Placement Agency Agreement dated January 25, 2005 between the registrant and
      Strasbourger Pearson Tulcin Wolff Incorporated


    
      Exhibit
        10.2

       

      


       

      MAGNETECH
        INTEGRATED SERVICES CORP.

       

      PLACEMENT
        AGENCY AGREEMENT

       

      Strasbourger
        Pearson Tulcin Wolff Incorporated

      33
        Whitehall Street, 17th
        Floor

      New
        York,
        New York 10004

       

      January
        25, 2005

       

      Ladies
        and Gentlemen:

       

      This
        Placement Agency Agreement (this “Agreement”)
        confirms the retention by Magnetech Integrated Services Corp., an Indiana
        corporation (“MISC”
        or the
“Company”), of Strasbourger Pearson Tulcin Wolff Incorporated, a New York
        corporation (“Strasbourger”
        or the
“Placement Agent”),
        to
        act as the sales agent, on a best efforts basis, in connection with the
        Placement (as defined below) for MISC, on the terms set forth below.


       

      MISC
        proposes to offer and sell solely to “accredited investors,” as such term is
        defined in Rule 501 promulgated under the Securities Act of 1933, as amended
        (the “1933
        Act”),
        a
        Private Placement Offering (the “PPO” or the “Placement”) of up to $4,000,000 in
        principal amount of its Subordinated Secured Convertible Debentures (the
        “Debentures”) at par. The PPO offering will be made on a “best efforts,
        $1,000,000 or none” basis with respect to the first $1,000,000 principal amount
        of Debentures, and on a “best efforts, any or all” basis with respect to the
        remaining $3,000,000 principal amount will be offered in accordance with
        Section
        4(2) of the 1933 Act and Regulation D promulgated thereunder. The Debentures
        will be convertible into a maximum of 11,747,685 shares of common stock of
        MISC,
        subject to adjustment in certain circumstances. Subscribers (as defined below)
        in the Placement will be issued, for no additional consideration, common
        stock
        purchase warrants (“Subscriber Warrants”) to purchase a maximum of 4,229,166
        shares of common stock of MISC.

       

      The
        Private Placement Memorandum to be used in connection with the PPO (the
“Memorandum”),
        as it
        may be amended or supplemented from time to time, and the form of proposed
        debenture purchase agreement (the “Debenture
        Purchase Agreement”)
        between the Company and each subscriber for the Placement (the “Subscribers”)
        and
        the exhibits which are part of the Memorandum and/or Debenture Purchase
        Agreement are collectively referred to herein as the “Offering
        Documents.”
        The
        Offering Documents, together with (i) this Agreement, (ii) the Fund Escrow
        Agreement (as defined in Section 3(b)(xii) hereof), (iii) the Agent’s Warrants
        (as defined in Section 3(d) hereof) and (iv) any exhibits, schedules and
        appendices which are part of the Offering Documents, and the Agency Agreement
        are collectively referred to herein as the “Transaction
        Documents.”
        The
        shares of common stock of MISC issuable upon conversion of the Debentures,
        the
        Subscriber Warrants and the Agents Warrants are referred to herein as the
        “Underlying
        Shares.”
        The
        Debentures, the Subscriber Warrants, the Agent’s Warrants, the Agent’s Shares
        (as defined in Section 3(d) hereof) and the Underlying Shares are collectively
        referred to herein as the “Securities.”


      
        
          
          

        

        
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      The
        Company will deliver to Strasbourger a reasonable number of copies of the
        Transaction Documents in form and substance satisfactory to Strasbourger
        and its
        counsel.

       

      Each
        Subscriber will be required to deliver, among other things, a Debenture Purchase
        Agreement and a Confidential Investor Questionnaire (the “Questionnaire”)
        in the
        form to be provided to offerees. An example of the Questionnaire is attached
        as
        Exhibit A.

       

      1. Appointment
        of Placement Agent.

       

      Strasbourger
        is hereby appointed or ratified, as the case may be, as exclusive placement
        agent of the Company (subject to Strasbourger’s right to have selected dealers
        (“Selected
        Dealers”)
        in
        good standing with the National Association of Securities Dealers (“NASD”)
        participate in the Placement) during the offering period for the Placement
        herein specified for the purposes of assisting the Company in finding qualified
        Subscribers. The offering period for the PPO (the “PPO
        Period”)
        shall
        commence January 25, 2005, which is the day the Offering Documents are first
        made available to the Placement Agent by the Company for delivery in connection
        with the PPO (the “Delivery
        Date”)
        and
        shall continue until the earlier to occur of: (i) the sale of all of the
        Debentures; or (ii) April 29, 2005, which is 90 days following the Delivery
        Date. The day that the PPO Period terminates is hereinafter referred to as
        the
“PPO
        Termination Date.”
        The
        PPO Termination Date may be extended for up to 45 days at the option of the
        Placement Agent and the Company. 

       

      (a) Subject
        to the performance by the Company of all of its obligations to be performed
        under this Agreement and to the completeness and accuracy of all representations
        and warranties of the Company contained in this Agreement, the Placement
        Agent
        hereby accepts such agency and agrees to use its best efforts to assist the
        Company in finding qualified Subscribers. It is understood that the Placement
        Agent has no commitment to sell the Debentures. Strasbourger’s agency hereunder
        is not terminable by the Company except upon termination of the PPO Offering
        Period.

       

      (b) Subscriptions
        for Debentures shall be evidenced by the execution by Subscribers of a Debenture
        Purchase Agreement. No Debenture Purchase Agreement shall be effective unless
        and until it is accepted and countersigned by the Company. The Placement
        Agent
        shall not have any obligation to independently verify the accuracy or
        completeness of any information contained in any Debenture Purchase Agreement
        or
        the authenticity, sufficiency, or validity of any check delivered by any
        prospective Subscriber in payment for Debentures.

       

      (c) The
        Placement Agent and/or its affiliates may be Subscribers in the
        Placement.

       

      2. Representations
        and Warranties of the Company.
        Except
        as set forth in the Transaction Documents or in the Disclosure Schedule attached
        hereto, the Company represents and warrants to the Placement Agent and each
        Selected Dealer, if any, as follows:

       

      (a) Securities
        Law Compliance.
        The
        offer, offer for sale, and sale of the Securities have not been registered
        with
        the United States Securities and Exchange Commission (the “SEC”).
        The
        Securities are to be offered, offered for sale and sold in reliance upon
        the
        exemptions from the registration requirements of Section 5 of the 1933 Act.
        The
        Company will conduct the 


      
        
          
          

        

        
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      Placement
        in compliance with the requirements of Regulation D of the General Rules
        and
        Regulations under the 1933 Act, and the Company will file all appropriate
        notices of offering with the SEC. The Company has prepared the Offering
        Documents. None of the representations or warranties of the Company contained
        in
        this Agreement or any information appearing in any of the Transaction Documents
        contains, or on or prior to any Closing will contain, any untrue statement
        of a
        material fact or omit to state any material fact necessary in order to make
        the
        statements therein, in light of the circumstances in which they were made,
        not
        misleading. If at any time prior to the completion of the Placement or other
        termination of this Agreement any event shall occur as a result of which
        it
        might become necessary to amend or supplement the Offering Documents so that
        they do not include any untrue statement of any material fact or omit to
        state
        any material fact necessary in order to make the statements therein, in the
        light of the circumstances then existing, not misleading, the Company will
        promptly notify the Placement Agreement and will supply the Placement Agreement
        with amendments or supplements correcting such statement or omission. The
        Company will also provide the Placement Agent for delivery to all offerees
        and
        purchasers and their representatives, if any, any information, documents
        and
        instruments which the Placement Agent deems reasonably necessary to comply
        with
        applicable state and federal law.

       

      (b) Organization.
        The
        Company is duly organized and validly existing under the laws of the
        jurisdiction in which it was organized, and has the requisite power and
        authorization to own its properties and to carry on its business as now being
        conducted. The Company is duly qualified as a foreign corporation to do business
        and is in good standing in every jurisdiction in which its ownership of property
        or the nature of the business conducted by it makes such qualification
        necessary, except to the extent that the failure to be so qualified or be
        in
        good standing would not have a Material Adverse Effect. As used in this
        Agreement, “Material
        Adverse Effect”
        means
        any event or change in circumstance, whether or not directly or indirectly
        caused by management or arising independently of management’s control, that has
        or could reasonably be deemed by the Placement Agent to have in the future,
        a
        material adverse effect on the business, properties, assets, operations,
        results
        of operations, financial condition or prospects of the Company or on the
        transactions contemplated hereby, or on the other Transaction Documents or
        the
        agreements and instruments to be entered into in connection herewith or
        therewith, or on the authority or ability of the Company to perform its
        obligations under the Transaction Documents. 

       

      (c) Capitalization.
        As of
        the date hereof, the authorized, issued and outstanding capital stock of
        the
        Company will be as set forth on Schedule 2(c) attached hereto. Following
        the
        completion of the PPO, except as set forth on Schedule 2(c), (i) no shares
        of
        the Company’s capital stock will be subject to preemptive rights or any other
        similar rights or any liens or encumbrances suffered or permitted by the
        Company; (ii) there will be no outstanding debt securities issued by the
        Company, other than the Debentures; (iii) there will be no outstanding options,
        warrants, scrip, rights to subscribe to, calls or commitments of any character
        whatsoever relating to, or securities or rights convertible into or exchangeable
        for, any shares of capital stock of the Company, or contracts, commitments,
        understandings or arrangements by which the Company is or may become bound
        to
        issue additional shares of capital stock of the Company or options, warrants,
        scrip, rights to subscribe to, calls or commitments of any character whatsoever
        relating to, or securities or rights convertible into or exchangeable for,
        any
        shares of capital stock 


      
        
          
          

        

        
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      of
        the
        Company; (iv) there will be no outstanding securities of the Company which
        contain any redemption or similar provisions, and there will be no contracts,
        commitments, understandings or arrangements by which the Company will be
        or may
        become bound to redeem a security of the Company ; and (v) the Company will
        not
        have any stock appreciation rights or “phantom stock” plans or agreements or any
        similar plan or agreement. All prior sales of securities of the Company will
        be
        either registered under the 1933 Act and applicable state securities laws
        or
        exempt from such registration, and no security holder will have any rescission
        rights with respect thereto.

       

      (d) Subsidiaries
        and Investments.
        Except
        as set forth on Schedule 2(d), following the sale of the Debentures and the
        completion of the PPO, the Company will not have any subsidiaries other than
        Magnetech Industrial Services, Inc. and Martell Electric, LLC, and the Company
        will not own, directly or indirectly, any capital stock or other equity
        ownership or proprietary interests in any other corporation, association,
        trust,
        partnership, joint venture or other entity. 

       

      (e) Financial
        Statements.
        The
        Company’s financial statements attached hereto as Schedule 2(e) will fairly
        present in all material respects the financial position of the Company as
        of
        December 31, 2004 and the results of its operations and cash flows for the
        period then ended December 31, 2004 (subject to normal year-end adjustments
        that
        will not be material). 

       

      (f) Absence
        of Changes.
        Since
        the date (the “Balance
        Sheet Date”)
        of the
        most recent balance sheet provided to the Placement Agent (the “Balance
        Sheet”)
        and
        except as set forth on Schedule 2(f) or Schedule 2(c), the Company has not
        (i)
        incurred any debts, obligations or liabilities, absolute, accrued, contingent
        or
        otherwise, whether due or to become due, except current liabilities incurred
        in
        the usual and ordinary course of business and consistent with past practices,
        having individually or in the aggregate a Material Adverse Effect, (ii) made
        or
        suffered any material changes in its contingent obligations by way of guaranty,
        endorsement (other than the endorsement of checks for deposit in the usual
        and
        ordinary course of business), indemnity, warranty or otherwise, (iii) discharged
        or satisfied any material liens other than those securing, or paid any
        obligation or liability other than, current liabilities shown on the Balance
        Sheet, and current liabilities incurred since the Balance Sheet Date, in
        each
        case in the usual and ordinary course of business and consistent with past
        practices, (iv) mortgaged, pledged or subjected to lien any of its material
        assets, tangible or intangible, (v) sold, transferred or leased any of its
        material assets except in the usual and ordinary course of business and
        consistent with past practices, (vi) cancelled or compromised any debt or
        claim,
        or waived or released any right, of material value except in the usual and
        ordinary course of business and consistent with past practices, (vii) suffered
        any physical damage, destruction or loss (whether or not covered by insurance)
        materially adversely affecting the properties or business of the Company,
        (viii)
        entered into any material transaction other than in the usual and ordinary
        course of business except for this Agreement, the other Transaction Documents
        and the related agreements referred to herein and therein, (ix) encountered
        any
        material labor difficulties or labor union organizing activities, (x) made
        or
        granted any wage or salary increase or entered into any employment agreement
        other than in the ordinary course of business, (xi) issued or sold any shares
        of
        capital stock or other securities or granted any options with respect thereto,
        or modified any equity security of the Company, (xii) declared or paid any
        dividends on or made any other distributions with respect 


      
        
          
          

        

        
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      to,
        or
        purchased or redeemed, any of its outstanding equity securities, (xiii) suffered
        or experienced any change in, or condition affecting, its condition (financial
        or otherwise), properties, assets, liabilities, business operations, or results
        of operations other than changes, events or conditions in the usual and ordinary
        course of its business and consistent with past practices, having (either
        by
        itself or in conjunction with all such other changes, events and conditions)
        a
        Material Adverse Effect, (xiv) made any change in the accounting principles,
        methods or practices followed by it or depreciation or amortization policies
        or
        rates theretofore adopted, or (xv) entered into any agreement, or otherwise
        obligated itself, to do any of the foregoing. 

       

      (g) Title.
        Except
        as set forth on Schedule 2(g), the Company has good and marketable title
        to all
        properties and assets owned by it, free and clear of all liens, charges,
        encumbrances or restrictions, except such as will not be significant or
        important in relation to the Company’s business; to the Company’s knowledge, all
        of the material leases and subleases under which the Company is the lessor
        or
        sublessor of properties or assets or under which the Company holds properties
        or
        assets as lessee or sublessee will be in full force and effect, and the Company
        will not be in default in any material respect with respect to any of the
        terms
        or provisions of any of such leases or subleases, and no material claim will
        have been asserted by anyone adverse to rights of the Company as lessor,
        sublessor, lessee or sublessee under any of the leases or subleases mentioned
        above, or affecting or questioning the right of the Company to continued
        possession of the leased or subleased premises or assets under any such lease
        or
        sublease.

       

      (h) Proprietary
        Rights.
        Except
        as set forth on Schedule 2(h),the Company directly or indirectly owns or
        possesses exclusive and enforceable rights to use all patents, patent
        applications, trademarks, service marks, copyrights, trade secrets, processes,
        formulations, technology or know-how currently used in the conduct of its
        business (the “Proprietary
        Rights”).
        The
        Company has not received any notice of any claims, nor does it have any
        knowledge of any threatened claims, and knows of no facts which would form
        the
        basis of any claim, asserted by any person to the effect that the sale or
        use of
        any product or process now used or offered by the Company or proposed to
        be used
        or offered by the Company infringes on any patents or infringes upon the
        use of
        any such Proprietary Rights of another person and, to the best of the Company’s
        or knowledge, no others have infringed the Company’s Proprietary
        Rights.

       

      (i) Litigation.
        There
        is no material action, suit, investigation, customer complaint, claim or
        proceeding at law or in equity by or before any arbitrator, court, governmental
        instrumentality or agency, self-regulatory organization or body or public
        board
        now pending or, to the knowledge of the Company, threatened against the Company
        of any of the officers or directors of the Company in their capacities as
        such
        (or basis therefor known to the Company), the adverse outcome of which would
        have a Material Adverse Effect. To its knowledge, the Company is not subject
        to
        any judgment, order, writ, injunction or decree of any Federal, state, municipal
        or other governmental department, commission, board, bureau, agency or
        instrumentality, domestic or foreign which have a Material Adverse
        Effect.

       

      (j) Non-Defaults;
        Non-Contravention.
        The
        Company is not in violation of or default under, nor will the execution and
        delivery of this Agreement or any of the Transaction Documents or consummation
        of the transactions contemplated herein or therein result in a violation
        of or
        constitute a default in the performance or observance of any obligation under:
        (i) 


      
        
          
          

        

        
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      its
        Articles of Incorporation, or its By-laws; or (ii) any indenture, mortgage,
        contract, material purchase order or other agreement or instrument to which
        the
        Company is a party or by which it or its property is bound, where such violation
        or default would have a Material Adverse Effect; or (iii) any material order,
        writ, injunction or decree of any court of any Federal, state, municipal
        or
        other governmental department, commission, board, bureau, agency or
        instrumentality, domestic or foreign, where such violation or default would
        have
        a Material Adverse Effect, and to the Company’s knowledge, there exists no
        condition, event or act which constitutes, nor which after notice, the lapse
        of
        time or both, could constitute a default under any of the foregoing, which
        in
        either case would have a Material Adverse Effect. 

       

      (k) Taxes.
        The
        Company has filed all Federal, state, local and foreign tax returns which
        are
        required to be filed by it or otherwise met its disclosure obligations to
        the
        relevant agencies and all such returns are true and correct in all material
        respects. The Company has paid or adequately provided for all tax liabilities
        of
        the Company as reflected on such returns or pursuant to any assessments received
        by it or which it is obligated to withhold from amounts owing to any employee,
        creditor or third party. The tax returns of the Company have never been audited
        by any state, local or Federal authorities. The Company has not waived any
        statute of limitations with respect to taxes or agreed to any extension of
        time
        with respect to any tax assessment or deficiency.

       

      (l) Compliance
        With Laws; Licenses, Etc.
        The
        Company has not received notice of any violation of or noncompliance with
        any
        Federal, state, local or foreign, laws, ordinances, regulations and orders
        applicable to its business which has not been cured, the violation of, or
        noncompliance with which, would have a Material Adverse Effect. To its
        knowledge, the Company has all material licenses and permits and other
        governmental certificates, authorizations and permits and approvals
        (collectively, “Licenses”)
        required by every Federal, state and local government or regulatory body
        for the
        operation of its business as currently conducted and the use of its properties,
        except where the failure to be licensed or possess a permit would not have
        a
        Material Adverse Effect. The Licenses are in full force and effect and to
        the
        Company’s knowledge no violations currently exist in respect of any License and
        no proceeding is pending or threatened to revoke or limit any
        thereof.

       

      (m) Authorization
        of Agreement, Etc.
        The
        Company has the requisite corporate power and authority to enter into and
        perform its obligations under this Agreement and the other Transaction
        Documents. The execution and delivery of the Transaction Documents by the
        Company and the consummation by the Company of the transactions contemplated
        by
        the Transaction Documents, including without limitation the issuance of the
        Securities, have been duly authorized by the Company’s Board of Directors (the
“Board”)
        and no
        further consent or authorization is required by the Company, the Board or
        the
        Company’s stockholders. The Transaction Documents, when executed, will have been
        duly executed and delivered by the Company, and will constitute valid and
        binding obligations of the Company enforceable against the Company in accordance
        with their terms, except as such enforceability may be limited by general
        principles of equity or applicable bankruptcy, insolvency, reorganization,
        moratorium, liquidation or similar laws relating to, or affecting generally,
        the
        enforcement of creditors’ rights and remedies.


      
        
          
          

        

        
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      (n) Authorization
        of the Securities.
        The
        issuance, sale and delivery of the Debentures, the Subscriber Warrants and
        the
        Agent’s Warrants and the Agent’s Shares shall have been duly authorized by all
        requisite corporate action of the Company. When so issued, sold and delivered
        in
        accordance with the Transaction Documents for the consideration set forth
        therein, the Debentures, the Subscriber Warrants and the Agent’s Warrants and
        the Agent’s Shares will be duly executed, issued and delivered and will
        constitute valid and legal obligations of the Company enforceable in accordance
        with their respective terms, except as such enforceability may be limited
        by
        general principles of equity or applicable bankruptcy, insolvency,
        reorganization, moratorium, liquidation or similar laws relating to, or
        affecting generally, the enforcement of creditors’ rights and remedies and, in
        each case, will not be subject to preemptive or any other similar rights
        of the
        stockholders of the Company or others which rights except as set forth herein
        or
        which shall not have been waived prior to the closing of the
        Placement.

       

      (o) Authorization
        of Underlying Shares.
        The
        issuance, sale and delivery by the Company of the Underlying Shares have
        been
        duly authorized by all requisite corporate action of the Company, and the
        Underlying Shares have been duly reserved for issuance upon conversion or
        exercise, as the case may be, of all or any of the Debentures, Subscriber
        Warrants or Agent’s Warrants, and when so issued, sold, paid for and delivered
        for the consideration set forth in the Transaction Documents, the Underlying
        Shares will be validly issued and outstanding, fully paid and non-assessable,
        and except as set forth herein, shall not subject to preemptive or any other
        similar rights of the stockholders of the Company or others which rights
        shall
        not have been waived prior to the closing of the Placement.

       

      (p) Exemption
        from Registration.
        Assuming (i) the accuracy of the information provided by the respective
        Subscribers in the Offering Documents and (ii) that the Placement Agent has
        complied in all material respects with this Agreement and the provisions
        of
        Regulation D promulgated under the 1933 Act, the offer and sale of the
        Securities in the Placement pursuant to the terms of this Agreement will
        be
        exempt from the registration requirements of the 1933 Act and the rules and
        regulations promulgated thereunder. The Company is not disqualified from
        the
        exemption under Regulation D by virtue of any disqualifications contained
        in
        Rule 505(b)(2)(iii) or Rule 507 promulgated thereunder expressly applicable
        to
        the Company.

       

      (q) Brokers.
        Neither
        the Company nor any of its officers, directors, employees or stockholders
        has
        employed any broker or finder in connection with the transactions contemplated
        by this Agreement other than the Placement Agent and Selected
        Dealers.

       

      (r) Title
        to Securities.
        When
        certificates representing the Debentures, the Subscriber Warrants and the
        Agent’s Warrants and the Agent’s Shares have been duly delivered to the
        Subscribers, or to the Placement Agent, as the case may be, and payment shall
        have been made therefor, the Subscribers shall receive good and marketable
        title
        to such securities free and clear of all liens, encumbrances and claims
        whatsoever (with the exception of claims arising through the acts or omissions
        of the Subscribers and except as arising from applicable Federal and state
        securities laws), and the Company shall have paid all transfer taxes, if
        any, in
        respect of the original issuance thereof.

       

      (s) Consents.
        Except
        as contemplated by this Agreement or as required under Regulation D and
        applicable Blue Sky laws, the Company is not required to obtain any consent,
        


      
        
          
          

        

        
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      authorization
        or order of, or make any filing or registration with, any court or governmental
        agency or any regulatory or self-regulatory agency in order for it to execute,
        deliver or perform any of its obligations under or contemplated by the
        Transaction Documents. Except as otherwise provided in the Transaction
        Documents, all consents, authorizations, orders, filings and registrations
        which
        the Company is required to obtain pursuant to the preceding sentence have
        been
        obtained or effected, or will be obtained and effected, on or prior to the
        closing of the Placement. The Company is not aware of any facts or circumstances
        that might prevent the Company from obtaining or effecting any of the
        foregoing.

       

      (t) No
        General Solicitation.
        None of
        the Company, any of its affiliates, and any person acting on its behalf,
        has
        engaged in any form of general solicitation or general advertising (within
        the
        meaning of Regulation D under the 1933 Act) in connection with the offer
        or sale
        of the Securities. 

       

      (u) No
        Integrated Offering.
        None of
        the Company, any of its affiliates, and any person acting on its behalf has,
        directly or indirectly, made any offers or sales of any security or solicited
        any offers to buy any security, under circumstances that would require
        registration of any of the Securities under the 1933 Act or cause the Placement
        to be integrated with prior offerings by the Company for purposes of the
        1933
        Act or any applicable stockholder approval provisions, including without
        limitation, under the rules and regulations of any exchange or automated
        quotation system on which any of the securities of the Company is listed
        or
        designated. None of the Company, its affiliates and any person acting on
        its
        behalf will take any action or steps referred to in the preceding sentence
        that
        would require registration of any of the Securities under the 1933 Act or
        cause
        the Placement to be integrated with other offerings.

       

      (v) Application
        of Takeover Protections; Rights Agreement.
        The
        Company and the Board have taken all necessary action, if any, in order to
        render inapplicable any control share acquisition, business combination,
        poison
        pill (including any distribution under a rights agreement) or other similar
        anti-takeover provision under the Certificate of Incorporation of the Company,
        or the laws of the state of its incorporation which is or could become
        applicable as a result of the transactions contemplated by this Agreement.
        The
        Company has not adopted a shareholder rights plan or similar arrangement
        relating to accumulations of beneficial ownership of Common Stock or a change
        in
        control of the Company.

       

      (w) Right
        of First
        Refusal.
        Except
        for the right of first refusal previously granted to the Placement Agent
        herein,
        no person, firm or other business entity is a party to any agreement, contract
        or understanding, written or oral entitling such party to a right of first
        refusal with respect to offerings by the Company. 

       

      (x) Foreign
        Corrupt Practices.
        Neither
        the Company, nor any director, officer, agent, employee or other person acting
        on behalf of the Company has, in the course of its actions for, or on behalf
        of,
        the Company, (i) used any corporate funds for any unlawful contribution,
        gift,
        entertainment or other unlawful expenses relating to political activity;
        made
        any direct or indirect unlawful payment to any foreign or domestic government
        official or employee from corporate funds, (ii) violated or is in violation
        of
        any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended,
        or
        (iii) made any unlawful bribe, rebate, payoff, influence payment, kickback
        or
        other unlawful payment to any foreign or domestic government official or
        employee.


      
        
          
          

        

        
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      3. Closing;
        Placement and Fees.

       

      (a) Closing
        of the Placement.
        A
        closing (the “Initial
        Closing”)
        shall
        take place at the New York offices of Gottbetter & Partners, LLP, counsel
        for the Placement Agent, within three business days after gross proceeds
        of
        $1,000,000, from the sale Debentures have been received by the Placement
        Agent
        and delivered to the escrow agent pursuant to the Fund Escrow Agreement (but
        in
        no event later than five days following the PPO Termination Date), which
        closing
        date may be accelerated or adjourned by agreement between the Company and
        the
        Placement Agent. At the Initial Closing, payment for the Debentures issued
        and
        sold by the Company shall be made against delivery of the certificates for
        the
        Debentures sold. In addition, subsequent closings of the PPO (if applicable)
        may
        be scheduled at the discretion of the Company and Placement Agent, each of
        which
        shall be referred to herein as a “Closing.”

       

      (b) Conditions
        to Placement Agent’s Obligations.
        The
        obligations of the Placement Agent hereunder will be subject to the accuracy
        of
        the representations and warranties of the Company herein contained as of
        the
        date hereof and as of each closing date of the Placement, to the performance
        by
        the Company of its obligations hereunder and to the following additional
        conditions:

       

      (i) Due
        Qualification or Exemption.
        (A) The
        Placement will become qualified or be exempt from qualification under the
        securities or “blue sky” laws of the several states pursuant to Section 4(d)
        below not later than the closing date of the Initial Closing, and (B) at
        each
        Closing no stop order suspending the sale of the Debentures shall have been
        issued, and no proceedings by an governmental agency, self-regulatory
        organization or any securities exchange for that purpose shall have been
        initiated or threatened.

       

      (ii) No
        Material Misstatements.
        Neither
        the blue sky qualification materials nor the Offering Documents, nor any
        supplement thereto, will contain any untrue statement of a fact which in
        the
        opinion of the Placement Agent is material, or omit to state a fact, which
        in
        the opinion of the Placement Agent is material and is required to be stated
        therein, or is necessary to make the statements therein, in light of the
        circumstances under which they were made, not misleading.

       

      (iii) Compliance
        with Agreements.
        The
        Company will have complied with all agreements and satisfied all conditions
        on
        its part to be performed or satisfied hereunder at or prior to each
        Closing.

       

      (iv) Corporate
        Action.
        The
        Company will have taken all necessary corporate action, including, without
        limitation, obtaining the approval of the Board, and, if necessary, its
        stockholders, for the execution and delivery of this Agreement, the performance
        by the Company of its obligations hereunder and the Placement contemplated
        hereby.

       

      (v) Opinion
        of Counsel.
        The
        Placement Agent shall receive the (i) opinion of Barnes & Thornburg LLP,
        counsel to the Company, addressed to the Placement Agent and the Subscribers,
        in
        form and substance reasonably acceptable to the Placement
        Agent.


      
        
          
          

        

        
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      (vi) Officers’
        Certificate.
        The
        Placement Agent shall receive a certificate of the Company, signed by the
        Chief
        Executive Officer and Chief Financial Officer thereof, that the representations
        and warranties contained in Section 2 hereof are true and accurate in all
        material respects as of the date hereof and at such Closing with the same
        effect
        as though expressly made at such Closing. 

       

      (vii) Stockholder
        Consents.
        The
        Placement Agent shall have received copies of such duly executed waivers
        and
        consents from the holders of the Company’s outstanding securities as counsel to
        the Placement Agent deems necessary or important for completion of the
        Placement.

       

      (viii) Due
        Diligence.
        The
        Placement Agent shall have completed and been satisfied with the results
        of its
        due diligence investigation of the Company, including, without limitation,
        the
        Company’s financial statements, projections, expense budgets, business
        prospects, capital structure, background searches and contractual
        arrangements.

       

      The
        obligation of the Placement Agent to consummate the PPO is subject to the
        following additional condition:

       

      (ix) Fund
        Escrow Agreement.
        The
        Placement Agent shall receive a copy of a duly executed escrow agreement
        in the
        form previously delivered to the Placement Agent regarding the deposit of
        funds
        pending the Closing(s) of the PPO with a bank or trust company acceptable
        to the
        Placement Agent (the “Fund
        Escrow Agreement”).

       

      (c) Blue
        Sky.
        The
        Company will prepare and file the necessary documents so that offers and
        sales
        of the securities to be offered in the Placement may be made in certain
        jurisdictions in the United States. 

       

      (d) Placement
        Fee and Expenses.

       

      (i) PPO.
        Simultaneously with payment for and delivery of the Debentures at each Closing,
        the Company shall: (A) pay to the Placement Agent a placement fee equal to
        10%
        of the aggregate purchase price of the Debentures sold; and (B) issue to
        the
        Placement Agent or its designees, consistent with meeting the requirements
        of an
        exemption from registration under the 1933 Act (i) ten-year warrants in the
        form
        attached hereto as Appendix A to purchase that number of shares of Common
        Stock
        of the Company is equal to 15,457.48 warrants per $10,000 of gross proceeds
        from
        the sale of the Debentures (the “Agent’s
        Warrants”),
        up to
        a maximum of 6,182,992 Agent’s Warrants and (ii) 50,000 shares of Common Stock
        of the Company (the “Agent’s Shares”). The Company shall, upon demand, reimburse
        the Placement Agent for its accountable expenses incurred in connection with
        the
        PPO and pay all expenses in connection with the qualification of the Underlying
        Shares under the securities or Blue Sky laws of the states which the Placement
        Agent shall designate, including legal fees and filing fees. It is anticipated
        that the Placement Agent’s reimbursable expenses in connection with the
        Placement will not exceed $180,000. The Placement Agent will promptly notify
        the
        Company in the event its accountable expenses will materially exceed $180,000
        and the Placement Agent and Company shall mutually agree to any such greater
        amount.


      
        
          
          

        

        
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      (ii) Interest.
        In the
        event that for any reason the Company shall fail to pay to the Placement
        Agent
        all or any portion of the fees payable hereunder when due, interest shall
        accrue
        and be payable on the unpaid cash balance due hereunder from the date when
        first
        due through and including the date when actually collected by the Placement
        Agent, at a rate equal to four percent above the prime rate of Citibank,
        N.A.,
        in New York, New York, computed on a daily basis and adjusted as announced
        from
        time to time.

       

      (e) Bring-Down
        Opinions and Certificates.
        If
        there is more than one Closing, then at the request of the Placement Agent,
        at
        each such Closing there shall be delivered to the Placement Agent an updated
        opinion and certificate as described in (v) and (vi) of Section 3(b) above,
        respectively.

       

      (f) No
        Adverse Changes.
        There
        shall not have occurred, at any time prior to the applicable Closing (i)
        any
        domestic or international event, act or occurrence which has materially
        disrupted, or in the Placement Agent’s opinion will in the immediate future
        materially disrupt, the securities markets; (ii) a general suspension of,
        or a
        general limitation on prices for, trading in securities on the New York Stock
        Exchange or other national market or exchange or in the over-the-counter
        market;
        (iii) any outbreak of major hostilities or other national or international
        calamity; (iv) any banking moratorium declared by a state or federal authority;
        (v) any moratorium declared in foreign exchange trading by major international
        banks or other persons; (vi) any material interruption in the mail service
        or
        other means of communication within the United States; (vii) any material
        adverse change in the business, properties, assets, results of operations,
        or
        financial condition of the Company; or (viii) any change in the market for
        securities in general or in political, financial, or economic conditions
        which,
        in the Placement Agent’s judgment, makes it inadvisable to proceed with the
        Placement.

       

      4. Covenants
        of the Company.
        

       

      (a) Use
        of
        Proceeds.
        The net
        proceeds of the PPO will be used by the Company substantially as set forth
        in
        the Memorandum. The Company shall not use any of the proceeds from the Placement
        to repay any indebtedness of the Company (other than trade payables in the
        ordinary course), including but not limited to indebtedness to any current
        executive officers, directors or principal stockholders of the Company, or
        any
        subsidiary thereof.

       

      (b) Expenses
        of Offering.
        The
        Company shall be responsible for, and shall bear all expenses directly incurred
        in connection with, the proposed Placement including, but not limited to,
        (i)
        legal fees of the Company’s counsel relating to the costs of preparing the
        Offering Documents and all amendments, supplements and exhibits thereto and
        preparing and delivering all Placement Agent and selling documents, Debenture
        and Warrant certificates; and (ii) blue sky fees, filing fees and the fees
        and
        disbursements of Placement Agent’s counsel in connection with blue sky matters
        (the “Company
        Expenses”).
        In
        addition, the Company shall reimburse the Placement Agent for all of its
        reasonable out-of-pocket expenses incurred in connection with the Placement,
        including, without limitation the Placement Agent’s mailing, printing, copying,
        telephone, travel, background searches, due diligence investigations, legal
        and
        consulting fees or other similar expenses (the “Placement
        Agent Expenses”),
        subject to Section 3(d).


      
        
          
          

        

        
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      If
        the
        Company decides not to proceed with the Placement for any reason (other than
        the
        material breach of the Placement Agent’s representations, warranties or
        covenants in Section 5 of this Agreement) or if the Placement Agent decides
        not
        to proceed with the Placement because of a material breach by the Company
        of its
        representations, warranties, or covenants in this Agreement or as a result
        of
        material adverse changes in the affairs of the Company, the Company will
        be
        obligated to pay the Placement Agent liquidated damages of $150,000 in cash
        (the
        method of payment to be at the sole discretion of the Placement Agent) and
        to
        reimburse the Placement Agent for the Placement Agent expenses as set forth
        above. The Placement Agent shall have no liability to the Company for any
        reason
        should the Placement Agent choose not to proceed with the Placement contemplated
        hereby.

       

      (c) Notification.
        The
        Company shall notify the Placement Agent immediately, and in writing, (i)
        when
        any event shall have occurred during the period commencing on the date hereof
        and ending on the later of the last Closing or the Termination Date as a
        result
        of which the Offering Documents would include any untrue statement of a material
        fact or omit to state any material fact required to be stated therein or
        necessary to make the statements therein not misleading, and (ii) of the
        receipt
        of any notification with respect to the modification, rescission, withdrawal
        or
        suspension of the qualification or registration of the Securities, or of
        any
        exemption from such registration or qualification, in any jurisdiction. The
        Company will use its best efforts to prevent the issuance of any such
        modification, rescission, withdrawal or suspension and, if any such
        modification, rescission, withdrawal or suspension is issued and the Placement
        Agent so request, to obtain the lifting thereof as promptly as
        possible.

       

      (d) Blue
        Sky.
        The
        Company will use its best efforts to qualify or register the securities to
        be
        offered in the Placement for offering and sale under, or establish an exemption
        from such qualification or registration under, the securities or “blue sky” laws
        of such jurisdictions as the Placement Agent may reasonably request; provided
        however, that the Company will not be obligated to qualify as a dealer in
        securities in any jurisdiction in which it is not so qualified or consent
        to the
        general service of process in any such jurisdiction. The Company will not
        consummate any sale of securities pursuant to the Placement in any jurisdiction
        in which it is not so qualified or in any manner in which such sale may not
        be
        lawfully made.

       

      (e) Form
        D
        Filing.
        The
        Company shall file five copies of a Notice of Sales of Securities on Form
        D with
        the SEC no later than 15 days after the first sale of the Debentures. The
        Company shall file promptly such amendments to such Notices on Form D as
        shall
        become necessary and shall also comply with any filing requirement imposed
        by
        the laws of any state or jurisdiction in which offers and sales are made.
        The
        Company shall furnish the Placement Agent with copies of all such
        filings.

       

      (f) Press
        Releases, Etc.
        The
        Company shall not, during the period commencing on the date hereof and ending
        on
        the PPO Termination Date, issue any press release or other communication,
        or
        hold any press conference with respect to the Company, or its financial
        condition, results of operations, business, properties, assets, or liabilities,
        or the Placement, without the prior consent of the Placement Agent, which
        consent shall not be unreasonably withheld. The Company shall not include
        information with respect to the Placement or use the Placement Agent’s name in
        any press release, advertisement or on any website maintained by the



      
        
          
          

        

        
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      Company
        with out the prior written consent of the Placement Agent, such consent not
        to
        be unreasonably withheld.

       

      (g) Executive
        Compensation.
        The
        compensation of the Company’s executive officers shall not increase during the
        three-year period following the Closing without the approval of a majority
        of
        the independent members of the Board.

       

      (h) Restrictions
        on Issuances of Securities.
        During
        the period commencing on the date hereof and ending on the later of (i) the
        final Closing or (ii) the Termination Date, the Company will not, without
        the
        prior written consent of the Placement Agent, issue additional shares of
        Common
        Stock, other than pursuant to the exercise of options or warrants outstanding
        on
        the date hereof, or grant any warrants, options or other securities of the
        Company. 

       

      5. Representations,
        Warranties and Covenants of the Placement Agent.

       

      (a) No
        General Solicitation.
        No form
        of general solicitation or general advertising has been or will be used by
        the
        Placement Agent or any of its affiliates or representatives in connection
        with
        the offer and sale of any of the Debentures, including, but not limited to,
        articles, notices or other communication published in any newspaper, magazine
        or
        similar medium or broadcast over television or radio, or any seminar or meeting
        whose attendees have been invited by general solicitation or general
        advertising.

       

      (b) Delivery
        of Memorandum.
        Prior
        to or simultaneously with the sale by the Company to any purchaser of any
        of the
        Debentures pursuant hereto, the Placement Agent will furnish to such purchaser
        a
        copy of the Memorandum (and any amendment thereof or supplement thereto that
        the
        Company shall have furnished to the Placement Agent prior to the date of
        such
        sale).

       

      (c) Registration;
        Good Standing.
        The
        Placement Agent represents and warrants to the Company that it is: (1) a
        broker-dealer registered with the SEC pursuant to the Securities and Exchange
        Act of 1934, as amended (the “1934
        Act”);
        (2) a
        member in good standing of the National Association of Securities Dealers,
        Inc.;
        and (3) registered and qualified to act in each state and jurisdiction in
        which
        it is required to be registered as such in order to offer and sell the
        Debentures. 

       

      (d) Authorization.
        The
        Placement Agent represents and warrants to the Company that the person who
        has
        signed this Agreement on its behalf is duly authorized to so sign, and this
        Agreement is a valid and binding obligation of the Placement Agent, enforceable
        in accordance with its terms, subject, as to enforcement of remedies, to
        applicable bankruptcy, insolvency, reorganization, moratorium and other laws
        affecting the rights of creditors generally and the discretion of courts
        in
        granting equitable remedies and except that enforceability of the
        indemnification and contribution provisions set forth thereunder and hereunder
        may be limited by the federal securities laws of the United States or state
        securities laws or public policies related thereto.

       

      (e) Compliance
        with Regulation D.
        Neither
        the Placement Agent nor any of its affiliates nor any person acting on behalf
        of, or as agent for, the forgoing, shall take any action in 


      
        
          
          

        

        
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      connection
        with any offering hereunder which would cause such offering not to comply
        with
        Rule 506 of Regulation D.

       

      (f) Accredited
        Investors.
        The
        Placement Agent shall not offer the Debentures to any prospective Subscriber
        (i)
        if the Placement Agent has reason to believe that material information supplied
        or the representations and warranties made by that person are not fully
        accurate; or (ii) unless immediately prior to making such offer, the Placement
        Agent reasonably believes that such person is an “accredited investor” as
        defined in Rule 501 promulgated under the 1933 Act.

       

      (g)
        Investment
        Intent/Accredited Investor.
        The
        Placement Agent represents and warrants to the Company that it is an “accredited
        investor” as defined in Rule 501 promulgated under the 1933 Act and that it is
        receiving the Agent’s Shares and the Agent’s Warrants for investment purposes
        and not with a present view toward resale or distribution.

       

      6. Indemnification.

       

      (a) The
        Company agrees to indemnify and hold harmless the Placement Agent and each
        Selected Dealer, if any, and their respective shareholders, directors, officers,
        agents and controlling persons (an “Agent
        Indemnified Party”)
        against any and all loss, liability, claim, damage and expense whatsoever
        (and
        all actions in respect thereof), and to reimburse the Placement Agent for
        reasonable legal fees and related expenses as incurred (including, but not
        limited to the costs of investigating, preparing or defending any such action
        or
        claim whether or not in connection with litigation in which the Placement
        Agent
        is a party and the costs of giving testimony or furnishing documents in response
        to a subpoena or otherwise), caused by or arising out of (i) any untrue
        statement or alleged untrue statement of a material fact contained in the
        Transaction Documents or the omission or alleged omission therefrom of a
        material fact necessary in order to make the statements therein, in light
        of the
        circumstances under which they were made, not misleading (provided, however,
        that the Company shall not be liable in any such case to the extent that
        any
        such loss, liability, claim, damage or expense arises out of or is based
        upon
        any untrue statement of a material fact or alleged untrue statement or a
        material fact provided by the Placement Agent in writing to the Company),
        (ii)
        any violation by the Company of the federal securities laws or the securities
        laws of any states, or otherwise arising out of the Placement Agent’s engagement
        hereunder, except in respect of any matters as to which the Placement Agent
        shall have been adjudicated to have acted with gross negligence, or (iii)
        any
        breach by the Company of any of its representations, warranties or covenants
        contained in this Agreement;
        provided,
        however,
        that in
        the case of each of clauses (ii) and (iii) hereof, there has been a final
        adjudication of such violation or breach by a court of competent
        jurisdiction.

       

      (b) The
        Placement Agent agrees to indemnify and hold harmless the Company and its
        shareholders, directors, officers, agents and controlling persons (a
“Company
        Indemnified Party”
        and,
        together with an Agent Indemnified Party, an “Indemnified
        Party”)
        against any and all loss, liability, claim, damage and expense whatsoever
        (and
        all actions in respect thereof), and to reimburse the Company for reasonable
        legal fees and related expenses as incurred (including, but not limited to
        the
        costs of investigating, preparing or defending any such action or claim whether
        or not in connection with litigation in which the Company is a party and
        the
        costs of giving testimony or furnishing documents in response to a subpoena
        or
        otherwise), caused by or arising out of (i) any breach by the Placement Agent
        of
        any of its representations, warranties and 


      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      


       

      covenants
        contained in this Agreement, or (ii) any violation by the Placement Agent
        of the
        federal securities laws or the securities laws of any state, or otherwise
        arising out of the Placement Agent’s engagement hereunder, except in respect of
        any matters as to which the Company shall have been adjudicated to have acted
        with gross negligence; provided,
        however,
        that in
        the case of each of clauses (i) and (ii) hereof, there has been a final
        adjudication of such breach or violation by a court of competent jurisdiction;
        and provided,
        however,
        that
        the aggregate liability of the Placement Agent under this Section 6 shall
        not
        exceed an amount equal to the aggregate placement fees received by the Placement
        Agent pursuant to Section 3(d)(i) or Section 3(d)(ii) hereof.

       

      (c) Promptly
        after receipt by an Indemnified Party under this Section of notice of the
        commencement of any action, the Indemnified Party will, if a claim in respect
        thereof is to be made against the party from whom indemnification is sought
        under this Section 6 (the “Indemnifying
        Party”),
        notify in writing the Indemnifying Party of the commencement thereof; but
        the
        omission so to notify the Indemnifying Party will not relieve the Indemnifying
        Party from any liability which it may have to the Indemnified Party otherwise
        under this Section except to the extent the defense of the claim is prejudiced.
        In case any such action is brought against an Indemnified Party, and it notifies
        the Indemnifying Party of the commencement thereof, the Indemnifying Party
        will
        be entitled to participate in, and, to the extent that it may wish, jointly
        with
        any other indemnifying party similarly notified, to assume the defense thereof,
        subject to the provisions herein stated, with counsel reasonably satisfactory
        to
        the Indemnified Party, and after notice from the Indemnifying Party to the
        Indemnified Party of its election so to assume the defense thereof, the
        Indemnifying Party will not be liable to the Indemnified Party under this
        Section for any legal or other expenses subsequently incurred by the Indemnified
        Party in connection with the defense thereof other than reasonable costs
        of
        investigation (provided the Indemnifying Party has been advised in writing
        that
        such investigation is being undertaken). The Indemnified Party shall have
        the
        right to employ separate counsel in any such action and to participate in
        the
        defense thereof, but the fees and expenses of such counsel shall not be at
        the
        expense of the Indemnifying Party if the Indemnifying Party has assumed the
        defense of the action with counsel reasonably satisfactory to the Indemnified
        Party; provided that the reasonable fees and expenses of such counsel shall
        be
        at the expense of the Indemnifying Party if (i) the employment of such counsel
        has been specifically authorized in writing by the Indemnifying Party or
        (ii)
        the named parties to any such action (including any impleaded parties) include
        both the Indemnified Party or Parties and the Indemnifying Party and, in
        the
        reasonable judgment of counsel for the Indemnified Party, it is advisable
        for
        the Indemnified Party or Parties to be represented by separate counsel due
        to an
        actual conflict of interest (in which case the Indemnifying Party shall not
        have
        the right to assume the defense of such action on behalf of an Indemnified
        Party
        or Parties), it being understood, however, that the Indemnifying Party shall
        not, in connection with any one such action or separate but substantially
        similar or related actions in the same jurisdiction arising out of the same
        general allegations or circumstances, be liable for the reasonable fees and
        expenses of more than one separate firm of attorneys for all the Indemnified
        Parties. No settlement of any action against an Indemnified Party shall be
        made
        unless such an Indemnified Party is fully and completely released in connection
        therewith.


      
        
          
          

        

        
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      7. Contribution.

       

      To
        provide for just and equitable contribution, if an Indemnified Party makes
        a
        claim for indemnification pursuant to Section 6 but it is found in a final
        judicial determination, not subject to further appeal, that such indemnification
        may not be enforced in such case, even though this Agreement expressly provides
        for indemnification in such case, then the Company (including for this purpose
        any contribution made by or on behalf of any officer, director, employee
        or
        agent for the Company, or any controlling person of the Company), on the
        one
        hand, and the Placement Agent and any Selected Dealers (including for this
        purpose any contribution by or on behalf of an Indemnified Party), on the
        other
        hand, shall contribute to the losses, liabilities, claims, damages, and expenses
        whatsoever to which any of them may be subject, in such proportions as are
        appropriate to reflect the relative benefits received by the Company, on
        the one
        hand, and the Placement Agent and the Selected Dealers, on the other hand;
        provided, however, that if applicable law does not permit such allocation,
        then
        other relevant equitable considerations such as the relative fault of the
        Company and the Placement Agent and the Selected Dealers in connection with
        the
        facts which resulted in such losses, liabilities, claims, damages, and expenses
        shall also be considered. In no case shall the Placement Agent or a Selected
        Dealer be responsible for a portion of the contribution obligation in excess
        of
        the compensation received by it or the Selected Dealers, as the case may
        be. No
        person guilty of a fraudulent misrepresentation shall be entitled to
        contribution from any person who is not guilty of such fraudulent
        misrepresentation. For purposes of this Section 7, each person, if any, who
        controls the Placement Agent or a Selected Dealer within the meaning of Section
        15 of the 1933 Act or Section 20(a) of the 1934 Act and each officer, director,
        stockholder, employee and agent of the Placement Agent or a Selected Dealer,
        shall have the same rights to contribution as the Placement Agent or the
        Selected Dealer, and each person, if any, who controls the Company within
        the
        meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act and
        each
        officer, director, employee and agent of the Company, shall have the same
        rights
        to contribution as the Company, subject in each case to the provisions of
        this
        Section 7. Anything in this Section 7 to the contrary notwithstanding, no
        party
        shall be liable for contribution with respect to the settlement of any claim
        or
        action effected without its written consent. This Section 7 is intended to
        supersede any right to contribution under the 1933 Act, the 1934 Act, or
        otherwise.

       

      8. Miscellaneous.

       

      (a) Survival.
        Any
        termination of any offering hereunder without consummation thereof shall
        be
        without obligation on the part of any party except that the indemnification
        provided in Section 6 hereof and the contribution provided in Section 7 hereof
        shall survive any termination and shall survive the final Closing for a period
        of two years.

       

      (b) Representations,
        Warranties and Covenants to Survive Delivery.
        The
        respective representations, warranties, indemnities, agreements, covenants
        and
        other statements as of the date hereof and as of the date of each Closing
        shall
        survive execution of this Agreement and delivery of the Debentures and the
        termination of this Agreement for a period of one year after such respective
        event.


      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      


       

      (c) No
        Other Beneficiaries.
        This
        Agreement is intended for the sole and exclusive benefit of the parties hereto
        and their respective successors and controlling persons, and no other person,
        firm or corporation shall have any third-party beneficiary or other rights
        hereunder.

       

      (d) Governing
        Law; Resolution of Disputes.
        This
        Agreement shall be governed by and construed in accordance with the law of
        the
        State of New York without regard to conflict of law provisions. The Placement
        Agent and the Company will attempt to settle any claim or controversy arising
        out of this Agreement through consultation and negotiation in good faith
        and a
        spirit of mutual cooperation. Should such attempts fail, then the dispute
        will
        be mediated by a mutually acceptable mediator to be chosen by the Placement
        Agent and the Company within 15 days after written notice from either party
        demanding mediation. Neither party may unreasonably withhold consent to the
        selection of a mediator, and the parties will share the costs of the mediation
        equally. Any dispute which the parties cannot resolve through negotiation
        or
        mediation within six months of the date of the initial demand for it by one
        of
        the parties may then be submitted to the courts for resolution. The use of
        mediation will not be construed under the doctrine of latches, waiver or
        estoppel to affect adversely the rights of either party. Nothing in this
        paragraph will prevent either party from resorting to judicial proceedings
        if
        (a) good faith efforts to resolve the dispute under these procedures have
        been
        unsuccessful or (b) interim relief from a court is necessary to prevent serious
        and irreparable injury.

       

      (e) Counterparts.
        This
        Agreement may be signed in counterparts with the same effect as if both parties
        had signed one and the same instrument.

       

      (f) Notices.
        Any
        communications specifically required hereunder to be in writing, if sent
        to the
        Placement Agent, will be sent by overnight courier providing a receipt of
        delivery or by certified or registered mail to it at Strasbourger Pearson
        Tulcin
        Wolff Incorporated, 33 Whitehall Street, 17th
        Floor,
        New York, New York 10004, Att: Ron Moschetta, with a copy to Gottbetter
        & Partners, 488 Madison Ave., 12th
        Floor,
        New York, NY10022, Att: Kenneth S. Goodwin and if sent to the Company, will
        be
        sent by overnight courier providing a receipt of delivery or by certified
        or
        registered mail to it at 1125 S. Walnut Street, South Bend, Indiana 46619,
        Att:
        John Martell, with a copy to BT Law, 600 1st
        Source
        Bank Building, 100 N. Michigan, South Bend Indiana 46601, Att: Richard L.
        Mintz.

       

      (g) Entire
        Agreement.
        This
        Agreement constitutes the entire agreement of the parties with respect to
        the
        matters herein referred and supersedes all prior agreements and understandings,
        written and oral, between the parties with respect to the subject matter
        hereof.
        Neither this Agreement nor any term hereof may be changed, waived or terminated
        orally, except by an instrument in writing signed by the party against which
        enforcement of the change, waiver or termination is sought.


      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      


       

      If
        the
        Placement Agent finds the foregoing is in accordance with its understanding
        with
        the Company, kindly sign and return to the Company a counterpart hereof,
        whereupon this instrument along with all counterparts will become a binding
        agreement between the Placement Agent the Company.

      
         

        


        
          	 	 	
                   

                  Very
                    truly yours,

                
	 	 	 	 
	 	
                  MAGNETECH
                    INTEGRATED SERVICES CORP.

                
	 	 	 	 
	 	 	 	 
	 	 	
                  By:

                	 /s/
                  John A. Martell
	 	 	 	
                  Name: 
                    John A. Martell

                
	 	 	 	
                  Title: 
                    President & CEO

                


        

        
Agreed:

      

       

      STRASBOURGER
        PEARSON TULCIN WOLFF INCORPORATED

      
        	
                 

                By:

              	
                 

                /s/ Michael J. Schumacher

              	 
	 	
                Name: 
                  Michael J. Schumacher

              	 
	 	
                Title: 
                  President

              	 


      

      


      


      18

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      Exhibit
        A

       

       

      

        
          	
                  IMPORTANT:

                	
                  Investor
                    Name: ____________________

                
	
                  Please
                    Complete

                	 


        

        


         

        INDIVIDUAL
          INVESTOR QUESTIONNAIRE

         

        _________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP

         

         __________________________

         

        Magnetech
          Integrated Services Corp

        1125
          South Walnut Street

        South
          Bend, Indiana 46679

         

          The
          information contained in this Questionnaire is being furnished in order
          to
          determine whether the undersigned’s subscription to purchase Debentures and
          Warrants(the “Securities”) of Magnetech Integrated Services Corp. (the
“Company”) may be accepted.

        


        One
          (1)
          copy of this Questionnaire should be completed, signed, dated and delivered
          to
          Weikai Lang at Strasbourger Pearson Tulcin Wolff Inc. 33 Whitehall Street,
          17th
          Floor,
          New York, New York 10004. Please contact Weikai Lang at 646-459-6988 if
          you have
          any questions with respect to this Questionnaire.

         

          ALL
          INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY.
          The
          undersigned understands, however, that the Company may present this
          Questionnaire to such parties as it deems appropriate if called upon to
          establish that the proposed offer and sale of the  is exempt from
          registration under the Securities Act of 1933, as amended, or meets the
          requirements of applicable state securities or “blue sky” laws. Further, the
          undersigned understands that the offering is required to be reported to
          the
          Securities and Exchange Commission and to various state securities or “blue sky”
          regulators.

          

        
          	 

                  IF
                    YOU ARE PURCHASING SECURITIES WITH YOUR SPOUSE, YOU MUST
                    BOTH SIGN
                    THE SIGNATURE PAGE (PAGE A_5).

                


        

          

        
          	 

                  IF
                    YOU ARE PURCHASING SECURITIES WITH ANOTHER PERSON NOT
                    YOUR SPOUSE,
                    YOU MUST EACH FILL OUT A SEPARATE QUESTIONNAIRE.
                    Please make a photocopy of pages A_1 to A_5 and return both completed
                    Questionnaires to the Placement Agent in the same
                    envelope.

                


        

         

        
          	
                  I.

                	
                  PLEASE
                    INDICATE DESIRED TYPE OF OWNERSHIP OF
                    SECURITIES:

                


        

         

        [  ] Individual

         

        [  ] Joint
          Tenants (rights of survivorship)

         

        [  ] Tenants
          in Common (no rights of survivorship)


        
          
            
            

          

          
            A-1

            
              

            

          

          
            
            

          

        


         

        
          	
                  II.

                	
                  PLEASE
                    CHECK ANY OF STATEMENTS 1-4 BELOW THAT APPLY TO
                    YOU.

                


        

        
          	
                   

                  [  ]

                	
                   

                  1.

                	
                   

                  I
                    have an individual net worth* 
                    or
                    joint net worth with my spouse in excess of $1,000,000.

                
	
                   

                  [  ]

                	
                   

                  2.

                	
                   

                  I
                    have had an individual income*
                    in
                    excess of $200,000 in each of the previous two years and I reasonably
                    expect an individual income in excess of $200,000 for this year.
                    NOTE: IF
                    YOU ARE BUYING JOINTLY WITH YOUR SPOUSE, YOU MUST EACH HAVE AN
                    INDIVIDUAL
                    INCOME IN EXCESS OF $200,000 IN EACH OF THESE YEARS IN ORDER
                    TO CHECK THIS
                    BOX.

                
	
                   

                  [  ]

                	
                   

                  3.

                	
                   

                  My
                    spouse and I have had a joint income*
                    in
                    excess of $300,000 in each of the previous two years and I reasonably
                    expect a joint income in excess of $300,000 for this
                    year.

                
	
                   

                  [  ]

                	
                   

                  4.

                	
                   

                  I
                    am a director and/or an executive officer of the Company as such
                    terms are
                    defined in Regulation D promulgated under the Securities Act
                    of 1933, as
                    amended.

                


        

         

        
          	
                  III.

                	
                  OTHER
                    CERTIFICATIONS

                


        

         

        By
          signing the Signature Page, I certify the following (or, if I am purchasing
          Securities with my spouse as co-owner, each of us certifies the
          following):

         

        
          	 	
                  (a)

                	
                  that
                    I am at least 21 years of age;

                


        

         

        
          	 	
                  (b)

                	
                  that
                    my purchase of Securities will be solely for my own account
                    and not
                    for the account of any other person (other than my spouse, if
                    co-owner);

                


        

         

        
          	 	
                  (c)

                	
                  that
                    the name, home address and social security number or taxpayer
                    identification number as set forth in this Questionnaire are
                    true, correct
                    and complete; and

                


        

         

        
          	 	
                  (d)

                	
                  that
                    one of the following is true and correct (check
                    one):

                


        

         

        __________________

         

        *For
          purposes of this Questionnaire, the term "net worth" means the excess of
          total
          assets over total liabilities. In determining income, an investor should
          add to
          his or her adjusted gross income any amounts attributable to tax-exempt
          income
          received, losses claimed as a limited partner in any limited partnership,
          deductions claimed for depletion, contributions to IRA or Keogh retirement
          plans, alimony payments and any amount by which income from long-term capital
          gains has been reduced in arriving at adjusted gross income.


        
          
            
            

          

          
            A-2

            
              

            

          

          
            
            

          

        


         

        
          	 	
                  Purchaser

                	
                  Spouse,
                    if Co-Owner

                	 
	 	
                  [  ]

                	
                  [  ]

                	
                  I
                    am a United States citizen or resident of the United States for
                    United
                    States federal income tax purposes.

                
	 	 	 	 
	 	
                  [  ]

                	
                  [  ]

                	
                  I
                    am neither a United States citizen nor a resident of the United
                    States for
                    United States federal income tax
                    purposes.

                


        

         

        
          	
                  IV.

                	
                  GENERAL
                    INFORMATION

                


        

         

        
          	 	
                  (a)

                	
                  PERSONAL
                    INFORMATION

                


        

        
          	
                   

                  Purchaser

                
	
                   

                  Name:

                	 
	
                   

                  Social
                    Security or Taxpayer Identification Number:

                	 
	
                   

                  Residence
                    Address:

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Residence
                    Telephone Number:

                	 
	 	 	
                  (Area
                    Code)

                	
                  (Number)

                
	
                   

                  Residence
                    Facsimile Number:

                	 
	 	 	
                  (Area
                    Code)

                	
                  (Number)

                
	
                   

                  Name
                    of Business:

                	 
	
                   

                  Business
                    Address:

                	 
	 	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Business
                    Telephone Number:

                	 
	 	 	
                  (Area
                    Code)

                	
                  (Number)

                
	
                   

                  Business
                    Facsimile Number:

                	 
	 	 	
                  (Area
                    Code)

                	
                  (Number)

                	 
	
                   

                  I
                    prefer to have correspondence sent to:

                	
                   

                  [  ]  Residence

                	
                   

                  [  ]  Business

                


        

         

        



        
          
            
            

          

          
            A-3

            
              

            

          

          
            
            

          

        

         

        
          	
                   

                  E-mail
                    Address:

                	 
	
                   

                  NASD
                    Affiliation or Association, if any:

                	 
	
                  If
                    none, check here  

                	
                  [  ]

                


        

         

        


        
          	
                   

                  Spouse,
                    if Co-Owner

                
	
                   

                  Name:

                	 
	
                   

                  Social
                    Security or Taxpayer Identification Number:

                	 
	
                   

                  Residence
                    Address (if different from Purchaser’s):

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Residence
                    Telephone Number Address (if different from Purchaser’s):

                	 
	 	 	
                  (Area
                    Code)

                	
                  (Number)

                
	
                   

                  Name
                    of Business Address (if different from Purchaser’s):

                	 
	
                   

                  Business
                    Address Address (if different from Purchaser’s):

                	 
	 	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Business
                    Telephone Number Address (if different from Purchaser’s):

                	 
	 	 	
                  (Area
                    Code)

                	
                  (Number)

                
	
                   

                  I
                    prefer to have correspondence sent to:

                	
                   

                  [  ]  Residence

                	
                   

                  [  ]  Business

                
	
                   

                  NASD
                    Affiliation or Association, if any:

                	 
	
                  If
                    none, check here  

                	
                  [  ]

                	 


        

         

        V. SIGNATURE

         

        The
          Signature Page to this Questionnaire is contained on page A-5, entitled
          Individual Signature Page.

         

        
          
            
            

          

          
            A-4

            
              

            

          

          
            
            

          

        

         

        INDIVIDUAL
          SIGNATURE PAGE

        _____________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP

        
          _____________________________

        

         

        The
          undersigned represents that (a) the information contained in this Questionnaire
          is complete and accurate and (b) he/she will telephone Weikai Lang at
          646-459-6988 immediately if any material change in any of this information
          occurs before the acceptance of his/her subscription and will promptly
          send
          Weikai Lang confirmation of such change.

         

         

        
          	 	 	 
	
                  Dollar
                    Amount of Securities Applied For

                	 	
                  Date

                
	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Name
                    (Please Type or Print)

                
	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Signature

                
	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Name
                    of Spouse if Co-Owner

                
	
                   

                	
                   

                	
                  (Please
                    Type or Print)

                
	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Signature
                    of Spouse if Co-Owner

                
	
                   

                	
                   

                	
                   

                
	
                   

                   

                


        

         

        
           

          
            	 

                    IF
                      YOU ARE PURCHASING SECURITIES WITH YOUR SPOUSE, YOU MUST BOTH
                      SIGN THIS
                      SIGNATURE PAGE (PAGE A-5).

                  


          

           

        

         

        
          	 

                  IF
                    YOU ARE PURCHASING SECURITIES WITH ANOTHER PERSON NOT YOUR SPOUSE,
                    YOU
                    MUST EACH FILL OUT A SEPARATE QUESTIONNAIRE. Please
                    make a photocopy of pages A-1 to A-5 and return both completed
                    Questionnaires to the Placement Agent in the same
                    envelope.

                


        

         

        THE
          SECURITIES COMPRISING THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR
          OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE
          REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, CONCURRED
          IN BY
          COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT REGISTRATION
          OF
          SUCH SECURITIES IS NOT REQUIRED.


        
          
            
            

          

          
            A-5

            
              

            

          

          
            
            

          

        


         

        


        
          	
                  IMPORTANT:

                	
                  Investor
                    Name: ________________________

                
	
                  Please
                    Complete

                	 


        

         

        TRUST
          QUESTIONNAIRE

         

        __________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP.

         

        _________________________

         

        Magnetech
          Integrated Services Corp

        1125
          South Walnut Street

        South
          Bend, Indiana 46679

         

        The
          information contained in this Questionnaire is being furnished in order
          to
          determine whether the undersigned TRUST’s subscription to purchase shares of
          Debentures and Warrants (the “Securities”) of Magnetech Integrated
          Services Corp (the “Company”) may be accepted.

        


        One
          (1)
          copy of this Questionnaire should be completed, signed, dated and delivered
          to
          Weikai Lang at Strasbourger Pearson Tulcin Wolff Inc. 33 Whitehall Street,
          17th
          Floor,
          New York, New York 10004. Please contact Weikai Lang at 646-459-6988 if
          you have
          any questions with respect to this Questionnaire.

         

        ALL
          INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY.
          The
          undersigned TRUST understands, however, that the Company may present this
          Questionnaire to such parties as it deems appropriate if called upon to
          establish that the proposed offer and sale of the Securities is exempt
          from
          registration under the Securities Act of 1933, as amended, or meets the
          requirements of applicable state securities or “blue sky” laws. Further, the
          undersigned TRUST understands that the offering is required to be reported
          to
          the Securities and Exchange Commission and to various state securities
          or “blue
          sky” regulators.

         

          

        
          	 

                  NOTE:
                    RETIREMENT PLANS SHOULD COMPLETE THE QUESTIONNAIRE ON PAGES E-1
                    to
                    E-5.

                


        

         

        I. PLEASE
          CHECK STATEMENTS 1 AND 2 BELOW, AS APPLICABLE.

         

        
          	 	
                   

                  [  ]

                	
                   

                  1.

                	
                   

                  (a)

                	
                   

                  the
                    TRUST has total assets in excess of $5,000,000; and

                
	 	 	 	
                   

                  (b)

                	
                   

                  the
                    TRUST was not formed for the specific purpose of acquiring the
                    Securities;
                    and

                
	 	 	 	
                   

                  (c)

                	
                   

                  the
                    purchase by the TRUST is directed by a person who has such knowledge
                    and
                    experience in financial and business matters that he/she is capable
                    of
                    evaluating the merits and risks of an investment in the
                    Securities.

                


        

         

        



        
          
            
            

          

          
            B-1

            
              

            

          

          
            
            

          

        


         

        


        
          	 	
                   

                  [  ]

                	
                   

                  2.

                	
                   

                  The
                    grantor of the TRUST may revoke the TRUST at any time; the grantor
                    retains
                    sole investment control over the assets of the trust and

                
	 	 	 	
                   

                  (a)

                	
                   

                  the
                    grantor is a natural person whose individual net worth* or joint
                    net worth
                    with the grantor’s spouse exceeds $1,000,000; or 

                
	 	 	 	
                   

                  (b)

                	
                   

                  the
                    grantor is a natural person who had an individual income*
                    in
                    excess of $200,000 in each of the previous two years and who
                    reasonably
                    expects an individual income in excess of $200,000 for this year;
                    or

                
	 	 	 	
                   

                  (c)

                	
                   

                  the
                    grantor is a natural person who, together with his or her spouse,
                    has had
                    a joint income*
                    in
                    excess of $300,000 in each of the previous two years and who
                    reasonably
                    expects a joint income in excess of $300,000 for this
                    year.

                
	
                  IF
                    YOU CHECKED STATEMENT 2 IN SECTION I AND DID NOT CHECK STATEMENT
                    1, THE
                    TRUST MUST PROVIDE A COMPLETED INDIVIDUAL INVESTOR QUESTIONNAIRE
                    (PAGES
                    A-1 TO A-5) FOR EACH
                    GRANTOR.

                


        

         

        
          	
                  II.

                	
                  OTHER
                    CERTIFICATIONS

                


        

         

        By
          signing the Signature Page, the undersigned certifies the
          following:

        


        
          	 	
                   

                  (a)

                	
                   

                  that
                    the TRUST’s purchase of the Securities will be solely for the TRUST’s own
                    account and not for the account of any other person;

                
	 	
                   

                  (b)

                	
                   

                  that
                    the TRUST’s purchase of the Securities is within the investment powers
                    and
                    authority of the TRUST (as set forth in the declaration of trust
                    or other
                    governing instrument) and that all necessary consents, approvals
                    and
                    authorizations for such purchase have been obtained and that
                    each person
                    who signs the Signature Page has all requisite power and authority
                    as
                    trustee to execute this Questionnaire and the Purchase Agreement
                    on behalf
                    of the TRUST;

                
	 	
                   

                  (c)

                	
                   

                  that
                    the TRUST has not been established in connection with either
                    (i) an
                    employee benefit plan (as defined in Section 3(3) of ERISA),
                    whether or
                    not subject to the provisions of Title I of ERISA, or (ii) a
                    plan
                    described in Section 4975(e)(i) of the Internal Revenue
                    Code;

                
	 	
                   

                  (d)

                	
                   

                  that
                    the TRUST’s name, address of principal office, place of formation and
                    taxpayer identification number as set forth in this Questionnaire
                    are
                    true, correct and complete; and

                
	 	
                   

                  (e)

                	
                   

                  that
                    one of the following is true and correct (check
                    one):

                


        

         

        ________________________

         

        *For
          purposes of this Questionnaire, the term "net worth" means the excess of
          total
          assets over total liabilities. In determining income, an investor should
          add to
          his or her adjusted gross income any amounts attributable to tax-exempt
          income
          received, losses claimed as a limited partner in any limited partnership,
          deductions claimed for depletion, contributions to IRA or Keogh retirement
          plans, alimony payments and any amount by which income from long-term capital
          gains has been reduced in arriving at adjusted gross income.


        
          
            
            

          

          
            B-2

            
              

            

          

          
            
            

          

        


        


        
          	 	
                   

                  [  ]

                	
                   

                  (i)

                	
                   

                  the
                    TRUST is an estate or trust whose income from sources outside
                    of the
                    United States is includable in its gross income for United States
                    federal
                    tax purposes regardless of its connection with a trade or business
                    carried
                    on in the United States.

                
	 	
                   

                  [  ]

                	
                   

                  (ii)

                	
                   

                  the
                    TRUST is an estate or trust whose income from sources outside
                    the United
                    States is not includable in its gross income for United States
                    federal
                    income taxes purposes regardless of its connection with a trade
                    or
                    business carried on in the United
                    States.

                


        

         

        
          	
                  III.

                	
                  GENERAL
                    INFORMATION

                


        

         

        
          	 	
                  (a)

                	
                  PROSPECTIVE
                    PURCHASER (THE TRUST)

                


        

        
          	
                   

                  Name:

                	 
	
                   

                  Address:

                	 
	 	
                   

                  (Number
                    and Street)

                
	 
	
                  (City)

                	
                  (State)

                	
                  (Zip
                    Code)

                
	
                  Address
                    for Correspondence (if different):

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Telephone
                    Number:

                	 
	 	
                  (Area
                    Code)

                	
                  (Number)

                
	
                   

                  State
                    in which Formed:

                	 
	
                   

                  Date
                    of Formation:

                	 
	
                   

                  Taxpayer
                    Identification Number:

                	 


        

         

        
          	 	
                  (b)

                	
                  TRUSTEES
                    WHO ARE EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE
                    TRUST

                


        

        
          	
                   

                  Name(s)
                    of Trustee(s):

                	 
	
                   

                  E-mail
                    Address: 

                	 
	
                   

                  NASD
                    Affiliation or Association of Trustee(s), if any:

                	 
	 	
                  If
                    none, check here  

                	
                  [  ]

                


        


        
          
            
            

          

          
            B-3

            
              

            

          

          
            
            

          

        


         

        
          	
                  IV.

                	
                  ADDITIONAL
                    INFORMATION

                


        

         

        A
          TRUST
          must attach a copy of its declaration of trust or other governing instrument,
          as
          amended, as well as all other documents that authorize the TRUST to invest
          in
          the Securities. All documentation must be complete and correct.

         

        
          	
                  V.

                	
                  SIGNATURE

                


        

         

        The
          Signature Page to this Questionnaire is contained on page B-5, entitled
          Trust
          Signature Page.

         

         

         

        
          
            
            

          

          
            B-4

            
              

            

          

          
            
            

          

        

         

        TRUST
          SIGNATURE PAGE

         

        _______________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP.

         

        ________________________

         

        1. The
          undersigned represents that (a) the information contained in this Questionnaire
          is complete and accurate and (b) the TRUST will notify Weikai Lang, at
          646-459-6988 immediately if any material change in any of this information
          occurs before the acceptance of the TRUST’s subscription and will promptly send
          Weikai Lang written confirmation of such change.

         

        2. The
          undersigned TRUST hereby represents and warrants that the persons signing
          this
          Questionnaire on behalf of the TRUST are duly authorized to acquire the
          Securities and sign this Questionnaire and the Purchase Agreement on behalf
          of
          the TRUST and, further, that the undersigned TRUST has all requisite authority
          to purchase such Securities and enter into the Purchase Agreement.

        


        
          	
                  Dollar
                    Amount of Securities Applied For

                	
                  Date

                	 
	 	
                  Title
                    of Trust

                	
                   

                   

                
	 	 	
                  (Please
                    Type or Print)

                
	 	
                   

                  By:

                	 
	 	 	
                  Signature
                    of Trustee

                
	 	
                   

                  Name
                    of Trustee:

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	
                   

                  By:

                	 
	 	 	
                  Signature
                    of Co-Trustee

                
	 	
                   

                  Name
                    of Co-Trustee:

                	 
	 	 	
                  (Please
                    Type or Print)

                


        

         

        THE
          SECURITIES COMPRISING THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR
          OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE
          REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, CONCURRED
          IN BY
          COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT REGISTRATION
          OF
          SUCH SECURITIES IS NOT REQUIRED.


        
          
            
            

          

          
            B-5

            
              

            

          

          
            
            

          

        

         

        
          	
                  IMPORTANT:

                	
                  Investor
                    Name:_________________

                
	
                  Please
                    Complete

                	 


        

         

        PARTNERSHIP
          QUESTIONNAIRE

         

        ________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP

         

        ________________________

         

        Magnetech
          Integrated Services Corp

        3300
          North A Street Building Two

        Suite
          100

        Midland, Texas
          79705

         

        The
          information contained in this Questionnaire is being furnished in order
          to
          determine whether the undersigned PARTNERSHIP’s subscription to purchase
          shares Debentures amd Warramts (the “Securities”) of Magnetech
          Integrated Services Corp (the “Company”) may be accepted.

        


        One
          (1)
          copy of this Questionnaire should be completed, signed, dated and delivered
          to
          Weikai Lang at Strasbourger Pearson Tulcin Wolff Inc. 33 Whitehall Street,
          17th
          Floor,
          New York, New York 10004. Please contact Weikai Lang at 646-459-6988 if
          you have
          any questions with respect to this Questionnaire.

         

        ALL
          INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY.
          The
          undersigned PARTNERSHIP understands, however, that the Company may present
          this
          Questionnaire to such parties as it deems appropriate if called upon to
          establish that the proposed offer and sale of the Securities is exempt
          from
          registration under the Securities Act of 1933, as amended, or meets the
          requirements of applicable state securities or “blue sky” laws. Further, the
          undersigned PARTNERSHIP understands that the offering is required to be
          reported
          to the Securities and Exchange Commission and to various state securities
          or
“blue sky” regulators.

         

        
          	
                  I.

                	
                  PLEASE
                    CHECK ANY OF STATEMENTS 1-3 BELOW THAT APPLY TO THE
                    PARTNERSHIP.

                


        

        
          	 	
                   

                  [  ]

                	
                   

                  1.

                	
                   

                  Each
                    of the partners of the undersigned PARTNERSHIP is able to certify
                    that
                    such partner meets at least one of the following
                    conditions:

                
	 	 	
                   

                  (a)

                	
                   

                  The
                    partner is a natural person whose individual net worth* or
                    joint net worth with his or her spouse exceeds
                    $1,000,000.

                


        

         

        ________________________

         

        *For
          purposes of this Questionnaire, the term "net worth" means the excess of
          total
          assets over total liabilities. In determining income, an investor should
          add to
          his or her adjusted gross income any amounts attributable to tax-exempt
          income
          received, losses claimed as a limited partner in any limited partnership,
          deductions claimed for depletion, contributions to IRA or Keogh retirement
          plans, alimony payments and any amount by which income from long-term capital
          gains has been reduced in arriving at adjusted gross income.

         

        



        
          
            
            

          

          
            C-1

            
              

            

          

          
            
            

          

        

         

        
          	 	 

                  (b)

                	
                   

                   

                	
                   

                  The
                    partner is a natural person whose individual income*
                    was in excess of $200,000 in each of the previous two years and
                    who
                    reasonably expects an individual income in excess of $200,000
                    for this
                    year.

                
	 	
                   

                  [  ]

                	
                   

                  2.

                	
                   

                  Each
                    of the partners of the undersigned PARTNERSHIP is able to certify
                    that
                    such partner is a natural person who, together with his or her
                    spouse, has
                    had a joint income*
                    in
                    excess of $300,000 in each of the previous two years and who
                    reasonably
                    expects a joint income in excess of $300,000 for this
                    year.

                
	 	
                   

                  [  ]

                	
                   

                  3.

                	
                   

                  The
                    undersigned PARTNERSHIP: (a) was not formed for the specific
                    purpose of
                    acquiring the Securities; and
                    (b) has total assets in excess of
                    $5,000,000.

                


        

         

        


        
          	 

                  IF
                    YOU CHECKED STATEMENT 1 OR STATEMENT 2 IN SECTION I AND DID NOT
                    CHECK
                    STATEMENT 3, YOU MUST PROVIDE A LETTER SIGNED BY A GENERAL PARTNER
                    OF THE
                    UNDERSIGNED PARTNERSHIP LISTING THE NAME OF EACH PARTNER (WHETHER
                    A
                    GENERAL OR LIMITED PARTNER) AND THE REASON (UNDER STATEMENT 1
                    OR STATEMENT
                    2) SUCH PARTNER QUALIFIES AS AN ACCREDITED INVESTOR (ON THE BASIS
                    OF NET
                    WORTH, INDIVIDUAL INCOME OR JOINT INCOME), OR EACH PARTNER MUST
                    PROVIDE A
                    COMPLETED INDIVIDUAL INVESTOR QUESTIONNAIRE (PAGES A_1 TO
                    A_5).

                


        

         

        
          	
                  II.

                	
                  OTHER
                    CERTIFICATIONS

                


        

         

        By
          signing the Signature Page, the undersigned certifies the
          following:

         

        
          	 	
                  (a)

                	
                  that
                    the PARTNERSHIP’s purchase of the Securities will be solely for the
                    PARTNERSHIP’s own account and not for the account of any other
                    person;

                


        

         

        
          	 	
                  (b)

                	
                  that
                    the PARTNERSHIP’s name, address of principal office, place of formation
                    and taxpayer identification number as set forth in this Questionnaire
                    are
                    true, correct and complete; and

                


        

         

        
          	 	
                  (c)

                	
                  that
                    one of the following is true and correct (check
                    one):

                


        

         

        [  ] (i) the
          PARTNERSHIP is a partnership formed in or under the laws of the United
          States or
          any political subdivision thereof.

         

        [  ] (ii) the
          PARTNERSHIP is not a partnership formed in or under the laws of the United
          States or any political subdivision thereof.

         

         

        
          
            C-2

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	
                  III.

                	
                  GENERAL
                    INFORMATION

                


        

         

        
          	 	
                  (a)

                	
                  PROSPECTIVE
                    PURCHASER (THE PARTNERSHIP)

                


        

        
          	
                   

                  Name:

                	 
	
                   

                  Principal
                    Place of Business:

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	
                  (State)                 (Zip
                    Code)           

                


        

         

        
          	
                   

                  Address
                    for Correspondence (if different):

                	 
	 	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Telephone
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 
	
                   

                  Facsimile
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 
	
                   

                  State
                    in which Formed:

                	 
	
                   

                  Date
                    of Formation:

                	 
	
                   

                  Taxpayer
                    Identification Number:

                	 
	
                   

                  Number
                    of Partners:

                	 
	
                   

                  E-mail
                    Address: 

                	 
	
                   

                  NASD
                    Affiliation or Association of the PARTNERSHIP, if any:

                	 
	 	
                  If
                    none, check
                    here    [  ]

                


        

         

        
          	 	
                  (b)

                	
                  INDIVIDUAL
                    WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE
                    PARTNERSHIP

                


        

        
          	
                   

                  Name:

                	 
	
                   

                  Position
                    or Title:

                	 


        

         

        
          	
                  IV.

                	
                  SIGNATURE

                


        

         

        The
          Signature Page to this Questionnaire is contained on page C-4, entitled
          Partnership Signature Page.

         

         

        
          
            
            

          

          
            C-3

            
              

            

          

          
            
            

          

        

         

        PARTNERSHIP
          SIGNATURE PAGE

         

        ________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP

         

        ________________________

         

        1. The
          undersigned PARTNERSHIP represents that (a) the information contained in
          this
          Questionnaire is complete and accurate and (b) the PARTNERSHIP will notify
          Weikai Lang, at 646-459-6988 immediately if any material change in any
          of this
          information occurs before the acceptance of the undersigned PARTNERSHIP’s
          subscription and will promptly send Weikai Lang written confirmation of
          such
          change.

         

        2. The
          undersigned PARTNERSHIP hereby represents and warrants that the person
          signing
          this Questionnaire and the Purchase Agreement on behalf of the PARTNERSHIP
          is a
          general partner of the PARTNERSHIP, has been duly authorized by the PARTNERSHIP
          to acquire the Securities and sign the Purchase Agreement on behalf of
          the
          PARTNERSHIP and, further, that the undersigned PARTNERSHIP has all requisite
          authority to purchase such Securities and enter into the Purchase
          Agreement.

         

        
          	 	 	 
	
                  Dollar
                    Amount of Securities Applied For

                	 	
                  Date

                	 
	 	 	 
	 	 	
                  Name
                    of Partnership

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  By:

                	 
	 	 	
                  (Signature)

                
	 	 	
                   

                  Name:

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  Title:

                	 
	 	 	
                  (Please
                    Type or Print)

                


        

         

        THE
          SECURITIES COMPRISING THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OR 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR
          OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE
          REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, CONCURRED
          IN BY
          COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT REGISTRATION
          OF
          SUCH SECURITIES IS NOT REQUIRED.


        
          
            
            

          

          
            C-4

            
              

            

          

          
            
            

          

        

         

        
          	
                   

                  IMPORTANT:

                	
                   

                  Investor
                    Name: ___________

                
	
                  Please
                    Complete

                	 


        

         

        CORPORATION
          QUESTIONNAIRE

         

        ______________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP.

        
          ______________________

           

        

          

        Magnetech
          Integrated Services Corp.

        1125
          South Walnut Street

        South
          Bend, Indiana 46679

         

        The
          information contained in this Questionnaire is being furnished in order
          to
          determine whether the undersigned CORPORATION’s subscription to purchase
          shares Debentures and Warrants (the “Securities”) of Magnetech
          Integrated Services Corp (the “Company”) may be accepted.

        


        One
          (1)
          copy of this Questionnaire should be completed, signed, dated and delivered
          to
          Weikai Lang at Strasbourger Pearson Tulcin Wolff Inc. 33 Whitehall Street,
          17th
          Floor,
          New York, New York 10004. Please contact Weikai Lang at 646-459-6988 if
          you have
          any questions with respect to this Questionnaire.

         

        ALL
          INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY.
          The
          undersigned CORPORATION understands, however, that the Company may present
          this
          Questionnaire to such parties as it deems appropriate if called upon to
          establish that the proposed offer and sale of the Securities is exempt
          from
          registration under the Securities Act of 1933, as amended, or meets the
          requirements of applicable state securities or “blue sky” laws. Further, the
          undersigned CORPORATION understands that the offering is required to be
          reported
          to the Securities and Exchange Commission and to various state securities
          or
“blue sky” regulators.

         

        
          	
                  I.

                	
                  PLEASE
                    CHECK ANY OF STATEMENTS 1-3 BELOW THAT APPLY TO THE
                    CORPORATION.

                


        

        
          	 	
                   

                  [  ]

                	
                   

                  1.

                	
                   

                  Each
                    of the shareholders of the undersigned CORPORATION is able to
                    certify that
                    such shareholder meets at least one of the following two
                    conditions:

                
	 	 	
                   

                  (a)

                	
                   

                  The
                    shareholder is a natural person whose individual net worth or
                    joint net
                    worth with his or her spouse exceeds $1,000,000;
                    or

                


        

         

        ________________________

         

        *For
          purposes of this Questionnaire, the term "net worth" means the excess of
          total
          assets over total liabilities. In determining income, an investor should
          add to
          his or her adjusted gross income any amounts attributable to tax-exempt
          income
          received, losses claimed as a limited partner in any limited partnership,
          deductions claimed for depletion, contributions to IRA or Keogh retirement
          plans, alimony payments and any amount by which income from long-term capital
          gains has been reduced in arriving at adjusted gross income.


        
          
            
            

          

          
            D-1

            
              

            

          

          
            
            

          

        


         

        


        
          	 	 	
                   

                  (b)

                	
                   

                  The
                    shareholder is a natural person who had an individual income*
                    in
                    excess of $200,000 in each of the previous two years and who
                    reasonably
                    expects an individual income in excess of $200,000 for this
                    year.

                
	 	
                   

                  [  ]

                	
                   

                  2.

                	
                   

                  Each
                    of the shareholders of the undersigned CORPORATION is able to
                    certify that
                    such shareholder is a natural person who, together with his or
                    her spouse,
                    has had a joint income*
                    in
                    excess of $300,000 in each of the previous two years and who
                    reasonably
                    expects a joint income in excess of $300,000 for this
                    year.

                
	 	
                   

                  [  ]

                	
                   

                  3.

                	
                   

                  The
                    undersigned CORPORATION: (a) was not formed for the specific
                    purpose of
                    acquiring any Securities; and
                    (b) has total assets in excess of
                    $5,000,000.

                


        

         

          

        
          	 

                  IF
                    YOU CHECKED STATEMENT 1 OR STATEMENT 2 IN SECTION 1 AND DID NOT
                    CHECK
                    STATEMENT 3, YOU MUST PROVIDE A LETTER SIGNED BY AN OFFICER OF
                    THE
                    UNDERSIGNED CORPORATION LISTING THE NAME OF EACH SHAREHOLDER
                    AND THE
                    REASON (UNDER STATEMENT 1 OR STATEMENT 2) WHY SUCH SHAREHOLDER
                    QUALIFIES
                    AS AN ACCREDITED INVESTOR (ON THE BASIS OF NET WORTH, INDIVIDUAL
                    INCOME OR
                    JOINT INCOME), OR EACH SHAREHOLDER MUST PROVIDE A COMPLETED INDIVIDUAL
                    INVESTOR QUESTIONNAIRE (PAGES A_1 TO
                    A_5).

                


        

         

         

        
          	
                  II.

                	
                  OTHER
                    CERTIFICATIONS

                


        

         

        By
          signing the Signature Page, the undersigned certifies the
          following:

         

        
          	 	
                  (a)

                	
                  that
                    the CORPORATION’s purchase of the Securities will be solely for the
                    CORPORATION’s own account and not for the account of any other person or
                    entity;

                


        

         

        
          	 	
                  (b)

                	
                  that
                    the CORPORATION’s name, address of principal office, place of
                    incorporation and taxpayer identification number as set forth
                    in this
                    Questionnaire are true, correct and complete;
                    and

                


        

         

        
          	 	
                  (c)

                	
                  that
                    one of the following is true and correct (check
                    one):

                


        

         

         

        
          	 	
                   

                  [  ]

                	
                   

                  (i)

                	
                   

                  the
                    CORPORATION is a corporation organized in or under the laws of
                    the United
                    States or any political subdivision thereof.

                
	 	
                   

                  [  ]

                	
                   

                  (ii)

                	
                   

                  the
                    CORPORATION is a corporation which is neither created nor organized
                    in or
                    under the United States or any political subdivision thereof,
                    but which
                    has made an election under either Section 897(i) or 897(k) of
                    the United
                    States Internal Revenue Code of 1986, as amended, to be treated
                    as a
                    domestic corporation for certain purposes of United States federal
                    income
                    taxation (A
                    COPY OF THE INTERNAL REVENUE SERVICE ACKNOWLEDGMENT OF THE UNDERSIGNED’S
                    ELECTION MUST BE ATTACHED TO THIS PURCHASE AGREEMENT IF THIS
                    PROVISION IS
                    APPLICABLE).

                


        

         

        



        
          
            
            

          

          
            D-2

            
              

            

          

          
            
            

          

        


         

        


        
          	 	
                   

                  [  ]

                	
                   

                  (iii)

                	
                   

                  neither
                    (i) nor (ii) above is true.

                


        

         

         

        
          	
                  III.

                	
                  GENERAL
                    INFORMATION

                


        

         

        
          	 	
                  (a)

                	
                  PROSPECTIVE
                    PURCHASER (THE CORPORATION)

                


        

        
          	
                   

                  Name:

                	 
	
                   

                  Principal
                    Place of Business:

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	
                  (State)                 (Zip
                    Code)            

                
	
                  Address
                    for Correspondence (if different):

                	 
	 	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Telephone
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 
	
                   

                  Facsimile
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 
	
                   

                  State
                    of Incorporation:

                	 
	
                   

                  Date
                    of Formation:

                	 
	
                   

                  Taxpayer
                    Identification Number:

                	 
	
                   

                  Number
                    of Shareholders:

                	 
	
                   

                  NASD
                    Affiliation or Association of the PARTNERSHIP, if any:

                	 
	 	
                  If
                    none, check
                    here    [  ]

                


        

         

        
          	 	
                  (b)

                	
                  INDIVIDUAL
                    WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE
                    CORPORATION

                


        

        
          	
                   

                  Name:

                	 
	
                   

                  Position
                    or Title:

                	 
	
                   

                  Email
                    Address:

                	 


        

         

         

        
          	
                  IV.

                	
                  SIGNATURE

                


        

         

        The
          Signature Page to this Questionnaire is contained on page D-4, entitled
          Corporation Signature Page.

         

         

         

        
          
            
            

          

          
            D-3

            
              

            

          

          
            
            

          

        

        CORPORATION
          SIGNATURE PAGE

         

        _________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP

         

        ________________________

         

        1. The
          undersigned CORPORATION represents that (a) the information contained in
          this
          Questionnaire is complete and accurate and (b) the CORPORATION will notify
          Weikai Lang, at 646-459-6988 immediately if any material change in any
          of the
          information occurs prior to the acceptance of the undersigned CORPORATION’s
          subscription and will promptly send Weikai Lang written confirmation of
          such
          change.

         

        2. The
          undersigned CORPORATION hereby represents and warrants that the person
          signing
          this Questionnaire on behalf of the CORPORATION has been duly authorized
          by all
          requisite action on the part of the CORPORATION to acquire the Securities
          and
          sign this Questionnaire and the Purchase Agreement on behalf of the CORPORATION
          and, further, that the undersigned CORPORATION has all requisite authority
          to
          purchase the Securities and enter into the Purchase Agreement.

         

        


        
          	 	 	 
	
                  Dollar
                    Amount of Securities Applied For

                	 	
                  Date

                	 
	 	 	 
	 	 	
                  Name
                    of Corporation

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  By:

                	 
	 	 	
                  (Signature)

                
	 	 	
                   

                  Name:

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  Title:

                	 
	 	 	
                  (Please
                    Type or Print)

                


        

         

        THE
          SECURITIES COMPRISING THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR
          OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE
          REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, CONCURRED
          IN BY
          COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT REGISTRATION
          OF
          SUCH SECURITIES IS NOT REQUIRED.


        
          
            
            

          

          
            D-4

            
              

            

          

          
            
            

          

        

         

        
          	
                  IMPORTANT:

                	
                  Investor
                    Name: ___________________

                
	
                  Please
                    Complete

                	 


        

         

        RETIREMENT
          PLAN QUESTIONNAIRE

         

        ___________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP.

         

        __________________________

         

        Magnetech
          Integrated Services Corp.

        1125 South
          Walnut Street

        South
          Bend, Indiana 46679

         

        The
          information contained in this Questionnaire is being furnished in order
          to
          determine whether the undersigned RETIREMENT PLAN’s subscription to purchase
          shares Debentures and Warrants (the “Securities”) of Magnetech Integrated
          Services Corp (the “Company”) may be accepted.

        


        One
          (1)
          copy of this Questionnaire should be completed, signed, dated and delivered
          to
          Weikai Lang at Strasbourger Pearson Tulcin Wolff Inc. 33 Whitehall Street,
          17th
          Floor,
          New York, New York 10004. Please contact Weikai Lang at 646-459-6988 if
          you have
          any questions with respect to this Questionnaire.

         

        ALL
          INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY.
          The
          undersigned RETIREMENT PLAN understands, however, that the Company may
          present
          this Questionnaire to such parties as it deems appropriate if called upon
          to
          establish that the proposed offer and sale of the Securities is exempt
          from
          registration under the Securities Act of 1933, as amended, or meets the
          requirements of applicable state securities or “blue sky” laws. Further, the
          undersigned RETIREMENT PLAN understands that the offering is required to
          be
          reported to the Securities and Exchange Commission and to various state
          securities or “blue sky” regulators.

         

         

        
          	
                  I.

                	
                  PLEASE
                    CHECK ANY OF THE FOLLOWING STATEMENTS, AS
                    APPLICABLE.

                


        

         

        
          	 	
                  [  ]
                    1.

                	
                  The
                    undersigned RETIREMENT PLAN certifies that it is an employee
                    benefit plan
                    within the meaning of the Employee Retirement Income Security
                    Act of 1974
                    (“ERISA”) and:

                


        

         

        
          	 	
                  [  ]
                    (a)

                	
                  the
                    investment decisions are made by a plan fiduciary as defined
                    in Section
                    3(21) of ERISA that (i) is either a bank, insurance company or
                    registered
                    investment advisor or (ii) is a savings and loan association;
                    or

                


        

         

        
          	 	
                  [  ]
                    (b)

                	
                  The
                    undersigned RETIREMENT PLAN has total assets in excess of $5,000,000;
                    or

                


        

         

         

         

        
          
            
            

          

          
            E-1

            
              

            

          

          
            
            

          

        

        
          	 	
                  [  ]
                    (c)

                	
                  The
                    undersigned RETIREMENT PLAN is self-directed, with investment
                    decisions
                    made solely by persons each of whom satisfies at least one of
                    the
                    following conditions:

                


        

         

        
          	 	
                  [  ]

                	
                  (i)

                	
                  such
                    person’s individual net worth* For
                    purposes of this Questionnaire, the term "net worth" means the
                    excess of
                    total assets over total liabilities. In determining income, an
                    investor
                    should add to his or her adjusted gross income any amounts attributable
                    to
                    tax-exempt income received, losses claimed as a limited partner
                    in any
                    limited partnership, deductions claimed for depletion, contributions
                    to
                    IRA or Keogh retirement plans, alimony payments and any amount
                    by which
                    income from long-term capital gains has been reduced in arriving
                    at
                    adjusted gross income.
                    or
                    joint net worth with his or her spouse exceeds $1,000,000;
                    or

                


        

         

        
          	 	
                  [  ]

                	
                  (ii)

                	
                  such
                    person had an individual income*
                    in
                    excess of $200,000 in each of the previous two years and reasonably
                    expects an individual income in excess of $200,000 for this year;
                    or

                


        

         

        
          	 	
                  [  ]

                	
                  (iii)

                	
                  such
                    person together with his or her spouse, had a joint income*
                    in
                    excess of $300,000 in each of the previous two years and reasonably
                    expects a joint income in excess of $300,000 for this
                    year.

                


        

         

        
          	 	
                  [  ]
                    2.

                	
                  The
                    undersigned RETIREMENT PLAN certifies that it is an employee
                    benefit plan,
                    Keogh plan or Individual Retirement Account in which each participant
                    satisfies at least one of the following
                    conditions:

                


        

         

        
          	 	
                  [  ]
                    (a)

                	
                  such
                    person’s individual net worth* or joint net worth with his or her spouse
                    exceeds $1,000,000; or

                


        

         

        
          	 	
                  [  ]
                    (b)

                	
                  such
                    person had an individual income* in excess of $200,000 in each
                    of the
                    previous two years and reasonably expects an individual income
                    in excess
                    of $200,000 for this year; or

                


        

         

        
          	 	
                  [  ]
                    (c)

                	
                  such
                    person, together with his or her spouse, had a joint income*
                    in excess of
                    $300,000 in each of the previous two years and reasonably expects
                    a joint
                    income in excess of $300,000 for this
                    year.

                


        

         

        
           

          ____________________

          

            *For
              purposes of this Questionnaire, the term "net worth" means the excess
              of total
              assets over total liabilities. In determining income, an investor should
              add to
              his or her adjusted gross income any amounts attributable to tax-exempt
              income
              received, losses claimed as a limited partner in any limited partnership,
              deductions claimed for depletion, contributions to IRA or Keogh retirement
              plans, alimony payments and any amount by which income from long-term
              capital
              gains has been reduced in arriving at adjusted gross
              income.

          

        

        
           

          
            
              
              

            

            
              E-2

              
                

              

            

            
              
              

            

          

        

         

         

        
          
            	 IF YOU CHECKED STATEMENT 1(c)
                    OR
                    STATEMENT 2 AND NOT STATEMENT 1(a) OR STATEMENT 1(b), YOU MUST
                    PROVIDE A
                    LETTER SIGNED BY A PERSON DULY AUTHORIZED BY THE RETIREMENT PLAN
                    LISTING,
                    AS APPLICABLE (I) THE NAMES OF THE PERSONS (OR ENTITIES) MAKING
                    THE
                    INVESTMENT DECISIONS, OR (II) THE NAMES OF ALL OF THE PARTICIPANTS
                    IN THE
                    PLAN AND THE REASON (UNDER STATEMENT 1(c) OR STATEMENT 2) SUCH
                    PERSON (OR
                    ENTITY), QUALIFIES AS AN ACCREDITED INVESTOR (ON THE BASIS OF
                    NET WORTH,
                    INDIVIDUAL INCOME, JOINT INCOME OR OTHERWISE), OR EACH SUCH PERSON
                    (OR
                    ENTITY) MUST COMPLETE THE APPROPRIATE QUESTIONNAIRE (i.e. FOR
                    AN
                    INDIVIDUAL, TRUST, PARTNERSHIP OR
                    CORPORATION).


          

        

         

        
          	
                  II.

                	
                  OTHER
                    CERTIFICATIONS

                


        

         

        By
          signing the Signature Page, the undersigned certifies the
          following:

         

        
          	 	
                  (a)

                	
                  that
                    the RETIREMENT PLAN’s purchase of the Securities will be solely for the
                    RETIREMENT PLAN’s own account and not for the account of any other person
                    or entity;

                


        

         

        
          	 	
                  (b)

                	
                  that
                    the RETIREMENT PLAN’s governing documents duly authorize the type of
                    investment contemplated herein, and the undersigned is authorized
                    and
                    empowered to make such investment on behalf of the RETIREMENT
                    PLAN.

                


        

         

        
          	 	
                  (c)

                	
                  that
                    one of the following is true and correct (check
                    one):

                


        

         

        
          	 	
                  [  ]
                    (i)

                	
                  the
                    RETIREMENT PLAN is a retirement plan whose income from sources
                    outside of
                    the United States is includable in its gross income for United
                    States
                    federal tax purposes regardless of its connection with a trade
                    or business
                    carried on in the United States.

                


        

         

        
          	 	
                  [  ]
                    (ii)

                	
                  the
                    RETIREMENT PLAN is a retirement plan whose income from sources
                    outside the
                    United States is not includable in its gross income for United
                    States
                    federal income tax purposes regardless of its connection with
                    a trade or
                    business carried on in the United
                    States.

                


        

         

         

        
          	
                  III.

                	
                  GENERAL
                    INFORMATION

                


        

         

        
          	 	
                  (a)

                	
                  PROSPECTIVE
                    PURCHASER (THE RETIREMENT PLAN)

                


        

         

        


        
          	
                   

                  Name:

                	 
	
                   

                  Address:

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	
                  (State)                 (Zip
                    Code)            

                
	
                  Address
                    for Correspondence (if different):

                	 
	 	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Telephone
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 


        

         

         

        
          
            
            

          

          
            E-3

            
              

            

          

          
            
            

            
              	
                      Address
                        for Correspondence (if different):

                    	 
	 	 	
                      (Number
                        and Street)

                    
	 
	
                      (City)

                    	 	
                      (State)

                    	
                      (Zip
                        Code)

                    
	
                       

                      Telephone
                        Number:

                    	 
	 	 	
                      (Area
                        Code)

                    	 	
                      (Number)

                    	 


            

          

        

        
          	
                   

                  Telephone
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 


        

        
          
            	
                     

                    Facsimile
                      Number:

                  	 
	 	 	
                    (Area
                      Code)

                  	 	
                    (Number)

                  	 
	
                     

                    State
                      in which Formed:

                  	 
	
                     

                    Date
                      of Formation:

                  	 
	
                     

                    Taxpayer
                      Identification Number:

                  	 


          

        

         

        
          	 	
                  (b)

                	
                  INDIVIDUAL
                    WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE RETIREMENT
                    PLAN

                


        

        
          	
                   

                  Name:

                	 
	
                   

                  Position
                    or Title:

                	 
	
                   

                  Email
                    Address:

                	 


        

         

        
          	
                  IV.

                	
                  ADDITIONAL
                    INFORMATION

                


        

         

         

        
          	 THE
                  RETIREMENT PLAN MUST ATTACH COPIES OF ALL DOCUMENTS GOVERNING THE
                  PLAN AS
                  WELL AS ALL OTHER DOCUMENTS AUTHORIZING THE RETIREMENT PLAN TO
                  INVEST IN
                  THE SECURITIES. INCLUDE, AS NECESSARY, DOCUMENTS DEFINING PERMITTED
                  INVESTMENTS BY THE RETIREMENT PLAN, AND DEMONSTRATING AUTHORITY
                  OF THE
                  SIGNING INDIVIDUAL TO ACT ON BEHALF OF THE PLAN. ALL DOCUMENTATION
                  MUST BE
                  COMPLETE AND CORRECT.


        

         

         

        
          	
                  V.

                	
                  SIGNATURE

                


        

         

        The
          Signature Page to this Questionnaire is contained on page E-5, entitled
          Retirement Plan Signature Page.

         

         

        
          
            
            

          

          
            E-4

            
              

            

          

          
            
            

          

        

         

        RETIREMENT
          PLAN SIGNATURE PAGE

         

         _________________________

         

         MAGNETECH
          INTEGRATED SERVICES CORP.

         

         ________________________

         

        1. The
          undersigned RETIREMENT PLAN represents that (a) the information contained
          in
          this Questionnaire is complete and accurate and (b) the RETIREMENT PLAN
          will
          notify Weikai Lang, at 646-459-6988 immediately if any material change
          in any of
          the information occurs prior to the acceptance of the undersigned RETIREMENT
          PLAN’s subscription and will promptly send Weikai Lang written confirmation
          of
          such change.

         

        2. The
          undersigned RETIREMENT PLAN hereby represents and warrants that the person
          signing this Questionnaire on behalf of the RETIREMENT PLAN has been duly
          authorized to acquire the Common Stock and sign this Questionnaire and
          the
          Purchase Agreement on behalf of the RETIREMENT PLAN and, further, that
          the
          undersigned RETIREMENT PLAN has all requisite authority to purchase the
          Securities and enter into the Purchase Agreement.

         

        


        
          	 	 	 
	
                  Dollar
                    Amount of Securities Applied For

                	 	
                  Date

                	 
	 	 	 
	 	 	
                  Name
                    of Retirement Plan

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  By:

                	 
	 	 	
                  (Signature)

                
	 	 	
                   

                  Name:

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  Title:

                	 
	 	 	
                  (Please
                    Type or Print)

                


        

         

        THE
          SECURITIES COMPRISING THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR
          OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE
          REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, CONCURRED
          IN BY
          COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT REGISTRATION
          OF
          SUCH SECURITIES IS NOT REQUIRED.


        
          
            
            

          

          
            E-5

            
              

            

          

          
            
            

          

        


         

        


        
          	
                  IMPORTANT:

                	
                  Investor
                    Name: ___________________

                
	
                  Please
                    Complete

                	 


        

         

        LIMITED
          LIABILITY COMPANY QUESTIONNAIRE

         

        ______________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP.

         

        ______________________

         

        Magnetech
          Integrated Services Corp.

        1125
          South Walnut Street

        South
          Bend, Indiana 46679

         

        The
          information contained in this Questionnaire is being furnished in order
          to
          determine whether the undersigned LIMITED LIABILITY COMPANY’s subscription to
          purchase Securities (the “Securities”) of Magnetech Integrated Services
          Corp (the “Company”) may be accepted.

        


        One
          (1)
          copy of this Questionnaire should be completed, signed, dated and delivered
          to
          Weikai Lang at Strasbourger Pearson Tulcin Wolff Inc. 33 Whitehall Street,
          17th
          Floor,
          New York, New York 10004. Please contact Weikai Lang at 646-459-6988 if
          you have
          any questions with respect to this Questionnaire.

         

        ALL
          INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY.
          The
          undersigned LIMITED LIABILITY COMPANY understands, however, that the Company
          may
          present this Questionnaire to such parties as it deems appropriate if called
          upon to establish that the proposed offer and sale of the Securities is
          exempt
          from registration under the Securities Act of 1933, as amended, or meets
          the
          requirements of applicable state securities or “blue sky” laws. Further, the
          undersigned LIMITED LIABILITY COMPANY understands that the offering is
          required
          to be reported to the Securities and Exchange Commission and to various
          state
          securities or “blue sky” regulators.

         

        
          	
                  I.

                	
                  PLEASE
                    CHECK ANY OF STATEMENTS 1-3 BELOW THAT APPLY TO THE LIMITED LIABILITY
                    COMPANY.

                


        

         

        
          	 	
                  [  ]
                    1.

                	
                  Each
                    of the members of the undersigned LIMITED LIABILITY COMPANY is
                    able to
                    certify that such member meets at least one of the following
                    two
                    conditions:

                


        

         

        
          	 	
                  (a)

                	
                  The
                    member is a natural person whose individual net worth* or
                    joint net worth with his or her spouse exceeds $1,000,000;
                    or

                


        

         

        ____________________

        *For
          purposes of this Questionnaire, the term "net worth" means the excess of
          total
          assets over total liabilities. In determining income, an investor should
          add to
          his or her adjusted gross income any amounts attributable to tax-exempt
          income
          received, losses claimed as a limited partner in any limited partnership,
          deductions claimed for depletion, contributions to IRA or Keogh retirement
          plans, alimony payments and any amount by which income from long-term capital
          gains has been reduced in arriving at adjusted gross income.

         

         

        
          
            
            

          

          
            F-1

            
              

            

          

          
            
            

          

        

        
          	 	
                  (b)

                	
                  The
                    member is a natural person who had an individual income*
                    in
                    excess of $200,000 in each of the previous two years and who
                    reasonably
                    expects an individual income in excess of $200,000 for this
                    year.

                


        

         

        
          	 	
                  [  ]
                    2.

                	
                  Each
                    of the members of the undersigned LIMITED LIABILITY COMPANY is
                    able to
                    certify that such member is a natural person who, together with
                    his or her
                    spouse, has had a joint income*
                    in
                    excess of $300,000 in each of the previous two years and who
                    reasonably
                    expects a joint income in excess of $300,000 for this
                    year.

                


        

         

        
          	 	
                  [  ]
                    3.

                	
                  The
                    undersigned LIMITED LIABILITY COMPANY: (a) was not formed for
                    the specific
                    purpose of acquiring any Securities; and
                    (b) has total assets in excess of
                    $5,000,000.

                


        

         

        
          	 	
                  [  ]
                    4.

                	
                  The
                    sole member of the undersigned LIMITED LIABILITY COMPANY is able
                    to
                    certify that such member is an entity which (a) was not formed
                    for the
                    specific purpose of acquiring any Common Stock; and
                    (b) has total assets in excess of
                    $5,000,000.

                


        

         

        
          
            	 IF YOU CHECKED STATEMENT 1 OR
                    STATEMENT 2 IN SECTION 1 AND DID NOT CHECK STATEMENT 3, YOU MUST
                    PROVIDE A
                    LETTER SIGNED BY A MANAGER OF THE UNDERSIGNED LIMITED LIABILITY
                    COMPANY
                    LISTING THE NAME OF EACH MEMBER AND THE REASON (UNDER STATEMENT
                    1 OR
                    STATEMENT 2) WHY SUCH MEMBER QUALIFIES AS AN ACCREDITED INVESTOR
                    (ON THE
                    BASIS OF NET WORTH, INDIVIDUAL INCOME OR JOINT INCOME), OR EACH
                    MEMBER
                    MUST PROVIDE A COMPLETED INDIVIDUAL INVESTOR QUESTIONNAIRE (PAGES
                    A-1 TO
                    A-5).


          

        

         

         

         

        
          	
                  II.

                	
                  OTHER
                    CERTIFICATIONS

                


        

         

        By
          signing the Signature Page, the undersigned certifies the
          following:

         

        
          	 	
                  (a)

                	
                  that
                    the LIMITED LIABILITY COMPANY’s purchase of the Securities will be solely
                    for the LIMITED LIABILITY COMPANY’s own account and not for the account of
                    any other person or entity;

                


        

         

        
          	 	
                  (b)

                	
                  that
                    the LIMITED LIABILITY COMPANY’s name, address of principal office, place
                    of incorporation and taxpayer identification number as set forth
                    in this
                    Questionnaire are true, correct and complete;
                    and

                


        

         

        
          	 	
                  (c)

                	
                  that
                    one of the following is true and correct (check
                    one):

                


        

         

        
          	 	
                  [  ]
                    (i)

                	
                  the
                    LIMITED LIABILITY COMPANY is organized in or under the laws of
                    the United
                    States or any political subdivision
                    thereof.

                


        

         

         

        
          
            
            

          

          
            F-2

            
              

            

          

          
            
            

          

        

         

        
          	 	
                  [  ]
                    (ii)

                	
                  the
                    LIMITED LIABILITY COMPANY is neither created nor organized in
                    or under the
                    United States or any political subdivision
                    thereof.

                


        


         

        
          	
                  III.

                	
                  GENERAL
                    INFORMATION

                


        

         

        
          	 	
                  (a)

                	
                  PROSPECTIVE
                    PURCHASER (THE LIMITED LIABILITY
                    COMPANY)

                


        

        
          	
                   

                  Name:

                	 
	
                   

                  Principal
                    Place of Business:

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	
                  (State)                 (Zip
                    Code)            

                
	
                  Address
                    for Correspondence (if different):

                	 
	 	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Telephone
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 
	
                   

                  Facsimile
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 
	
                   

                  E-mail
                    Address:

                	 
	
                   

                  State
                    of Formation:

                	 
	
                   

                  Date
                    of Formation:

                	 
	
                   

                  Taxpayer
                    Identification Number:

                	 
	
                   

                  Number
                    of Members:

                	 
	
                   

                  NASD
                    Affiliation or Association of the PARTNERSHIP, if any:

                	 
	 	
                  If
                    none, check
                    here    [  ]

                


        

         

        
          	 	
                  (b)

                	
                  INDIVIDUAL
                    WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE LIMITED
                    LIABILITY
                    COMPANY

                


        

        
          	
                   

                  Name:

                	 
	
                   

                  Position
                    or Title:

                	 


        

         

        
          	
                  IV.

                	
                  SIGNATURE

                


        

         

        The
          Signature Page to this Questionnaire is contained on page F-4, entitled
          LIMITED
          LIABILITY COMPANY Signature Page.

         

         

         

        
          
            
            

          

          
            F-4

            
              

            

          

          
            
            

          

        

        LIMITED
          LIABILITY COMPANY SIGNATURE PAGE

         

        _________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP

         

        ________________________

         

        1. The
          undersigned LIMITED LIABILITY COMPANY represents that (a) the information
          contained in this Questionnaire is complete and accurate and (b) the LIMITED
          LIABILITY COMPANY will notify Weikai Lang, at 646-459-6988 immediately
          if any
          material change in any of the information occurs prior to the acceptance
          of the
          undersigned LIMITED LIABILITY COMPANY’s subscription and will promptly send
          Weikai Lang written confirmation of such change.

         

        2. The
          undersigned LIMITED LIABILITY COMPANY hereby represents and warrants that
          the
          person signing this Questionnaire on behalf of the LIMITED LIABILITY COMPANY
          has
          been duly authorized by all requisite action on the part of the LIMITED
          LIABILITY COMPANY to acquire the Securities and sign this Questionnaire
          and the
          Purchase Agreement on behalf of the LIMITED LIABILITY COMPANY and, further,
          that
          the undersigned LIMITED LIABILITY COMPANY has all requisite authority to
          purchase the Securities and enter into the Purchase Agreement.

         

        


        
          	 	 	 
	
                  Dollar
                    Amount of Securities Applied For

                	 	
                  Date

                	 
	 	 	 
	 	 	
                  Name
                    of LIMITED LIABILITY COMPANY

                
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  By:

                	 
	 	 	
                  (Signature)

                
	 	 	
                   

                  Name:

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  Title:

                	 
	 	 	
                  (Please
                    Type or Print)

                


        

         

        THE
          SECURITIES COMPRISING THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR
          OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE
          REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, CONCURRED
          IN BY
          COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT REGISTRATION
          OF
          SUCH SECURITIES IS NOT REQUIRED.

         

         

        F-5

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    
      

        Schedule
          2(c)

        


        Capitalization

        


        


        As
          of the
          date hereof, the Company is authorized to issue 220,000,000 shares of capital
          stock, consisting of 200,000,000 shares of common stock without par value
          and
          20,000,000 shares of preferred stock without par value. The Company has
          issued
          and outstanding 97,000,006 shares of common stock.

        


        For
          its
          services as placement agent in the Bridge Financing and the Private Offering
          of
          common stock of the Company which began in May, 2004, the Company issued
          ten
          year warrants to purchase 4,500,000 shares of the common stock of the Company
          to
          Strasbourger.

        


        Pursuant
          to Section 3(d)of the Agreement, upon the closing, the Company will issue
          the
          Agent’s Warrants, Subscriber Warrants and the Agent’s Shares.

        


        The
          Company has received a loan from MFB Financial (from here forward referred
          to as
          the “Bank”):

        


        Three
          Million Dollar ($3,000,000) line of credit, as evidenced by a promissory
          note
          executed in favor of the bank dated November 1, 2004. The note is payable
          on
          demand and is secured by the assets of The Company. In addition, John &
          Bonnie Martell have guaranteed the loan.

        


        The
          Company has outstanding loan obligations to John A. Martell, evidenced
          by the
          following promissory notes:

        


        Promissory
          Note, dated effective January 1, 2004, executed by The Company in favor
          of John
          A. Martell in the principal amount of $3,000,000. The balance of the outstanding
          loan obligation as of February 25, 2005 is $3,000,000. The original loan
          was
          made prior to January 1, 2004.

        


        Promissory
          Note, dated effective April 1, 2004, as amended February 21, 2005, executed
          by
          The Company in favor of John A. Martell in the principal amount of $321,000.
          The
          note evidences the balance of the outstanding loan obligation due to Mr.
          Martell
          as of February 25, 2005. 

        


        



        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        Section
          2(d)

        


        Subsidiaries
          and Investments

        


        
          	1.  	
                  HK
                    Engine Components, LLC

                


        

        
          	2.  	
                  HK
                    Machined Parts, LLC, HK Weston Properties, LLC and HK Cast Products,
                    LLC
                    are subsidiaries of HK Engine Components,
                    LLC.

                


        

        


        



        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        Schedule
          2(e)

        


        Financial
          Statements


        


        Following
          are the Company's unaudited management-compiled financial statements for
          the
          fiscal year ended December 31, 2004.


        


        Magnetech
          Integrated Services Corp. and Subsidiaries

        Condensed
          Consolidated Balance Sheet

        DECEMBER
          31, 2004

        


        
          	 ASSETS	 	 	 
	 	 	
                  2004

                	 
	
                  CURRENT
                    ASSETS

                	 	 	 	 	 
	
                  Cash

                	 	 	 	 	
                  $

                	
                  629,039

                	 
	
                  Accounts
                    receivable, less allowance for doubtful accounts of $36,336 for
                    2004 and
                    $149,473 for 2003

                	 	 	 	 	 	
                  5,394,254
                    

                	 
	
                  Inventories

                	 	 	 	 	 	
                  4,240,838
                    

                	 
	
                  Prepaid
                    expenses 

                	 	 	 	 	 	
                  232,448
                    

                	 
	
                  Other
                    Current Assets

                	 	 	 	 	 	
                  316,814
                    

                	 
	
                  Total
                    current assets

                	 	 	 	 	 	
                  10,813,393
                    

                	 
	 	 	 	 	 	 	 	 
	
                  PROPERTY
                    AND EQUIPMENT, net

                	 	 	 	 	 	
                  2,340,785
                    

                	 
	 	 	 	 	 	 	 	 
	
                  OTHER
                    ASSETS

                	 	 	 	 	 	 	 
	
                  Deposits

                	 	 	 	 	 	
                  43,538
                    

                	 
	
                  Patents
                    and trademarks, net

                	 	 	 	 	 	
                  3,159
                    

                	 
	
                  Covenant
                    not-to-compete, net

                	 	 	 	 	 	
                  0
                    

                	 
	
                  Other
                    assets

                	 	 	 	 	 	
                  32,112
                    

                	 
	
                  Total
                    other assets

                	 	 	 	 	 	
                  78,809
                    

                	 
	 	 	 	 	 	 	 	 
	
                  Total
                    Assets

                	 	 	 	 	
                  $

                	
                  13,232,987

                	 
	 	 	 	 	 	 	 	 
	
                   LIABILITIES
                    AND STOCKHOLDER'S
                    EQUITY

                	 	 	 	 	 	 	 
	
                  CURRENT
                    LIABILITIES

                	 	 	 	 	 	 	 
	
                  Cash
                    overdraft

                	 	 	 	 	
                  $

                	
                  520,125

                	 
	
                  Notes
                    payable, bank

                	 	 	 	 	 	
                  2,509,334
                    

                	 
	
                  Current
                    portion of long term debt

                	 	 	 	 	 	
                  0
                    

                	 
	
                  Advances
                    from Stockholder

                	 	 	 	 	 	
                  121,500
                    

                	 
	
                  Accounts
                    payable

                	 	 	 	 	 	
                  3,208,589
                    

                	 
	
                  Accrued
                    expenses

                	 	 	 	 	 	
                  724,493
                    

                	 
	
                  Other
                    Current Liabilities

                	 	 	 	 	 	
                  166,613
                    

                	 
	
                  Total
                    current liabilities

                	 	 	 	 	 	
                  7,250,654
                    

                	 
	 	 	 	 	 	 	 	 
	
                  LONG
                    TERM LIABILITIES

                	 	 	 	 	 	 	 
	
                  Long
                    term debt, bank

                	 	 	 	 	 	
                  0
                    

                	 
	
                  Long
                    term debt, Stockholder

                	 	 	 	 	 	
                  3,000,000
                    

                	 
	
                  Total
                    long term liabilities

                	 	 	 	 	 	
                  3,000,000
                    

                	 
	 	 	 	 	 	 	 	 
	
                  Total
                    liabilities

                	 	 	 	 	 	
                  10,250,654
                    

                	 
	 	 	 	 	 	 	 	 
	
                  COMMITMENTS

                	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
                  STOCKHOLDER'S
                    EQUITY

                	 	 	 	 	 	 	 
	
                  Capital
                    stock (note 1)

                	 	 	 	 	 	
                  4,300,000
                    

                	 
	
                  Authorized:
                    200,000,000 common shares, nil par value

                	 	 	 	 	 	 	 
	
                  20,000,000
                    preferred shares, nil par value

                	 	 	 	 	 	 	 
	
                  Issued
                    and outstanding at December 31, 2004:

                	 	 	 	 	 	 	 
	
                  97,000,000
                    common shares

                	 	 	 	 	 	 	 
	
                  Additional
                    paid in capital

                	 	 	 	 	 	
                  2,630,561
                    

                	 
	
                  Accumulated
                    deficit

                	 	 	 	 	 	
                  (3,948,228

                	
                  )

                
	
                  Total
                    Stockholder's equity

                	 	 	 	 	 	
                  2,982,333
                    

                	 
	 	 	 	 	 	 	 	 
	
                  Total
                    Liabilities and Stockholder's Equity

                	 	 	 	 	
                  $

                	
                  13,232,987

                	 


        

        


        



        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        Schedule
          2(e)

         

        Magnetech
          Integrated Services Corp. and Subsidiaries

        Condensed
          Consolidated Statements of Operations

        For
          the year ended December 31, 2004

        


        
          	
                  REVENUES

                	 	 	 
	
                  Product
                    sales

                	 	
                  $

                	
                  6,816,890

                	 
	
                  Service
                    revenue

                	 	 	
                  22,134,229
                    

                	 
	
                  Total
                    revenues

                	 	 	
                  28,951,119
                    

                	 
	 	 	 	 	 
	
                  COST
                    OF REVENUES

                	 	 	 	 
	
                  Product
                    sales

                	 	 	
                  4,787,498
                    

                	 
	
                  Service
                    revenue

                	 	 	
                  17,768,438
                    

                	 
	
                  Total
                    cost of revenues

                	 	 	
                  22,555,936
                    

                	 
	 	 	 	 	 
	
                  Gross
                    profit 

                	 	 	
                  6,395,183
                    

                	 
	 	 	 	 	 
	
                  Selling,
                    general and administrative expenses

                	 	 	
                  6,120,937
                    

                	 
	 	 	 	 	 
	
                  Income
                    (Loss) from operations

                	 	 	
                  274,246
                    

                	 
	 	 	 	 	 
	
                  Other
                    income (expense)

                	 	 	 	 
	
                  Interest
                    expense

                	 	 	
                  (182,793

                	
                  )

                
	
                  Other
                    income

                	 	 	
                  12,067
                    

                	 
	 	 	 	
                  (170,726

                	
                  )

                
	 	 	 	 	 
	
                  NET
                    INCOME (LOSS)

                	 	
                  $

                	
                  103,520

                	 


        

        


        



        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

          Schedule
            2(e)

           

          Magnetech
            Integrated Services Corp. and Subsidiaries

          Condensed
            Consolidated Statements of Cash Flows

          Year
            Ended December 31, 2004

          


          
            	 	 	 2004	 
	
                    OPERATING
                      ACTIVITIES

                  	 	 	 
	
                    Net
                      income (loss)

                  	 	
                    $

                  	
                    103,520

                  	 
	
                    Adjustments
                      to reconcile net loss to net cash utilized by operating
                      activities:

                  	 	 	 	 
	
                    Depreciation
                      and amortization

                  	 	 	
                    463,910
                      

                  	 
	
                    Bad
                      debt

                  	 	 	
                    20,924
                      

                  	 
	
                    Loss
                      (gain) on sale of assets

                  	 	 	
                    (1,800

                  	
                    )

                  
	
                    Non-cash
                      interest/rent

                  	 	 	
                    0
                      

                  	 
	
                    Changes
                      in:

                  	 	 	 	 
	
                    Accounts
                      receivable

                  	 	 	
                    (2,251,698

                  	
                    )

                  
	
                    Inventories

                  	 	 	
                    (1,467,212

                  	
                    )

                  
	
                    Prepaid
                      expenses 

                  	 	 	
                    (83,815

                  	
                    )

                  
	
                    Deposits
                      and other current assets

                  	 	 	
                    (327,226

                  	
                    )

                  
	
                    Accounts
                      payable

                  	 	 	
                    1,240,463
                      

                  	 
	
                    Accrued
                      expenses

                  	 	 	
                    269,457
                      

                  	 
	 	 	 	 	 
	
                    Net
                      cash utilized by operating activities

                  	 	 	
                    (2,033,477

                  	
                    )

                  
	 	 	 	 	 
	
                    INVESTING
                      ACTIVITIES

                  	 	 	 	 
	
                    Acquisition
                      of property and equipment

                  	 	 	
                    (929,981

                  	
                    )

                  
	
                    Proceeds
                      from disposal of property and equipment

                  	 	 	
                    1,800
                      

                  	 
	 	 	 	 	 
	
                    Net
                      cash utilized by investing activities

                  	 	 	
                    (928,181

                  	
                    )

                  
	 	 	 	 	 
	
                    FINANCING
                      ACTIVITIES

                  	 	 	 	 
	 	 	 	 	 
	
                    Cash
                      overdraft

                  	 	 	
                    43,088
                      

                  	 
	
                    Short
                      term borrowings, net

                  	 	 	
                    963,019
                      

                  	 
	
                    Advances
                      from Stockholder

                  	 	 	
                    101,121
                      

                  	 
	
                    Repayment
                      of long term debt, bank

                  	 	 	
                    (200,000

                  	
                    )

                  
	
                    Issue
                      of Common Stock

                  	 	 	
                    2,676,606
                      

                  	 
	
                    Borrowings
                      from Stockholder, long term debt

                  	 	 	
                    0
                      

                  	 
	 	 	 	 	 
	
                    Net
                      cash provided by financing activities

                  	 	 	
                    3,583,834
                      

                  	 
	 	 	 	 	 
	
                    INCREASE
                      IN CASH

                  	 	 	
                    622,176
                      

                  	 
	 	 	 	 	 
	
                    Cash,
                      beginning of year

                  	 	 	
                    6,863
                      

                  	 
	 	 	 	 	 
	
                    Cash,
                      end of year

                  	 	
                    $

                  	
                    629,039

                  	 


          

          


        

        


        
          	
                  SUPPLEMENTAL
                    DISCLOSURES OF CASH FLOW INFORMATION:

                	 	 	 
	 	 	 	 
	
                  Cash
                    paid during the year for:

                	 	 	 
	 	 	 	 
	
                  Interest

                	 	
                  $

                	
                  119,845

                	 
	 	 	 	 	 
	
                  SUPPLEMENTAL
                    DISCLOSURES OF NON-CASH FINANCING ACTIVITIES:

                	 	 	 	 
	
                  Credits
                    to additional paid in capital for interest/rent

                	 	
                  $

                	
                  63,000

                	 
	 	 	 	 	 
	
                  Stockholder
                    loan converted to additional paid in capital

                	 	
                  $

                	
                  1,740,703

                	 


        

        


        


        



        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        Schedule
          2(f)

        


        Absence
          of Changes

        


        
          	1.  	
                  See
                    Schedule 2(c) for debt obligations incurred by the
                    Company.

                


        

        


        
          	2.  	
                  On
                    January 5, 2005, the Company made an offer to purchase, through
                    its
                    subsidiaries, certain assets and assume certain liabilities of
                    Hatch &
                    Kirk, Inc. and HK Castings, Inc. A revised offer was made on
                    February 7,
                    2005. The Company expects to complete the transactions by March
                    31,
                    2005.

                


        

        


        


        


        



        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        Schedule
          2(g)

        


        Title

        


        The
          Bank
          has a security interest in all of the Company’s inventory, raw materials, work
          in process equipment, vehicles, furniture, fixture, accounts, general
          intangibles and other assets as evidenced by UCC-1 Financing Statement
          number
          200400010073835 filed
          with the Indiana Secretary of State.

        


        Toyota
          Motor Credit Corporation - secured interest in forklift Serial # 68232
          as
          evidenced by UCC-1 Financing Statement number 20020003805050 filed with
          the
          Indiana Secretary of State.

        


        Toyota
          Motor Credit Corporation - secured interest in forklift Serial # 77921
          as
          evidenced by UCC-1 Financing Statement number 20020003741433 and
          2004000005321946 filed with the Indiana Secretary of State.

        


        Citicorp
          Leasing, Inc. - lease dated 5/12/2004 for forklift Serial # P232L.

        


        Neopost
          Leasing - leased dated 1/20/2004 for postage meter Serial #
          1J35BAI.

        


        Baldor
          Electric Company - secured interest in all inventory, equipment and goods
          manufactured by or distributed by Baldor and all related accounts receivable
          as
          evidenced by UCC-1 Financing Statement number 200400011179661 filed with
          the
          Indiana Secretary of State. Secured interest is limited to outstanding
          obligations between Baldor and the Company.

        


        Doble
          Engineering Company capital lease dated 7/29/04 for relay test set (F2253
          with
          F2910 ad F2875).

        


        Railmotive,
          Inc. capital lease date 4/29/04 for Taylor fork lift Serial #
          C7P3343A.

        


        


        



        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        Schedule
          2(h)

        


        Proprietary
          Rights

        


        


        U.S.
          Patent No. 6,412,837 (U.S. Serial No. 09/749,366) is not in the name of
          the
          Company. The Company is attempting to obtain an assignment of the patent
          from
          its owners: Carlton G. Smith, Steven B. Begyn, David M. Futa, Lance E.
          Long and
          Jack Long. The Company is not currently using this patent, but may do so
          in the
          future.