

    Exhibit
      4.10

     

    


     

    THIS
      NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
      LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
      MAY
      NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
      EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH SHARES UNDER SAID
      ACT
      AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO MAGNETECH INTEGRATED SERVICES CORP. THAT SUCH REGISTRATION
      IS
      NOT REQUIRED.

     

    SECURED
      CONVERTIBLE TERM NOTE

     

    FOR
      VALUE
      RECEIVED, MAGNETECH INTEGRATED SERVICES CORP., an Indiana corporation (the
      “Company”),
      promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate Services
      Limited, P.O. Box 309 GT, Ugland House, South Church Street, George Town, Grand
      Cayman, Cayman Islands, Fax: 345-949-8080 (the “Holder”)
      or its
      registered assigns or successors in interest, the sum of Three Million Dollars
      ($3,000,000), together with any accrued and unpaid interest hereon, on August
      24, 2008 (the “Maturity
      Date”)
      if not
      sooner paid.

     

    Capitalized
      terms used herein without definition shall have the meanings ascribed to such
      terms in that certain Security and Purchase Agreement dated as of the date
      hereof by and between the Company, certain Subsidiaries of the Company and
      the
      Holder (as amended, modified and/or supplemented from time to time, the
“Security
      Agreement”).
      This
      Note is issued pursuant to, and is subject to the terms and conditions of,
      the
      Security Agreement.

     

    The
      following terms shall apply to this Secured Convertible Term Note (this
“Note”):

     

    ARTICLE
      I

    CONTRACT
      RATE AND AMORTIZATION

     

    1.1 Contract
      Rate.
      Subject
      to Sections 4.2 and 5.10, interest payable on the outstanding principal amount
      of this Note (the “Principal
      Amount”)
      shall
      accrue at a rate per annum equal to the “prime rate” published in The
      Wall Street Journal
      from
      time to time (the “Prime
      Rate”),
      plus
      one percent (1.0%) (the “Contract
      Rate”).
      The
      Contract Rate shall be increased or decreased as the case may be for each
      increase or decrease in the Prime Rate in an amount equal to such increase
      or
      decrease in the Prime Rate; each change to be effective as of the day of the
      change in the Prime Rate. Interest shall be (i) calculated on the basis of
      a 360
      day year, and (ii) payable monthly, in arrears, commencing on September 1,
      2005,
      and on the first business day of each consecutive calendar month thereafter
      through and including the Maturity Date, and on the Maturity Date, whether
      by
      acceleration or otherwise.

     

    1.2 Contract
      Rate Adjustments.
      The
      Contract Rate shall be calculated on the last business day of each calendar
      month hereafter (other than for increases or decreases in the Prime Rate which
      shall be calculated and become effective in accordance with the terms of Section
      1.1) until the Maturity Date (each a “Determination
      Date”)
      and
      shall be subject to 


    
      
        
        

      

      
        
          

        

      

      
        
        

      

    


     

    adjustment
      as set forth herein. If (i) the Company shall have registered the Grant Shares
      and the shares of the Common Stock underlying the conversion of this Note and
      each Warrant then outstanding on a registration statement declared effective
      by
      the Securities and Exchange Commission (the “SEC”),
      and
      (ii) the average of the Closing Prices (as defined below) of the Common
      Stock as reported by Bloomberg, L.P. on the Principal Market for the five (5)
      trading days immediately preceding a Determination Date (the “Closing
      Price Average”)
      exceeds the then applicable Fixed Conversion Price by at least twenty-five
      percent (25%), the Contract Rate for the succeeding calendar month shall
      automatically be reduced by 200 basis points (200 b.p.) (2.0%) for each
      incremental twenty-five percent (25%) increase in the Closing Price Average
      of
      the Common Stock above the then applicable Fixed Conversion Price.
      Notwithstanding the foregoing (and anything to the contrary contained herein),
      in no event shall the Contract Rate at any time be less than zero percent (0%).
      For purposes of this Note, the “Closing
      Price”of
      the
      Common Stock shall mean: (i) in the event that the Common Stock is listed on
      the
      American Stock Exchange or New York Stock Exchange or the National or SmallCap
      Market of The Nasdaq Stock Market, Inc. (“Nasdaq”),
      the
      closing or last sale price, as the case may be, reported for the applicable
      day
      or (ii) in the event that the Common Stock is not traded on the American Stock
      Exchange or New York Stock Exchange or on the Nasdaq but is quoted on the NASD
      Over The Counter Bulletin Board, then the average of the closing bid and asked
      prices reported for the applicable day.

     

    1.3 Principal
      Payments.
      Subject
      to Articles II and III below, amortizing payments of the aggregate principal
      amount outstanding under this Note at any time (the “Principal
      Amount”)
      shall
      be made by the Company on March 1, 2006 and on the first business day of each
      succeeding month thereafter through and including the Maturity Date (each,
      an
“Amortization
      Date”).
      Subject to Articles II and III below, commencing on the first Amortization
      Date,
      the Company shall make monthly payments to the Holder on each Repayment Date,
      each such payment in the amount of $100,000 together with any accrued and unpaid
      interest on such portion of the Principal Amount plus any and all other unpaid
      amounts which are then owing under this Note, the Security Agreement and/or
      any
      other Ancillary Agreement (other than the Revolving Note and each Minimum
      Borrowing Note) (collectively, the “Monthly
      Amount”).
      Any
      outstanding Principal Amount together with any accrued and unpaid interest
      thereon and any and all other unpaid amounts which are then owing by the Company
      to the Holder under this Note, the Security Agreement and/or any other Ancillary
      Agreement (other than the Revolving Note and any Minimum Borrowing Note) shall
      be due and payable on the Maturity Date.

     

    ARTICLE
      II

    CONVERSION
      AND REDEMPTION

     

    2.1 Payment
      of Monthly Amount.

     

    (a) Payment
      in Cash or Common Stock.
      If the
      Monthly Amount is required to be paid in cash pursuant to Section 2.1(b),
      then the Company shall pay the Holder an amount in cash equal to 101% of the
      Monthly Amount (the “Premium
      Fee”)
      due
      and owing to the Holder on the Amortization Date; provided, however, that if
      only a portion of such Monthly Amount may be converted into shares of Common
      Stock pursuant to Section 3.2, then the balance of such Monthly Amount that
      is
      required to be paid in cash shall not be subject to the 


    
      
        
        

      

      
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    Premium
      Fee. If the Monthly Amount (or a portion of such Monthly Amount if not all
      of
      the Monthly Amount may be converted into shares of Common Stock pursuant to
      Section 3.2) is required to be paid in shares of Common Stock pursuant to
      Section 2.1(b), the number of such shares to be issued by the Company to the
      Holder on such Amortization Date (in respect of such portion of the Monthly
      Amount converted into shares of Common Stock pursuant to Section 2.1(b)), shall
      be the number determined by dividing (i) the portion of the Monthly Amount
      converted into shares of Common Stock, by (ii) the then applicable Fixed
      Conversion Price. For purposes hereof, subject to Section 3.6 hereof, the
      initial “Fixed
      Conversion Price”
      means
      $0.26 per share of Common Stock.

     

    (b) Monthly
      Amount Conversion Conditions.
      Subject
      to Sections 2.1(a), 2.2, and 3.2 hereof, the Holder shall convert into
      shares of Common Stock all of the Monthly Amount due on each Amortization Date
      (or a portion of such Monthly Amount if not all of the Monthly Amount may be
      converted into shares of Common Stock pursuant to Section 3.2) if the following
      conditions (the “Conversion
      Criteria”)
      are
      satisfied: (i) the average of the Closing Prices (as defined herein)of the
      Common Stock as reported by Bloomberg, L.P. on the Principal Market for the
      five
      (5) trading days immediately preceding such Amortization Date shall be greater
      than or equal to 110% of the Fixed Conversion Price and (ii) the amount of
      such
      conversion does not exceed twenty eight percent (28%) of the aggregate dollar
      trading volume of the Common Stock for the period of twenty-two (22) trading
      days immediately preceding such Amortization Date. If subsection (i) of the
      Conversion Criteria is met but subsection (ii) of the Conversion Criteria is
      not
      met as to the entire Monthly Amount, the Holder shall convert only such part
      of
      the Monthly Amount that meets subsection (ii) of the Conversion Criteria. Any
      portion of the Monthly Amount due on an Amortization Date that the Holder has
      not been able to convert into shares of Common Stock due to the failure to
      meet
      the Conversion Criteria, shall be paid in cash by the Company at the rate of
      101% of the Monthly Amount otherwise due on such Amortization Date, within
      three
      (3) business days of such Amortization Date, pursuant to Section 2.1(a) above.
      

     

    2.2 No
      Effective Registration.
      Notwithstanding anything to the contrary herein, none of the Company’s
      obligations to the Holder under this Note may be converted into Common Stock
      unless (a) either (i) an effective current Registration Statement (as defined
      in
      the Registration Rights Agreement) covering the shares of Common Stock to be
      issued in connection with conversion of such obligations exists or (ii) an
      exemption from registration for resale of all of the Common Stock issued and
      issuable is available pursuant to Rule 144 of the Securities Act and (b) no
      Event of Default (as hereinafter defined) exists and is continuing, unless
      such
      Event of Default is cured within any applicable cure period or otherwise waived
      in writing by the Holder.

     

    2.3 Optional
      Redemption in Cash.
      The
      Company may prepay this Note (“Optional
      Redemption”)
      by
      paying to the Holder a sum of money equal to one hundred fifteen percent (115%)
      of the Principal Amount outstanding at such time together with accrued but
      unpaid interest thereon and any and all other sums due, accrued or payable
      to
      the Holder arising under this Note, the Security Agreement or any other
      Ancillary Agreement (other than the Revolving Note and any Minimum Borrowing
      Note) (the “Redemption
      Amount”)
      outstanding on the Redemption Payment Date (as defined below). The Company
      shall
      deliver to the Holder a written notice of redemption (the “Notice
      of Redemption”)
      specifying the date for such 


    
      
        
        

      

      
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    Optional
      Redemption (the “Redemption
      Payment Date”),
      which
      date shall be seven (7) business days after the date of the Notice of Redemption
      (the “Redemption
      Period”).
      A
      Notice of Redemption shall not be effective with respect to any portion of
      this
      Note for which the Holder has previously delivered a Notice of Conversion (as
      hereinafter defined) or for conversions elected to be made by the Holder
      pursuant to Section 3.1 during the Redemption Period. The Redemption Amount
      shall be determined as if the Holder’s conversion elections had been completed
      immediately prior to the date of the Notice of Redemption. On the Redemption
      Payment Date, the Redemption Amount must be paid in good funds to the Holder.
      In
      the event the Company fails to pay the Redemption Amount on the Redemption
      Payment Date as set forth herein, then such Redemption Notice will be null
      and
      void.

     

    ARTICLE
      III

    HOLDER’S
      CONVERSION RIGHTS

     

    3.1 Optional
      Conversion.
      Subject
      to the terms set forth in this Article III, the Holder shall have the right,
      but
      not the obligation, to convert all or any portion of the issued and outstanding
      Principal Amount and/or accrued interest under this Note and fees due and
      payable under this Note, the Security Agreement or any other Ancillary Agreement
      (other than the Revolving Note and any Minimum Borrowing Note) into fully paid
      and nonassessable shares of Common Stock at the Fixed Conversion Price. Such
      conversion shall constitute complete satisfaction of the Principal Amount and/or
      accrued interest and fees so converted. The shares of Common Stock to be issued
      upon such conversion are herein referred to as, the “Conversion
      Shares.”

     

    3.2 Conversion
      Limitation.
      Notwithstanding anything contained herein to the contrary, the Holder shall
      not
      be entitled to convert pursuant to the terms of this Note an amount that would
      be convertible into that number of Conversion Shares which would exceed the
      amount by which (i) 9.99% of the outstanding shares of Common Stock exceeds
      (ii)
      the number of shares of Common Stock beneficially owned by the Holder. For
      purposes of the immediately preceding sentence, beneficial ownership shall
      be
      determined in accordance with Section 13(d) of the Exchange Act and Regulation
      13d-3 thereunder. The Conversion Shares limitation described in this Section
      3.2
      shall automatically become null and void following notice to the Company upon
      the occurrence and during the continuance of an Event of Default, or upon 75
      days prior notice to the Company. Notwithstanding anything contained herein
      to
      the contrary, the provisions of this Section 3.2 are irrevocable and may not
      be
      waived by the Holder or any Company.

     

    3.3 Mechanics
      of Holder’s Conversion.
      In the
      event that the Holder elects to convert this Note into Common Stock, the Holder
      shall give notice of such election by delivering an executed and completed
      notice of conversion in substantially the form of Exhibit
      A
      hereto
      (appropriate completed) (“Notice
      of Conversion”)
      to the
      Company and such Notice of Conversion shall provide a breakdown in reasonable
      detail of the Principal Amount, accrued interest and fees that are being
      converted. The election to convert shall be irrevocable except (i) if an Event
      of Default has occurred and is continuing or (ii) if the Company has consented
      to such a revocation. On each Conversion Date (as hereinafter defined) and
      in
      accordance with its Notice of Conversion, the Holder shall make the appropriate
      reduction to the Principal Amount, accrued interest and fees as entered in
      its
      records and shall provide written notice thereof to the 


    
      
        
        

      

      
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    Company
      within two (2) business days after the Conversion Date. Each date on which
      a
      Notice of Conversion is delivered or telecopied to the Company in accordance
      with the provisions hereof shall be deemed a Conversion Date (the “Conversion
      Date”).
      Pursuant to the terms of the Notice of Conversion, the Company will issue
      instructions to the transfer agent accompanied by an opinion of the Company’s
      counsel within three (3) business days of the date of the delivery to the
      Company of the Notice of Conversion and shall cause the transfer agent to
      transmit the certificates representing the Conversion Shares to the Holder
      by
      crediting the account of the Holder’s designated broker with the Depository
      Trust Corporation (“DTC”)
      through its Deposit Withdrawal Agent Commission (“DWAC”)
      system
      within three (3) business days after receipt by the Company of the Notice of
      Conversion (the “Delivery
      Date”).
      In
      the case of the exercise of the conversion rights set forth herein the
      conversion privilege shall be deemed to have been exercised and the Conversion
      Shares issuable upon such conversion shall be deemed to have been issued upon
      the Conversion Date. The Holder shall be treated for all purposes as the record
      holder of the Conversion Shares, unless the Holder provides the Company written
      instructions to the contrary and further provides the Company any information
      reasonably requested and pays any transfer taxes or other fees relating to
      the
      issuance of the shares in a name other than that of the Holder. 

     

    3.4 Fractional
      Shares.
      The
      Company shall not be required to issue fractional shares of Common Stock upon
      any conversion of this Note. In lieu of any fractional shares of Common Stock
      that would otherwise be issuable upon conversion, the Company shall pay the
      Holder an amount in cash equal to the product of such fraction multiplied by
      the
      then applicable Fixed Conversion Price. 

     

    3.5 Conversion
      Mechanics.
      The
      number of shares of Common Stock to be issued upon each conversion of this
      Note
      shall be determined by dividing that portion of the principal and interest
      and
      fees to be converted, if any, by the then applicable Fixed Conversion Price.
      In
      the event of any conversions of a portion of the outstanding Principal Amount
      pursuant to this Article III, such conversions shall be deemed to constitute
      conversions of the outstanding Principal Amount applying to Monthly Amounts
      for
      the remaining Amortization Dates in chronological order.

     

    3.6 Adjustment
      Provisions.
      The
      Fixed Conversion Price and number and kind of shares or other securities to
      be
      issued upon conversion determined pursuant to this Note shall be subject to
      adjustment from time to time upon the occurrence of certain events during the
      period that this conversion right remains outstanding, as follows:

     

    (a) Reclassification.
      If the
      Company at any time shall, by reclassification or otherwise, change the Common
      Stock into the same or a different number of securities of any class or classes,
      this Note, as to the unpaid Principal Amount and accrued interest thereon,
      shall
      thereafter be deemed to evidence the right to purchase the number of and kind
      of
      securities that would have been issued to the Holder had the Holder converted
      this Note into Common Stock immediately before such reclassification or other
      change.

     

    (b) Stock
      Splits, Combinations and Dividends.
      If the
      shares of Common Stock are subdivided or combined into a greater or smaller
      number of shares of Common Stock, or if a dividend is paid on the Common Stock
      or any preferred stock issued by 


    
      
        
        

      

      
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    the
      Company in shares of Common Stock, the Fixed Conversion Price shall be
      proportionately reduced in case of subdivision of shares or stock dividend
      or
      proportionately increased in the case of combination of shares, in each such
      case by the ratio which the total number of shares of Common Stock outstanding
      immediately after such event bears to the total number of shares of Common
      Stock
      outstanding immediately prior to such event.

     

    (c) Share
      Issuances.
      Subject
      to the provisions of this Section 3.6, if the Company shall at any time prior
      to
      the conversion or repayment in full of the Principal Amount issue any shares
      of
      Common Stock or securities convertible into Common Stock to a Person other
      than
      the Holder (except (i) pursuant to Sections 3.6(a) or (b) above; (ii) pursuant
      to options, warrants, or other obligations to issue shares outstanding on the
      date hereof as disclosed to the Holder in writing; (iii) pursuant to any equity
      incentive plan for directors, officers or employees adopted by the Company;
      or
      (iv) the Notes, the Warrants, and Common Stock issued upon conversion or
      exercise, as applicable, of any of the Notes or Warrants) for a consideration
      per share (the “Offer
      Price”)
      less
      than the Fixed Conversion Price in effect at the time of such issuance, then
      the
      Fixed Conversion Price shall be immediately reset pursuant to the formula below.
      For purposes hereof, the issuance of any security of the Company convertible
      into or exercisable or exchangeable for Common Stock shall result in an
      adjustment to the Fixed Conversion Price upon the issuance of such securities
      rather than upon the issuance of Common Stock in connection with the conversion,
      exercise or exchange, as applicable, of such securities.

     

    If
      the
      Company issues any additional shares of Common Stock for a consideration per
      share less than the then-applicable Fixed Conversion Price pursuant to this
      Section 3.6 then, and thereafter successively upon each such issue, the Fixed
      Conversion Price shall be adjusted by multiplying the then applicable Fixed
      Conversion Price by the following fraction: 

     

    
      	
               

              A
                +
                B

               

            
	
               

              (A
                + B) + [((C - D) x B) / C]

               

            


    

     

    A
      = Total
      amount of shares convertible pursuant to this Note

     

    B
      =
      Actual shares sold in the offering

     

    C
      = Fixed
      Conversion Price

     

    D
      = Offer
      Price

     

    (d) Computation
      of Consideration.
      For
      purposes of any computation respecting consideration received pursuant to
      Section 3.6(c) above, the following shall apply:

     

    (i) in
      the
      case of the issuance of shares of Common Stock for cash, the consideration
      shall
      be the amount of such cash, provided that in no case shall any deduction be
      made
      for any commissions, discounts or other expenses incurred by the Company for
      any
      underwriting of the issue or otherwise in connection therewith;


    
      
        
        

      

      
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    (ii) in
      the
      case of the issuance of shares of Common Stock for a consideration in whole
      or
      in part other than cash, the consideration other than cash shall be deemed
      to be
      the fair market value thereof as determined in good faith by the Board of
      Directors of the Company (irrespective of the accounting treatment thereof);
      and


     

    (iii) with
      respect to any shares of Common Stock issued upon the exercise or conversion
      of
      any option, warrant or other convertible security, the aggregate consideration
      received for such shares of Common Stock shall be deemed to be the consideration
      received by the Company for the issuance of such convertible securities plus
      the
      additional minimum consideration, if any, to be received by the Company upon
      the
      conversion or exchange thereof (the consideration in each case to be determined
      in the same manner as provided in subsections (i) and (ii) of this Section
      3.6(d)).

     

    3.7 Reservation
      of Shares.
      During
      the period the conversion right exists, the Company will reserve from its
      authorized and unissued Common Stock a sufficient number of shares to provide
      for the issuance of Conversion Shares upon the full conversion of this Note.
      The
      Company represents that upon issuance, the Conversion Shares will be duly and
      validly issued, fully paid and non-assessable. The Company agrees that its
      issuance of this Note shall constitute full authority to its officers, agents,
      and transfer agents who are charged with the duty of executing and issuing
      stock
      certificates to execute and issue the necessary certificates for the Conversion
      Shares upon the conversion of this Note.

     

    3.8 Registration
      Rights.
      The
      Holder has been granted registration rights with respect to the Conversion
      Shares as set forth in the Registration Rights Agreement.

     

    3.9 Issuance
      of New Note.
      Upon
      any partial conversion of this Note, a new Note containing the same date and
      provisions of this Note shall, at the request of the Holder, be issued by the
      Company to the Holder for the principal balance of this Note and interest which
      shall not have been converted or paid. Subject to the provisions of Article
      IV
      of this Note, the Company shall not pay any costs, fees or any other
      consideration to the Holder for the production and issuance of a new
      Note.

     

    ARTICLE
      IV

    EVENTS
      OF DEFAULT

     

    4.1 Events
      of Default.
      The
      occurrence of an Event of Default under the Security Agreement shall constitute
      an event of default (“Event
      of Default”)
      hereunder. 

     

    4.2 Default
      Interest.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Company shall pay additional interest on the outstanding Principal Amount of
      this Note in an amount equal to one percent (1%) per month from the date of
      such
      Event of Default until the date such Event of Default is cured or
      waived.

     

    4.3 Default
      Payment.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Holder, at its option, may demand repayment in full of all obligations and
      liabilities owing by Company to the Holder under this Note, the Security
      Agreement and/or any other Ancillary Agreement and/or may elect, in addition
      to
      all rights and remedies of the Holder under the Security Agreement and the
      other
      Ancillary Agreements and all obligations and 


    
      
        
        

      

      
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    liabilities
      of the Company under the Security Agreement and the other Ancillary Agreements,
      to require the Company to make a Default Payment (“Default
      Payment”).
      The
      Default Payment shall be 112% of the outstanding principal amount of the Note,
      plus accrued but unpaid interest under this Note, all other fees arising under
      this Note or the Security Agreement or any other Ancillary Agreement (other
      than
      the Revolving Note and any Minimum Borrowing Note), and all other amounts
      payable hereunder. The Default Payment shall be applied first to any fees due
      and payable to the Holder pursuant to this Note, the Security Agreement, and/or
      the other Ancillary Agreements (other than the Revolving Note and any Minimum
      Borrowing Note), then to accrued and unpaid interest due on this Note and then
      to the outstanding principal balance of this Note, and any remaining balance
      of
      the Default Payment shall be retained by the Holder. The Default Payment shall
      be due and payable immediately on the date that the Holder has exercised its
      rights pursuant to this Section 4.3.

     

    ARTICLE
      V

    MISCELLANEOUS

     

    5.1 Conversion
      Privileges.
      The
      conversion privileges set forth in Article III shall remain in full force and
      effect immediately from the date hereof until the date this Note is indefeasibly
      paid in full and irrevocably terminated.

     

    5.2 Cumulative
      Remedies.
      The
      remedies under this Note shall be cumulative.

     

    5.3 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

     

    5.4 Notices.
      Any
      notice herein required or permitted to be given shall be in writing and shall
      be
      deemed effectively given: (a) upon personal delivery to the party notified,
      (b)
      when sent by confirmed telex or facsimile if sent during normal business hours
      of the recipient, if not, then on the next business day, (c) five days after
      having been sent by registered or certified mail, return receipt requested,
      postage prepaid, or (d) one business day after deposit with a nationally
      recognized overnight courier, specifying next day delivery, with written
      verification of receipt. All communications shall be sent to the Company at
      the
      address provided in the Security Agreement executed in connection herewith,
      and
      to the Holder at the address provided in the Security Agreement for such Holder,
      with a copy to John E. Tucker, Esq., 825 Third Avenue, 14th
      Floor,
      New York, New York 10022, facsimile number (212) 541-4434, or at such other
      address as the Company or the Holder may designate by ten days advance written
      notice to the other parties hereto. 

     

    5.5 Amendment
      Provision.
      The
      term “Note” and all references thereto, as used throughout this instrument,
      shall mean this instrument as originally executed, or if later amended or
      supplemented, then as so amended or supplemented, and any successor instrument
      as such successor instrument may be amended or supplemented.


    
      
        
        

      

      
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    5.6 Assignability.
      This
      Note shall be binding upon the Company and its successors and assigns, and
      shall
      inure to the benefit of the Holder and its successors and assigns, and may
      be
      assigned by the Holder in accordance with the requirements of the Security
      Agreement. The Company may not assign any of its obligations under this Note
      without the prior written consent of the Holder, any such purported assignment
      without such consent being null and void.

     

    5.7 Cost
      of Collection.
      In case
      of any Event of Default under this Note, the Company shall pay the Holder
      reasonable costs of collection, including reasonable attorneys’
      fees.

     

    5.8 Governing
      Law, Jurisdiction and Waiver of Jury Trial.

     

    (a) THIS
      NOTE
      SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
      LAW.

     

    (b) THE
      COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
      IN
      THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION
      TO
      HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY, ON THE ONE HAND,
      AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE OR ANY OF THE OTHER
      ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR ANCILLARY TO THIS NOTE
      OR ANY OF THE ANCILLARY AGREEMENTS; PROVIDED,
      THAT
      THE COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
      HEARD
      BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND
      FURTHER PROVIDED,
      THAT
      NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM
      BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT
      THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
      OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
      HOLDER. THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH THE
      COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
      PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
      NON CONVENIENS.
      THE
      COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
      PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
      SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
      MAIL
      ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE SECURITY AGREEMENT
      AND
      THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S
      ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
      POSTAGE PREPAID.

     

    (c) THE
      COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
      APPLICABLE LAWS. THEREFORE, TO 


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


     

    ACHIEVE
      THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION,
      THE COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT,
      OR
      PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT,
      OR
      OTHERWISE BETWEEN THE HOLDER AND THE COMPANY ARISING OUT OF, CONNECTED WITH,
      ANCILLARY OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
      CONNECTION WITH THIS NOTE, ANY OTHER ANCILLARY AGREEMENT OR THE TRANSACTIONS
      ANCILLARY HERETO OR THERETO.

     

    5.9 Severability.
      In the
      event that any provision of this Note is invalid or unenforceable under any
      applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law. Any such provision which
      may prove invalid or unenforceable under any law shall not affect the validity
      or enforceability of any other provision of this Note.

     

    5.10 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum rate permitted by such law, any payments in excess
      of such maximum rate shall be credited against amounts owed by the Company
      to
      the Holder and thus refunded to the Company.

     

    5.11 Security
      Interest and Guarantee.
      The
      Holder has been granted a security interest (i) in certain assets of the Company
      and its Subsidiaries as more fully described in the Security Agreement dated
      as
      of the date hereof and (ii) in the equity interests of the Companies’
      Subsidiaries pursuant to the Pledge Agreement dated as of the date hereof.
      The
      obligations of the Company under this Note are guaranteed by certain
      Subsidiaries of the Company pursuant to the Guaranty dated as of the date
      hereof.

     

    5.12 Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Note and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Note to favor any party against the
      other.

     

    5.13 Registered
      Obligation.
      This
      Note is intended to be a registered obligation within the meaning of Treasury
      Regulation Section 1.871-14(c)(1)(i) and the Company (or its agent) shall
      register the Note (and thereafter shall maintain such registration) as to both
      principal and any stated interest. Notwithstanding any document, instrument
      or
      agreement relating to this Note to the contrary, transfer of this Note (or
      the
      right to any payments of principal or stated interest thereunder) may only
      be
      effected by (i) surrender of this Note and either the reissuance by the Company
      of this Note to the new holder or the issuance by the Company of a new
      instrument to the new holder, or (ii) transfer through a book entry system
      maintained by the Company (or its agent), within the meaning of Treasury
      Regulation Section 1.871-14(c)(1)(i)(B).

     

    [Balance
      of page intentionally left blank; signature page follows]

     

    



    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


     

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Secured Convertible Term Note to be signed in its name
      effective as of this 24th
      day of
      August, 2005.

     

    


    
      	 	 	
              MAGNETECH
                INTEGRATED SERVICES CORP.

            
	 	 	 	 	 
	 	 	
              By:

            	 /s/
              John A. Martell
	 	 	 	
              Name:

            	 John
              A. Martell
	 	 	 	
              Title:

            	 President
&
              CEO
	
              WITNESS:

            	 	 	 	 
	 	 	 	 	 
	 /s/
              Laura D. Seng	 	 	 	 


    

    


     

    



    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


     

    EXHIBIT
      A

     

    NOTICE
      OF CONVERSION

     

    (To
      be
      executed by the Holder in order to convert all or part of

    the
      Secured Convertible Term Note into Common Stock)

    


    


    Magnetech
      Integrated Services Corp. 

    1125
      S.
      Walnut Street

    South
      Bend, Indiana 46619

    Attention:
      Chief Financial Officer

     

    The
      undersigned hereby converts $_________ of the principal, $______ of the interest
      and $________ of the fee due on [specify applicable Repayment Date] under the
      Secured Convertible Term Note dated as of August 24, 2005 (the “Note”)
      issued
      by Magnetech Integrated Services Corp. (the “Company”)
      by
      delivery of shares of Common Stock of the Company (“Shares”)
      on and
      subject to the conditions set forth in the Note.

    
      	
               

              1.

            	
               

              Date
                of Notice:

            	 
	
               

              2.

            	
               

              Shares
                To Be Delivered:

            	 
	
               

              3.

            	
               

              Holder
                DWAC Instructions:

            	 
	
               

              4.

            	
               

              Holder
                Address:

            	 


    

     

    
 

    
      	 	 	
              [HOLDER]

            
	 	 	 	 	 
	 	 	
              By:

            	 
	 	 	
              Name:

            	 
	 	 	
              Title: