Form of Stock Purchase Agreement between the registrant and the purchasers
      scheduled therein


    


    Exhibit
      10.4

    


    
      	
               

               

               

               

              STOCK
                PURCHASE AGREEMENT

               

              Between

               

              MAGNETECH
                INTEGRATED SERVICES CORP.

               

              and

               

              THE
                PURCHASER(S) LISTED ON

               

              SCHEDULE
                1 HERETO

               

               

               

              May
                __, 2004

               

               

            


    

     

    


    
      
        
        

      

      
        
          

        

      

      
        
        

      

    

    


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

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement, the Company
      desires to issue and sell to the Purchaser and the Purchaser desires to acquire
      from the Company [          ]
      shares of the Company’s Common Stock, (the “Common
      Stock”),
      no
      par value.

     

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

     

     

    SECTION
      I 

     

    CERTAIN
      DEFINITIONS


     

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

     

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

     

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

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

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

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

    


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

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

    


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

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

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

     

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

    


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

    


    “Escrow
      Agent”
      shall
      mean Wilmington
      Trust Company, a financial institution chartered under the laws of the State
      of
      Delaware.

    


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

    


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

    


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

    


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

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

    


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

    


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

    “Magnetech”
      means
      Magnetech Industrial Services
      Inc.,
subsidiary
      of the Company. 

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

    


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

    


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

    


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

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

    


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

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    


    
      


      “SEC”
        means
        the Securities and Exchange Commission.


    

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

    


    “Series
      A Preferred”
      means
      the Series A Convertible Redeemable Preferred Stock of Magnetech Industrial
      Services with a Stated Value of one dollar ($1) per share that is convertible
      into Common Stock.

    


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

    “Strasbourger”
      shall
      mean Strasbourger
      Pearson Tulcin Wolff Inc., a New York corporation.

    


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

    


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

     

     

    SECTION
      II

     

    PURCHASE
      AND SALE OF SHARES 

     

    2.1 Purchase
      and Sale; Purchase Price.

     

    (a) Subject
      to the terms and conditions set forth herein, the Company shall issue and sell
      and the Purchaser shall purchase [ ] shares of Common Stock (the “Shares”).


     

    (b) The
      purchase price for each Share shall be $0.20 (the “Per Share Consideration”).
      The Per Share Consideration multiplied by the number of Shares to be purchased
      by the Purchaser is referred to as the “Purchase
      Price.”

     

    2.2 Execution
      and Delivery of Documents; The Closing(s).

     

    (a) The
      Closing of the purchase and sale of the Shares (the “Closing”) shall take place
      after the execution and delivery of this Agreement and within three Business
      Days (but in no event later than five days) following the receipt of aggregate
      gross proceeds of $500,000 in payment for the Shares (the “Initial Closing
      Date”); provided however, after the Initial Closing Date, the Company may
      conduct one or more subsequent closing dates (each such date, including the
      Initial Closing Date, being a “Closing Date”). On the Closing
      Date(s):

     

    (i) the
      Company shall execute and deliver to the Purchaser the certificates representing
      the Shares; 

     

    (ii) 
      the
      Company and the Purchaser shall execute and deliver to each other an executed
      Registration Rights Agreement in the form annexed hereto as Exhibit
      A; and
      

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

     

    (b) Proceeds
      received in payment for the Shares shall be held in escrow by the Escrow Agent
      pending the Closing(s), and disbursed upon the Closing(s) in accordance with
      the
      Escrow Agreement between the Company, the Escrow Agent and Strasbourger attached
      hereto as Exhibit
      B.

    (c) If
      the
      Company does not receive executed Stock Purchase Agreements accompanied by
      aggregate gross proceeds of at least $500,000 in payment for the Shares, the
      Company shall not be obligated to conduct any Closings and all funds shall
      be
      returned, without interest, to the Purchasers in accordance with the terms
      of
      the Escrow Agreement.

     

     

    SECTION
      III 

    REPRESENTATIONS
      AND WARRANTIES

     

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

     

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

     

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

     

    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    


    applicable
      bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
      laws
      relating to, or affecting generally the enforcement of, creditors’ rights and
      remedies or by other equitable principles of general application.

     

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

     

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

     

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

     

    (f) Consents
      and Approvals.
      Except
      as specifically set forth in
      Schedule 3.1(f)
      and
      except as required under Regulation D and applicable Blue Sky laws, neither
      the
      Company nor any Subsidiary is required to obtain any consent, waiver,
      authorization or order of, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person,
      in
      connection with the execution, delivery and performance by the Company of this
      Agreement and each of the other Transaction Documents 

     

    


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    


    (together
      with the consents, waivers, authorizations, orders, notices and filings referred
      to in Schedule 3.1(f),
      the
“Required
      Approvals”).

     

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

     

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

     

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

     

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

     

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

     

    (a) Authority.
      The
      Purchaser has the requisite power and authority to enter into and to consummate
      the transactions contemplated hereby and by the other Transaction Documents
      and
      to otherwise carry out his obligations hereunder and thereunder. The execution
      and delivery of this Agreement and the acquisition of the Shares by the
      Purchaser (i) have been duly authorized by all necessary action on the part
      of
      the Purchaser, and (ii) in cases where Purchaser is not an individual, such
      execution, delivery and acquisition will not violate the provisions of the
      organizational documents of Purchaser or any agreement, obligation, law, rule,
      regulation or order to which Purchaser is a party or by which it is bound.
      If
      Purchaser is an 

     

    


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    


    individual,
      the Purchaser represents that he is at least twenty-one (21) years of age and
      has the legal capacity to enter into this Agreement, the address set forth
      Schedule
      1
      is
      Purchaser’s true and correct principal residence, and Purchaser has no present
      intention of relocating such principal residence to any other state or
      jurisdiction. This Agreement has been duly executed and delivered by the
      Purchaser and constitutes the valid and legally binding obligation of the
      Purchaser, enforceable against him in accordance with its terms, except as
      such
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium or similar laws relating to, or affecting generally
      the enforcement of, creditors rights and remedies or by other general principles
      of equity. 

     

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

     

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

     

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

     

    (e) Access
      to Information.
      The
      Purchaser acknowledges that he has been afforded (i) the opportunity to ask
      such
      questions as Purchaser has deemed necessary of, and to 

     

    


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    


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

     

    (f) Investment
      Decision.
      Except
      for the Disclosure Documents, the Purchaser has not received or relied on any
      representation or warranty from Magnetech or the Company or any of their
      officers, directors, employees, agents, attorneys or other representatives
      (including, but not limited to, any representations or warranties from
      Strasbourger Pearson Tulcin Wolff Inc.) in respect of Purchaser’s investment in
      the Shares, and has relied upon his own investigation in evaluating the risks
      and merits of making a decision to purchase the Shares. The Purchaser has had
      the opportunity to discuss the consequences of his investment decision with
      his
      legal and tax advisors. Without limiting the generality of the foregoing, and
      notwithstanding any other representation or warranty made by Magnetech or the
      Company, Purchaser acknowledges that neither Magnetech nor the Company has
      made
      any representation or warranty with respect to any projections, estimates,
      or
      budgets of future revenues, expenses, or expenditures or future results of
      operations. 

     

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

     

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

     

    “The
      shares represented by this certificate have not been registered under the
      federal Securities Act of 1933, as amended, or the securities law of any state.
      These shares may not be sold or offered for sale unless they have first been
      so
      registered or unless the Company receives a written opinion from legal counsel
      acceptable to the Company that such registration is not required.”

    


    (i) Reliance.
      The
      Purchaser understands and acknowledges that (i) the Shares being offered and
      sold to Purchaser hereunder are being offered and sold without registration
      

     

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    


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

     

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

     

     

    SECTION
      IV 

     

    OTHER
      AGREEMENTS OF THE PARTIES

     

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

     

    4.2 Notice
      of Certain Events.
      The
      Company shall, on a continuing basis prior to Closing, advise the Purchaser
      promptly after obtaining knowledge of, and, if requested by the Purchaser,
      confirm such advice in writing, of  any event that makes any statement
      of a
      material fact made by the Company in Section
      3.1
      or in
      the Disclosure Documents untrue or that requires the making of any additions
      to
      or changes in Section
      3.1
      or in
      the Disclosure Documents in order to make the statements therein, in the light
      of the circumstances under which they are made, not misleading. Purchaser agrees
      that the representations and warrantees made by Purchaser in Section 3.2 shall
      be true and correct on and as of the Closing Date as if made on and as of such
      Closing Date.

     

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

     

    4.4 Blue
      Sky Laws. The
      Company shall cooperate with the Purchaser in connection with the exemption
      from
      registration of the Shares under the securities or Blue Sky laws of such
      jurisdictions as the Purchasers may request; provided,
      however,
      that
      neither the Company nor its Subsidiaries shall be required in connection
      therewith to qualify as a foreign corporation where they are not now so
      qualified. The Company agrees that it will execute all necessary documents
      

     

    


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    


    and
      pay
      all necessary state filing or notice fees to enable the Company to qualify
      for
      an exemption from registration of the Shares and sell the Shares to the
      Purchasers.

     

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

     

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

     

    4.7 Indemnification.
      

     

    (a) Indemnification.

     

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

     

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

     

    (b) Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party promptly shall notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all fees and expenses incurred in connection with defense
      thereof; provided, that the failure of any Indemnified Party to give such notice
      shall not relieve the Indemnifying Party of its obligations or liabilities
      pursuant to this Agreement, except (and only) to the extent that it


     

    


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    


    shall
      be
      finally determined by a court of competent jurisdiction (which determination
      is
      not subject to appeal or further review) that such failure shall have
      proximately and materially adversely prejudiced the Indemnifying
      Party.

     

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

     

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

     

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

     

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

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    SECTION
      V 


     

    EVENT
      OF DEFAULT, LEGAL FEES AND DEFAULT INTEREST RATE

     

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

     

    5.2 “Event
      of
      Default”, wherever used herein, means the occurrence of any one of the following
      events:

     

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

     

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

     

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

     

     

    SECTION
      VI 

     

    MISCELLANEOUS

     

    6.1 Fees
      and Expenses.
      Except
      as set forth in this Agreement, each party shall pay the fees and expenses
      of
      its advisers, counsel, accountants and other experts, if any, and all other
      expenses incurred by such party incident to the negotiation, preparation,
      execution, delivery and 

     

    


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    


    performance
      of this Agreement. The Company shall pay all stamp and other taxes and duties
      levied in connection with the issuance of the Shares pursuant hereto. The
      Purchaser shall be responsible for any taxes payable by the Purchaser that
      may
      arise as a result of the investment hereunder or the transactions contemplated
      by this Agreement or any other Transaction Document. The Company shall pay
      all
      costs, expenses, fees and all taxes incident to and in connection with:
      (A) the issuance and delivery of the Shares, (B) the exemption
      from
      registration of the Shares for offer and sale to the Purchaser under the
      securities or Blue Sky laws of the applicable jurisdictions, and (C) the
      preparation of certificates for the Shares (including, without limitation,
      printing and engraving thereof), and (D) all fees and expenses of counsel
      and accountants of the Company.

     

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

     

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

     

    
      	 	
              If
                to the Company:

            	 	
              Magnetech
                Integrated Services Corp.

              1125
                S. Walnut Street

              South
                Bend, IN 46619

              Attn:  John
                A. Martell, President and CEO

              Tel:  (574)
                234-8131

              Fax:  (574)
                232-7648

            
	 	 	 	 
	 	
              With
                copies to:

            	 	
              Barnes
                & Thornburg

              600
                1st
                Source Bank Building

              100
                N. Michigan St.

              South
                Bend, IN 46601

              Attn:  Richard
                L. Mintz, Esq.

              Tel:  (574)  233-1171

              Fax:  (574)
                237-1125

            
	 	 	 	 
	 	
              If
                to the Purchaser:

               

            	 	
              See
                Schedule
                1
                attached hereto

               

            


    

    


     

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

    


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    6.11 Severability.
      In case
      any one or more of the provisions of this Agreement shall be invalid or
      unenforceable in any respect, the validity and enforceability of the remaining
      terms and provisions of this Agreement shall not in any way be affected or
      impaired thereby and the 

     

    


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    


    parties
      will attempt to agree upon a valid and enforceable provision which shall be
      a
      reasonable substitute therefore, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

     

    6.12 Limitation
      of Remedies.
      Notwithstanding anything to the contrary contained in this Agreement, with
      respect to claims by the Company or any person acting by or through the Company,
      or by the Purchaser or any person acting through the Purchaser, for remedies
      at
      law or at equity relating to or arising out of a breach of this Agreement,
      liability, if any, shall, in no event, include loss of profits or incidental,
      indirect, exemplary, punitive, special or consequential damages of any
      kind.

     

    


    [   SIGNATURE
      PAGE FOLLOWS   ]

     

    


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    


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

       

    

    
      	 	
              Company:

            
	 	 	 
	 	
              Magnetech
                Integrated Services Corp.

            
	 	 	 
	 	
              By:

            	 /s/
              John A. Martell
	 	
              Name:

            	 John
              A. Martell
	 	
              Title:

            	 President
&
              CEO
	 	 	 
	 	 
	 	
              Magnetech
                Industrial Services, Inc.

            
	 	 
	 	
              By:

            	 /s/  John
              A. Martell
	 	
              Name:

            	 John
              A. Martell
	 	
              Title:

            	 President
&
              CEO
	 	 
	 	
              With
                respect to Section 3 only.

            
	 	 	 
	 	 
	 	
              Purchaser:

            
	 	 	 
	 	
              By:

            	 
	 	
              Name:

            	 
	 	
              Title:

            	 


    

    


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    
      
        Schedule
          1

         

        Purchaser(s)

      

      
        
           

          MAGNETECH
            INTEGRATED SERVICES CORP.

        

        
          Private
            Placement of Common Stock


          
            	
                    Name

                  	 	
                    Closing
                      Date

                  	
                     

                  	
                    Amount

                  	
                     

                  	
                    Shares

                  	 
	 	 	 	 	 	 	 	 
	
                    Pershing
                      as Cust., IRA FBO Tomas D'Avanzo

                  	 	 	
                    6/3/2004

                  	 	
                    $

                  	
                    75,000.00

                  	 	 	
                    375,000

                  	 
	
                    Robert
                      H. Cole

                  	 	 	
                    6/3/2004

                  	 	
                    $

                  	
                    30,000.00

                  	 	 	
                    150,000

                  	 
	
                    David
                      L. Cohen

                  	 	 	
                    6/3/2004

                  	 	
                    $

                  	
                    55,000.00

                  	 	 	
                    275,000

                  	 
	
                    Frederick
                      B. Epstein

                  	 	 	
                    6/3/2004

                  	 	
                    $

                  	
                    100,000.00

                  	 	 	
                    500,000

                  	 
	
                    Jay
                      Shrager & Carole Shrager JTWROS

                  	 	 	
                    6/3/2004

                  	 	
                    $

                  	
                    45,000.00

                  	 	 	
                    225,000

                  	 
	
                    Gary
                      M. Glasscock

                  	 	 	
                    6/3/2004

                  	 	
                    $

                  	
                    25,000.00

                  	 	 	
                    125,000

                  	 
	
                    David
                      R. Cole

                  	 	 	
                    6/3/2004

                  	 	
                    $

                  	
                    30,000.00

                  	 	 	
                    150,000

                  	 
	
                    Reese
                      Cole Partnership Ltd.

                  	 	 	
                    6/3/2004

                  	 	
                    $

                  	
                    100,000.00

                  	 	 	
                    500,000

                  	 
	
                    James
                      J. Thompson, III

                  	 	 	
                    6/3/2004

                  	 	
                    $

                  	
                    40,000.00

                  	 	 	
                    200,000

                  	 
	
                    Matthew
                      A. Dancy

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    150,000.00

                  	 	 	
                    750,000

                  	 
	
                    Gregg
                      M. Gaylord & Linda S. Gaylord LV TR 1/18/99

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    50,000.00

                  	 	 	
                    250,000

                  	 
	
                    Dr.
                      Frank Lake, III

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    50,000.00

                  	 	 	
                    250,000

                  	 
	
                    Dr.
                      Leo Mazzocchi & Nancy T. Mazzocchi JTWROS

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    50,000.00

                  	 	 	
                    250,000

                  	 
	
                    Joseph
                      Rienzi & Judith Rienzi JTWROS

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    50,000.00

                  	 	 	
                    250,000

                  	 
	
                    Larry
                      Rosenfield

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    25,000.00

                  	 	 	
                    125,000

                  	 
	
                    Dr.
                      Gilbert R. Schorlemmer

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    20,000.00

                  	 	 	
                    100,000

                  	 
	
                    William
                      Sybesma

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    25,000.00

                  	 	 	
                    125,000

                  	 
	
                    William
                      Wisniewski & Jane Wisniewski JTWROS

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    20,000.00

                  	 	 	
                    100,000

                  	 
	
                    Joseph
                      Gazzola & Josephine Gazzola JTWROS

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    25,000.00

                  	 	 	
                    125,000

                  	 
	
                    Mollie
                      Ann Peters

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    15,000.00

                  	 	 	
                    75,000

                  	 
	
                    Richard
                      Campanella & Janis Campanella JTWROS

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    10,000.00

                  	 	 	
                    50,000

                  	 
	
                    Stanley
                      Merves

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    50,000.00

                  	 	 	
                    250,000

                  	 
	
                    Tom
                      Wrenn

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    25,000.00

                  	 	 	
                    125,000

                  	 
	
                    David
                      L. Cohen

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    145,000.00

                  	 	 	
                    725,000

                  	 
	
                    Lawrence
                      E. Jaffe Mon. Pen. Plan UAD 1/1/98

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    25,000.00

                  	 	 	
                    125,000

                  	 
	
                    RS
                      & VS Ltd.

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    50,000.00

                  	 	 	
                    250,000

                  	 
	
                    Somerset
                      Farms Profit Sharing Plan UA DTD 5/28/92

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    50,000.00

                  	 	 	
                    250,000

                  	 
	
                    Jay
                      Shrager & Carole Shrager JTWROS

                  	 	 	
                    7/8/2004

                  	 	
                    $

                  	
                    55,000.00

                  	 	 	
                    275,000

                  	 
	
                    Dr.
                      Domenic Strazzulla

                  	 	 	
                    10/20/2004

                  	 	
                    $

                  	
                    75,000.00

                  	 	 	
                    375,000

                  	 
	
                    Gregg
                      Goebel & Marilyn Goebel JTWROS

                  	 	 	
                    10/20/2004

                  	 	
                    $

                  	
                    10,000.00

                  	 	 	
                    50,000

                  	 
	
                    Stephen
                      T. Skoly, Jr.

                  	 	 	
                    10/20/2004

                  	 	
                    $

                  	
                    15,000.00

                  	 	 	
                    75,000

                  	 
	
                    SwissFinanz
                      Partner AG

                  	 	 	
                    10/20/2004

                  	 	
                    $

                  	
                    125,000.00

                  	 	 	
                    625,000

                  	 
	
                    Pershing
                      LLC as Cust., SEP FBO Henry Fortier, III

                  	 	 	
                    10/20/2004

                  	 	
                    $

                  	
                    23,700.00

                  	 	 	
                    118,500

                  	 
	
                    Jay
                      Shrager & Carole Shrager JTWROS

                  	 	 	
                    10/20/2004

                  	 	
                    $

                  	
                    50,000.00

                  	 	 	
                    250,000

                  	 
	
                    Garry
                      J. Fadale

                  	 	 	
                    10/20/2004

                  	 	
                    $

                  	
                    50,000.00

                  	 	 	
                    250,000

                  	 
	
                    Pershing
                      LLC as Cust., IRA FBO Thomas D'Avanzo

                  	 	 	
                    10/20/2004

                  	 	
                    $

                  	
                    25,000.00

                  	 	 	
                    125,000

                  	 
	
                    David
                      L. Cohen

                  	 	 	
                    10/20/2004

                  	 	
                    $

                  	
                    60,000.00

                  	 	 	
                    300,000

                  	 
	
                    Thomas
                      J. Keeney

                  	 	 	
                    10/20/2004

                  	 	
                    $

                  	
                    50,000.00

                  	 	 	
                    250,000

                  	 
	
                    William
                      Sybesma & Martina Jane Sybesma JTWROS

                  	 	 	
                    10/20/2004

                  	 	
                    $

                  	
                    50,000.00

                  	 	 	
                    250,000

                  	 
	
                    William
                      M. Greenfield

                  	 	 	
                    11/8/2004

                  	 	
                    $

                  	
                    10,000.00

                  	 	 	
                    50,000

                  	 
	
                    Jody
                      Nelson

                  	 	 	
                    11/8/2004

                  	 	
                    $

                  	
                    50,000.00

                  	 	 	
                    250,000

                  	 
	
                    Pershing
                      LLC - Cust., IRA FBO Henry Fortier, III, Roth Account

                  	 	 	
                    11/8/2004

                  	 	
                    $

                  	
                    1,300.00

                  	 	 	
                    6,500

                  	 
	
                    Garry
                      J. Fadale

                  	 	 	
                    11/8/2004

                  	 	
                    $

                  	
                    100,000.00

                  	 	 	
                    500,000

                  	 
	
                    Gregg
                      M. Gaylord & Linda S. Gaylord LV TR 1/18/99

                  	 	 	
                    11/8/2004

                  	 	
                    $

                  	
                    30,000.00

                  	 	 	
                    150,000

                  	 
	
                    Nasrollah
                      Jahdi

                  	 	 	
                    11/8/2004

                  	 	
                    $

                  	
                    30,000.00

                  	 	 	
                    150,000

                  	 
	
                    Jay
                      Shrager & Carole Shrager JTWROS

                  	 	 	
                    11/8/2004

                  	 	
                    $

                  	
                    30,000.00

                  	 	 	
                    150,000

                  	 
	
                    Frederick
                      B. Epstein

                  	 	 	
                    11/8/2004

                  	 	
                    $

                  	
                    25,000.00

                  	 	 	
                    125,000

                  	 
	
                    SwissFinanz
                      Partner AG

                  	 	 	
                    12/13/2004

                  	 	
                    $

                  	
                    25,000.00

                  	 	 	
                    125,000

                  	 
	
                    James
                      Ladner

                  	 	 	
                    12/13/2004

                  	 	
                    $

                  	
                    25,000.00

                  	 	 	
                    125,000

                  	 
	
                    Garry
                      J. Fadale

                  	 	 	
                    12/31/2004

                  	 	
                    $

                  	
                    300,000.00

                  	 	 	
                    1,500,000

                  	 
	 	 	 	 	 	 	 	 	 	 	 
	
                    TOTALS

                  	 	 	 	 	
                    $

                  	
                    2,550,000.00

                  	 	 	
                    12,750,000

                  	 


          

        

      

       

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    


    
      


      Schedule
        1.1



    Disclosure
      Documents

    


    
      
        

          MAGNETECH

           

          INTEGRATED
            SERVICES CORP.

           

          PRIVATE
            PLACEMENT MEMORANDUM

           

          Shares
            of Common Stock

          $.20
            per share

          


           

          Maximum
            Offering: $3,000,000

           

          Magnetech
            Integrated Services Corp. (the “Corporation”), is an Indiana corporation
            established as a holding company for Magnetech Industrial Services, Inc.
            (“MIS”
            or the “Company”). The Corporation proposes to offer for sale solely to
“accredited investors” (as such term is defined by Rule 501 promulgated under
            the Securities Act of 1933, as amended (the “Securities Act”)), up to 16,000,000
            shares of its common stock, no par value (the “Offering”). The Offering includes
            4,750,000 shares of common stock which will be issued upon the conversion
            of
            $750,000 of Series A Convertible Redeemable Preferred Stock of MIS (the
“Series
            A Stock”), purchased recently by investors (the “Bridge Financing”). This
            Offering will be made on a “best efforts, any or all” basis.

           

          The
            Corporation has appointed Strasbourger Pearson Tulcin Wolff Inc. as the
            placement agent for the Offering (the “Placement Agent”). The Corporation
            reserves the right to accept or reject subscriptions for shares for any
            reason
            or no reason. The Corporation has set a minimum offering of $500,000
            in
            aggregate proceeds. Assuming the maximum offering of $3,000,000 is fully
            subscribed, the Placement Agent will receive 4,500,000 warrants to purchase
            shares of the Corporation’s common stock at an exercise price of $0.0001 per
            share. In addition, the Placement Agent will receive a commission equal
            to 10%
            of the gross proceeds raised by the Corporation in connection with the
            Offering
            and 50,000 shares of the Corporation’s Common Stock. The Placement Agent also
            received a commission equal to 10% of the gross proceeds of the Bridge
            Financing.

           

          The
            offering period for this Offering (the “Offering Period”) shall commence on the
            day the offering documents are first made available to the Placement
            Agent by
            the Company for delivery in connection with the Offering (the “Delivery Date”)
            and shall continue until the earlier to occur of: (i) the sale of all
            of the
            shares of common stock offered; or (ii) 90 days following the Delivery
            Date. The
            day that the Offering Period terminates is hereinafter referred to as
            the
“Offering Termination Date.” The Offering Termination Date may be extended for
            up to 45 days at the option of the Placement Agent and the Company.

           

          The
            subscription price is payable upon submission to the Corporation of a
            fully
            completed and executed signature page to a stock purchase agreement (the
“Stock
            Purchase Agreement”) subscribing to purchase shares of common stock, along with
            duly completed and signed certain other documents as described in the
            subscription procedures section of this Memorandum. This is more particularly
            set forth in the instruction letter accompanying this memorandum. A copy
            of


           


          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          


          the
            form
            of the Stock Purchase Agreement is attached as Exhibit A to this memorandum
            and
            is incorporated by reference thereto.

           

          SPECULATIVE
            AND HIGH RISK

           

          THE
            SECURITIES OFFERED ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
            SEE “RISK
            FACTORS” PERSON OR ENTITY SHOULD INVEST IN THIS OFFERING UNLESS SUCH PERSON OR
            ENTITY CAN WITHSTAND THE ENTIRE LOSS OF HIS, HER OR ITS INVESTMENT.

           

          ACCREDITED
            INVESTORS

           

          THIS
            OFFERING IS BEING MADE IN RELIANCE UPON THE AVAILABILITY OF AN EXEMPTION
            FROM
            THE REGISTRATION PROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED
            (THE
“SECURITIES ACT”) AND APPLICABLE STATE SECURITIES LAWS FOR TRANSACTIONS NOT
            INVOLVING A PUBLIC OFFERING BY

           

          AN
            IS
            INTENDED THAT THIS OFFERING COMPLY WITH THE PROVISIONS OF SECTION 4(2)
            OF THE
            SECURITIES ACT AND RULE 506 OF REGULATION D, C.F.R. 250.501 et. seq.
            PROMULGATED
            BY THE SEC THEREUNDER, AND THAT THE UNITS BE OFFERED AND SOLD TO INVESTORS
            WHO
            ARE “ACCREDITED INVESTORS” WITHIN THE MEANING OF REGULATION D. PROSPECTIVE
            INVESTORS, ACCORDINGLY, WILL BE REQUIRED TO MAKE CERTAIN REPRESENTATIONS
            REGARDING THEIR RESPECTIVE QUALIFICATIONS AS ACCREDITED INVESTORS.

           

          CONFIDENTIALITY

           

          THE
            INFORMATION CONTAINED IN THIS PRIVATE PLACEMENT MEMORANDUM IS BEING FURNISHED
            TO
            PROSPECTIVE ACCREDITED INVESTORS SOLELY FOR SUCH INVESTORS’ CONFIDENTIAL USE AND
            WITH THE EXPRESS UNDERSTANDING THAT, WITHOUT PRIOR EXPRESS PERMISSION
            OF THE
            CORPORATION, SUCH PERSONS WILL NOT RELEASE THIS DOCUMENT OR DISCUSS THE
            INFORMATION CONTAINED HEREIN OR MAKE REPRODUCTIONS OF OR USE THIS PRIVATE
            PLACEMENT MEMORANDUM OR ANY DOCUMENTS SUPPLIED IN CONNECTION HEREWITH
            FOR ANY
            PURPOSE OTHER THAN AN EVALUATION OF A POTENTIAL INVESTMENT IN THE CORPORATION’S
            SECURITIES.

           

          UNREGISTERED
            SECURITIES

           

          THE
            SECURITIES BEING OFFERED HEREBY HAVE NOT BEEN REGISTERED OR APPROVED
            OR
            DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR THE SECURITIES
            REGULATORY AUTHORITY OF ANY STATE, NOR HAS THE COMMISSION OR ANY SUCH
            AUTHORITY
            PASSED UPON THE ACCURACY OR ADEQUACY OF THIS CONFIDENTIAL MEMORANDUM.
            ANY
            REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

           


          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          


          LIMITATION
            ON RESALE

           

          THE
            SECURITIES BEING OFFERED HEREBY MAY NOT BE RESOLD, TRANSFERRED OR OTHERWISE
            DISPOSED OF BY AN INVESTOR WITHOUT OUR CONSENT AND UNLESS, IN THE OPINION
            OF
            COUNSEL SATISFACTORY TO US, REGISTRATION UNDER APPLICABLE FEDERAL AND
            STATE
            SECURITIES LAWS IS NOT REQUIRED, OR UNLESS SUCH DISPOSITION IS MADE IN
            COMPLIANCE WITH SUCH REGISTRATION REQUIREMENTS.

           

          OFFERING
            SUBJECT TO CHANGE

           

          THIS
            OFFERING IS SUBJECT TO WITHDRAWAL, CANCELLATION OR MODIFICATION BY THE
            CORPORATION WITHOUT NOTICE. THE CORPORATION RESERVES THE RIGHT, IN ITS
            SOLE
            DISCRETION, TO REJECT ANY SUBSCRIPTION, IN WHOLE OR IN PART, FOR ANY
            REASON OR
            TO ALLOT ANY SUBSCRIBER LESS THAN THE NUMBER OF UNITS SUBSCRIBED
            FOR.

           

          LIMITATION
            ON OFFERS AND SALES

           

          THIS
            PRIVATE PLACEMENT MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR
            THE
            SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES
            OFFERED
            HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
            AN OFFER
            TO BUY SUCH SECURITIES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER
            OR
            SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
            OR
            SOLICITATION IS NOT QUALIFIED TO DO SO.

           

          LIMITATION
            OF INFORMATION AND REPRESENTATIONS

           

          NO
            ADVERTISING OR OFFERING LITERATURE IN ANY FORM MAY BE EMPLOYED IN THE
            OFFERING
            OF THE UNITS, EXCEPT FOR THIS PRIVATE PLACEMENT PERSON (OTHER THAN OUR
            OFFICERS
            AND DIRECTORS) IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
            REPRESENTATION NOT CONTAINED IN THIS PRIVATE PLACEMENT MEMORANDUM AND,
            IF GIVEN
            OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON.
            NEITHER
            THE DELIVERY OF THIS PRIVATE PLACEMENT MEMORANDUM NOR ANY SALES MADE
            HEREUNDER,
            UNDER ANY CIRCUMSTANCES, SHALL CREATE AN IMPLICATION THAT THERE HAS BEEN
            NO
            CHANGE IN THE INFORMATION CONTAINED HEREIN SINCE THE DATE HEREOF. HOWEVER,
            IN
            THE EVENT OF ANY MATERIAL CHANGE, THIS PRIVATE PLACEMENT MEMORANDUM WILL
            BE
            AMENDED OR SUPPLEMENTED ACCORDINGLY AND RECIRCULATED.

           

          THE
            CONTENTS OF THIS MEMORANDUM ARE NOT TO BE CONSTRUED AS TAX, LEGAL, INVESTMENT
            OR
            OTHER ADVICE. EACH INVESTOR SHOULD CONSULT HIS OWN COUNSEL, ACCOUNTANT,
            OR TAX
            OR BUSINESS ADVISOR AS TO TAX, LEGAL, AND RELATED MATTERS CONCERNING
            THIS
            INVESTMENT.

           


          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          


          FORWARD
            LOOKING STATEMENTS

           

          CERTAIN
            STATEMENTS CONTAINED IN THIS MEMORANDUM, INCLUDING, WITHOUT LIMITATION,
            STATEMENTS CONTAINING THE WORDS “BELIEVES,”“ANTICIPATES,”“INTENDS,”“EXPECTS,”
            AND WORDS OF SIMILAR IMPORT, CONSTITUTE “FORWARD-LOOKING STATEMENTS.” THESE
            STATEMENTS MAY INCLUDE BELIEFS REGARDING TECHNOLOGIES, CAPITAL STRUCTURE,
            OR
            OTHER FINANCIAL ITEMS, STATEMENTS REGARDING THE PLANS AND OBJECTIVES
            OF THE
            CORPORATION OR THE COMPANY FOR FUTURE OPERATIONS, AND STATEMENTS OF THE
            ASSUMPTIONS UNDERLYING OR RELATING TO ANY OF THE FOREGOING STATEMENTS
            WHICH ARE
            OTHER THAN STATEMENTS OF HISTORICAL FACT. INVESTORS ARE CAUTIONED THAT
            ANY SUCH
            FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND
            INVOLVE
            RISKS AND UNCERTAINTIES.

           

          IN
            ADDITION, ALTHOUGH THE STATEMENTS CONTAINED HEREIN ARE BASED ON INFORMATION
            BELIEVED BY THE CORPORATION AND THE COMPANY TO BE RELIABLE, NO WARRANTY
            CAN BE
            MADE THAT CIRCUMSTANCES HAVE NOT CHANGED SINCE SUCH DATE.

           

          ADDITIONAL
            INFORMATION

           

          PROSPECTIVE
            INVESTORS MAY, IF THEY SO DESIRE, MAKE INQUIRIES OF THE COMPANY WITH
            RESPECT TO
            THE COMPANY’S BUSINESS OR ANY OTHER MATTER RELATING TO THE CORPORATION OR THE
            COMPANY AND AN INVESTMENT IN THE SECURITIES BEING OFFERED HEREBY, AND
            MAY OBTAIN
            ANY ADDITIONAL INFORMATION WHICH SUCH PERSONS DEEM TO BE NECESSARY IN
            CONNECTION
            WITH MAKING AN INVESTMENT DECISION IN ORDER TO VERIFY SUCH INFORMATION
            (TO THE
            EXTENT THAT THE COMPANY POSSESSES SUCH INFORMATION OR CAN ACQUIRE IT
            WITHOUT
            UNREASONABLE EFFORT OR EXPENSE). IN CONNECTION WITH SUCH INQUIRY, ANY
            DOCUMENTS
            WHICH ANY POTENTIAL INVESTOR REASONABLY WISHES TO REVIEW WILL BE MADE
            AVAILABLE
            FOR INSPECTION AND COPYING OR PROVIDED UPON REQUEST, SUBJECT TO THE POTENTIAL
            INVESTOR’S AGREEMENT TO MAINTAIN SUCH INFORMATION IN CONFIDENCE AND TO RETURN
            THE SAME TO THE CORPORATION PROMPTLY UPON REQUEST OR IF SUCH PERSON DOES
            NOT
            PURCHASE ANY OF THE SECURITIES OFFERED HEREBY. ANY SUCH REQUESTS FOR
            ADDITIONAL
            INFORMATION OR DOCUMENTS SHOULD BE MADE IN WRITING TO THE CORPORATION,
            AS
            FOLLOWS: ATTENTION MICHAEL KUZMITS, AT 1125 S. WALNUT STREET, SOUTH BEND,
            IN
            46619, FAX (1) 574-234-8131.

           


          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          


          Placement
            Agent

          Strasbourger
            Pearson Tulcin Wolff Inc.

          Member
            of the New York Stock Exchange

          Web
            Address: www.sptw.com

          The
            date of this confidential memorandum is May_, 2004

           


          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          


          MAGNETECH
            INTEGRATED SERVICES CORP.

           

          Private
            Placement Memorandum

           

          Shares
            of Common Stock

           

          Table
            of Contents

           

          
            	
                    SUMMARY

                  	
                    7

                  
	
                    SUMMARY
                      TERMS OF THE PRIVATE PLACEMENT

                  	
                    9

                  
	
                    BUSINESS
                      OF THE COMPANY

                  	
                    11

                  
	
                    COMPANY
                      OVERVIEW AND HISTORY

                  	
                    11

                  
	
                    PRODUCTS
                      AND SERVICES

                  	
                    11

                  
	
                    MARKETPLACE

                  	
                    12

                  
	
                    COMPETITION

                  	
                    13

                  
	
                    GEOGRAPHICAL
                      FOOTPRINT

                  	
                    14

                  
	
                    VALUE
                      PROPOSITION

                  	
                    14

                  
	
                    MARKETING
                      AND SALES STRATEGY

                  	
                    15

                  
	
                    RELATED
                      PARTY TRANSACTIONS

                  	
                    15

                  
	
                    LEADERSHIP

                  	
                    16

                  
	
                    FINANCIAL
                      INFORMATION

                  	
                    18

                  
	
                    CAPITALIZATION
                      OF THE CORPORATION

                  	
                    18

                  
	
                    USE
                      OF PROCEEDS

                  	
                    18

                  
	
                    FINANCIAL
                      STATEMENTS

                  	
                    18

                  
	
                    RISK
                      FACTORS

                  	
                    20

                  
	
                    BUSINESS
                      RISKS

                  	
                    20

                  
	
                    OFFERING
                      RISKS

                  	
                    23

                  
	
                    PLACEMENT
                      AGENT

                  	
                    25

                  
	
                    INVESTOR
                      SUITABILITY STANDARDS

                  	
                    25

                  


          

          


          
            	
                    APPENDIX
                      A

                  	 	
                    UNAUDITED
                      FINANCIAL STATEMENT

                  
	
                    EXHIBIT
                      A

                  	 	
                    FORM
                      OF STOCK PURCHASE AGREEMENT

                  
	
                    EXHIBIT
                      B

                  	 	
                    FORM
                      OF ESCROW AGREEMENT

                  


          


          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          


          MAGNETECH
            INTEGRATED SERVICES CORP.

           

          SUMMARY

           

          This
            is a
            summary of the information contained in this Memorandum. You should read
            carefully the entire Memorandum, including the “Risk Factors” section and all
            appendices and exhibits to this Memorandum, to understand fully the Company’s
            business operations, the Offering and the risks associated with an investment
            in
            the Corporation’s shares of common stock.

           

          THE
            COMPANY

           

          Magnetech
            Integrated Services Corp. (the “Corporation”) is the holding company for
            Magnetech Industrial Services, Inc. (“MIS” or the “Company”). MIS was founded in
            July 2000 with the purchase of the electric motor and magnet assets of
            Delta
            Star Electric, Inc., (“Delta Star”), an electric motor and magnet shop in South
            Bend, Indiana. The goal was to build a “Best in Class” industrial services
            company to provide “Innovative Service Solutions”. In August 2001, MIS acquired
            the operating assets of Meade Industrial Services, which added locations
            in
            Hammond, Indiana and Boardman, Ohio. In March 2002, additional locations
            were
            added through the acquisition of three Grand Eagle shops based in Indianapolis,
            Indiana, Huntington, West Virginia and Mobile, Alabama. In March 2003,
            MIS
            started internally the Power Systems Group which created the Merrillville,
            Indiana location.

           

          The
            Company operates with five primary business groups at this time.

           

          · Motor
            Group

          · Magnet
            Group

          · Power
            Systems Group

          · Field
            Service Group

          · Education
            and Training Group

           

          MIS
            has
            one wholly owned subsidiary, Martell Electric LLC (“ME” or the “Subsidiary”),
            formed in 2001. This Subsidiary became active in mid-2002 to take advantage
            of
            the Company’s expertise in electrical contracting. Although revenues were not
            material in 2003, ME is expected to grow in 2004 and beyond. ME provides
            a wide
            range of electrical contracting services, mainly to industrial, commercial
            and
            institutional customers in the Indiana area.

           

          The
            Motor
            Group provides maintenance and repair services to the electric motor
            industry,
            including AC and DC motors. The Company’s shops service a range of major
            industries, including steel, railroad, marine, petrochemical, pulp and
            paper,
            mining, automotive and utilities. The largest motor repaired in an MIS
            shop to
            date has been a 10,000 HP AC unit. As part of the motor repair shops,
            services
            are also provided for the repair of gear boxes, pumps and other rotating
            equipment.

           

          The
            Magnet Group repairs and manufactures industrial lifting magnets. The
            Company
            believes based on industry experience and market information it is one
            of the
            largest magnet repair operations in the United States and one of the
            top three
            manufacturers of industrial lifting magnets in the U.S. In 2003, the
            Magnet
            Group expanded its business and began exporting 

           


          
            
              
              

            

            
              7

              
                

              

            

            
              
              

            

          


          magnets
            to Europe, Asia and South America. MIS holds three US patents including
            two
            industrial lifting magnet products not yet in operation. One of these
            products
            is, however, in production and is expected to be in operation later in
            2004. The
            other patent relates to a magnetic grapple design which is expected to
            be
            available for production within the next 18 months and in operation shortly
            thereafter.

           

          The
            Power
            Systems Group provides engineering and repair services for electrical
            power
            distribution systems within industrial plants and commercial facilities.
            This
            includes the repair and maintenance of electrical switchgear and substations
            and
            routine circuit breaker testing, cleaning and upgrading. The Company
            prepares
            power surveys and engineering studies to address potential electrical
            problems
            within a facility or process system.

           

          The
            Field
            Service Group provides on-site services in all areas of the Company’s business.
            This group offers predictive and preventative maintenance programs and
            the
            MagnetracTM asset management program. Predictive maintenance services
            include
            the following areas: vibration analysis and trending, thermographic imaging
            and
            analysis, tribology and oil particle analysis and trending, ultrasonic
            testing
            and motor circuit evaluation and analysis. MIS believes it has technologically
            advanced personnel and equipment available for these services. Preventative
            maintenance services include services done on-site to help extend equipment
            reliability and life span. The MagnetracTM asset management program provides
            a
            monitoring service to help with predictive and preventative maintenance
            for
            electro liftinY magnets and associated systems. During 2004, the Company
            intends
            to adapt further the Magnetrac m program for motors and other equipment
            that
            would be suitable to tracking purposes along with predictive and preventative
            maintenance.

           

          The
            Education and Training Group provides custom and standardized training
            in the
            area of industrial maintenance. The Company has a multi-craft training
            program
            that is recognized by Vincennes University in Vincennes, Indiana, that
            allows
            participants to earn college credits for approved programs offered by
            the
            Company. Customized training programs and skills testing programs are
            also
            provided in this area. The Education and Training group exemplifies the
            Company’s commitment to offering in-house training for its own
            personnel.

           

          In
            addition to the five primary groups of service, MIS also offers miscellaneous
            services in other synergistic areas such as:

           

          Custom
            machining;

          Transformer
            repair;

          Generator
            repair;

          Pump
            repair;

          Shaft
            Assemblies and Rolls; and

          Brake
            Assemblies.


          
            
              
              

            

            
              8

              
                

              

            

            
              
              

            

          


          The
            Motor, Power System and Field Service Group customers are located primarily
            east
            of the Mississippi River where the Company’s service centers are located. The
            Company’s Magnet Group customers are located throughout the United
            States.

           

          The
            Company markets its products and services through internal and external
            sales
            forces combined with a number of resellers. There can be no assurance
            that the
            Company will achieve successful and profitable results from its sales
            and
            marketing efforts.

           

          RECENT
            DEVELOPMENTS

           

          Magnetech
            Integrated Services Corp. was established in April, 2004 as a holding
            company
            for MIS.

           

          On
            March
            3, 2004, MIS completed a Bridge Financing, raising gross proceeds (before
            Placement Agent fees and associated expenses) of $750,000 through the
            issuance
            of 750,000 shares of Series A Stock, and providing MIS with additional
            working
            capital. Each share of Series A Stock will convert automatically into
            6.33333
            shares of common stock in the Corporation upon completion of the Offering.
            No
            dividends are payable on the Series A Stock. In the event that the Offering
            is
            not completed by March 2, 2005, MIS will redeem all of the Series A Stock
            at the
            stated value of $1 per share, plus interest at the annual rate of 5 3/8%.
            In
            addition, each share of Series A Stock will convert into 1.33333 shares
            of
            common stock of the Corporation.

           

          PRINCIPAL
            OFFICES

           

          Corporate
            offices of the Company and the Corporation are located at 1125 S. Walnut
            Street,
            South Bend, Indiana 46619, Tel: 574 234 8131, Fax: 574 232 7648. The
            Company
            operates from locations in Indiana (South Bend, Hammond, Indianapolis
            and
            Merrilville), Ohio (Boardman), Alabama (Mobile) and West Virginia
            (Huntington).

           

          EMPLOYEES

           

          The
            Company and the Corporation presently have approximately 190 employees.
            The
            number of employees fluctuates based on actual work load. The number
            of
            employees has grown from 66 at the end of 2001, to 123 at the end of
            2002, to
            165 at the end of 2003. Approximately half of the employees participate
            in
            collective bargaining agreements. The employees that participate in the
            collective bargaining arrangements are spread among four different agreements.
            There have been no work stoppages, slowdowns or strikes with any of the
            union
            locals or employees in the Company’s history.

           

          SUMMARY
            TERMS OF THE PRIVATE PLACEMENT

           

          
            	
                    Instrument:

                     

                  	
                    Up
                      to 16,000,000 shares of common stock of the Corporation (the
“Common
                      Stock”) (including 4,750,000 shares of Common Stock that will be
                      issued
                      upon the conversion of the 750,000 shares of Series A Stock.
                      This
                      conversion will occur automatically upon the sale of the Maximum
                      Offering.)

                     

                  


          


          
            
              
              

            

            
              9

              
                

              

            

            
              
              

            

          


          


          
            	
                    Offering:

                     

                  	
                    $3,000,000
                      (inclusive of the $750,000 principal amount of Series A Stock
                      sold in a
                      Bridge Financing).

                     

                  
	
                    Purchase
                      Price:

                     

                  	
                    $0.20
                      per share of Common Stock.

                     

                  
	
                    Placement
                      Agent:

                     

                  	
                    Strasbourger
                      Pearson Tulcin Wolff Inc.

                     

                  
	
                    Offering
                      Period:

                     

                  	
                    The
                      Offering Period shall commence with the Delivery Date and shall
                      continue
                      until the earlier to occur of (i) the sale of the Maximum Offering,
                      or
                      (ii) 90 days following the Delivery Date. The Offering Termination
                      Date
                      may be extended for up to 45 days at the option of the Placement
                      Agent and
                      the Corporation.

                     

                  
	
                    Minimum
                      Offering:

                     

                  	
                    $500,000
                      in aggregate proceeds.

                     

                  
	
                    Method
                      of Subscribing:

                     

                  	
                    Prospective
                      investors desiring to purchase shares of Common Stock are required
                      to
                      complete and execute the signature page of the Stock Purchase
                      Agreement
                      and deliver the executed Stock Purchase Agreement, together
                      with an amount
                      equal to the total purchase price for the shares of Common
                      Stock the
                      prospective investor is subscribing to purchase and certain
                      other
                      documents, to the Placement Agent. This is more particularly
                      set forth in
                      the instruction letter accompanying this memorandum. The form
                      of Stock
                      Purchase Agreement is attached as Exhibit A to this
                      Memorandum.

                     

                  
	
                    Registration
                      Rights:

                     

                  	
                    Customary
                      “Piggyback” registration rights as well as mandatory registration within
                      180 days following an initial public offering of the
                      Corporation.

                     

                  
	
                    Suitability:

                     

                  	
                    The
                      offering of the shares of Common Stock is being made only to
                      accredited
                      investors, as that term is defined in the Securities Act and
                      is suitable
                      only for investors who have no need for liquidity and can afford
                      to lose
                      their entire investment. See “Investor Suitability
                      Standards.”

                     

                  
	
                    Restrictions
                      on Transfer:

                     

                  	
                    The
                      shares of Common Stock will not be registered under the Securities
                      Act and
                      the certificates representing such shares will contain a legend
                      restricting their resale, transfer, or other disposition unless
                      and until
                      they have been registered under the Securities Act or the Corporation
                      has
                      received an opinion of counsel that registration is not required.
                      Furthermore, there is not currently and may never be a public
                      market for
                      the Corporation’s shares.

                     

                  
	
                    Risk
                      Factors:

                     

                  	
                    An
                      investment in the shares of Common Stock involves a high degree
                      of risk.
                      See “Risk Factors.”

                     

                  


          

           


          
            
              
              

            

            
              10

              
                

              

            

            
              
              

            

          


          BUSINESS
            OF THE COMPANY

           

          COMPANY
            OVERVIEW AND HISTORY

           

          The
            Corporation is the holding company for MIS. MIS was founded in July 2000
            with
            the purchase of the electric motor and magnet assets of Delta Star. The
            goal was
            to build a “Best in Class” industrial services company to provide “Innovative
            Service Solutions”. In August 2001, MIS acquired the operating assets of Meade
            Industrial Services, which added locations in Hammond, Indiana and Boardman,
            Ohio. In March 2002, additional locations were added through the acquisition
            of
            three Grand Eagle shops based in Indianapolis, Indiana, Huntington, West
            Virginia and Mobile, Alabama. In March 2003, MIS started internally the
            Power
            Systems Group which created the Merrillville, Indiana location.

           

          The
            Company operates five primary business groups at this time.

           

          · Motor
            Group

          · Magnet
            Group

          · Power
            Systems Group

          · Field
            Service Group

          · Education
            and Training Group

           

          In
            addition, MIS has one wholly owned subsidiary, Martell Electric LLC (“ME” or the
“Subsidiary”). This Subsidiary was formed in 2001, but only became active in
            mid-2002 to take advantage of the Company’s expertise in electrical contracting.
            Although revenues were not material in 2003, ME is expected to grow in
            2004 and
            beyond. ME provides a wide range of electrical contracting services,
            mainly to
            industrial, commercial and institutional customers in the Indiana
            area.

           

          PRODUCTS
            AND SERVICES

           

          The
            Motor
            Group provides maintenance and repair services in the electric motor
            industry,
            including both AC and DC motors. The Company’s shops service a range of major
            industries, including steel, railroad, marine, petrochemical, pulp and
            paper,
            mining, automotive and utilities. The largest motor repaired in an MIS
            shop to
            date has been a 10,000 HP AC unit. As part of the motor repair shops,
            services
            are also provided for the repair of gear boxes, pumps and other rotating
            equipment.

           

          The
            Magnet Group repairs and manufactures industrial lifting magnets. The
            Company
            believes, based on industry experience and market information, it is
            one of the
            largest magnet repair operations in the United States and one of the
            top three
            manufactures of industrial lifting magnets in the U.S. In 2003, the Magnet
            group
            expanded its business and began exporting magnets to Europe, Asia and
            South
            America. MIS holds three US patents, including two industrial lifting
            magnet
            products not yet in operation. One of these products is, however, in
            production
            and is expected to be in operation later in 2004. The other patent relates
            to a
            magnetic grapple design which is expected to be available for production
            within
            the next 18 months and in operation shortly thereafter

           


          
            
              
              

            

            
              11

              
                

              

            

            
              
              

            

          


          The
            Power
            Systems Group provides engineering and repair services for the electrical
            power
            distribution system within industrial plants and commercial facilities.
            This
            includes the repair and maintenance of electrical switchgear and substations
            and
            routine circuit breaker testing, cleaning and upgrading. The Company
            prepares
            power surveys and engineering studies to address potential electrical
            problems
            within a facility or process system.

           

          The
            Field
            Service Group provides on-site services in all areas of the Company’s business.
            This group offers predictive and preventative maintenance programs together
            with
            the MagnetracTM asset management program. Predictive maintenance services
            include the following areas: vibration analysis and trending, thermographic
            imaging and analysis, tribology and oil particle analysis and trending,
            ultrasonic testing and motor circuit evaluation and analysis. MIS believes
            it
            has technologically advanced personnel and equipment available for these
            services. Preventative maintenance services include services done on-site
            to
            help extend equipment reliability and life span. The MagnetracTM asset
            management program provides a monitoring service to help with predictive
            and
            preventative maintenance for electro liftin magnets and associated systems.
            During 2004, the Company intends to adapt further the Magnetrac program
            for
            motors and other equipment that would be suitable to tracking purposes
            along
            with predictive and preventative maintenance.

           

          The
            Education and Training Group provide custom and standardized training
            in the
            area of industrial maintenance. The Company has a multi-craft training
            program
            that is recognized by Vincennes University in Vincennes, Indiana, that
            allows
            participants to earn college credits for approved programs offered by
            the
            Company. Customized training programs and skills testing programs are
            also
            provided in this area. The Education and Training group exemplifies the
            Company’s commitment to offering in-house training for its own
            personnel.

           

          In
            addition to the five primary groups of service, MIS also offers miscellaneous
            services in other synergistic areas such as: (i) Custom machining, (ii)
            Transformer repair, (iii) Generator repair, (iv) Pump repair, (v) Shaft
            Assemblies and Rolls and (vi) Brake Assemblies.

           

          The
            Motor, Power System and Field Service Group customers are located primarily
            east
            of the Mississippi River where the Company’s service centers are located. The
            Company’s Magnet Group customers are located throughout the United
            States.

           

          MARKETPLACE

           

          Based
            on
            industry statistics and internal research, the Company believes that
            the size of
            the US markets in which the Company operates could be worth as much as
            $24bn per
            year. Having achieved just over $15m in revenue in 2003, the Company
            thus
            believes it has significant market share to aim for.

           

          The
            magnet market is linked largely to the steel industry, and operates in
            the areas
            of manufacturing, service or scrap. The recent consolidation in the steel
            industry seems to have subsided, and the oversupply of used magnets on
            the
            market appears to have been absorbed. Given its high fixed cost base
            and the
            significant adverse consequences of downtime, this industry attaches
            more
            importance than most to the increasing trend of preventative and 

           


          
            
              
              

            

            
              12

              
                

              

            

            
              
              

            

          


          predictive
            maintenance. Not only does this benefit the customer in lower overall
            costs, it
            allows the Company to better plan its workloads and efficiencies.

           

          The
            motor
            market is the largest segment in which the Company operates. According
            to recent
            statistics from the US Department of Energy, in US industry, process
            motor
            systems account for 63% of electricity use and HVAC motor systems account
            for
            6%. Therefore, all types of motor systems account for 69% of all industrial
            electricity consumption in the United States. According to the Current
            Industrial Reports MA335H by the Department of Commerce, Bureau of Census,
“the
            quantity of all motor and generator sales in the US was estimated at
            340 million
            units with a total value of almost $13bn.... Statistics on electric motor
            rewinding and repair are not as readily available as those for new motor
            sales
            because of the nature of the motor repair industry. Larger motors are
            often
            rewound several times, while smaller motors are usually replaced with
            new ones
            because of the relative cost of rewinding versus replacement. In 1999,
            the motor
            rewind market was estimated at 2.4 million units and $1.6 bn in
            revenue.”

           

          The
            Company operates in a variety of industries, including transportation,
            manufacturing and refining.

           

          Field
            service work is carried out generally for industrial companies. Increasingly
            these companies are looking at out-sourcing as a way of reducing overall
            costs,
            as well as providing additional flexibility at times of peak work loads.
            This
            trend provides additional opportunities for the Company as it grows and
            is able
            to offer extended geographical coverage. Power systems group work is
            conducted
            either on-site or in-house.

           

          The
            Company’s largest customers in 2003 included International Steel Group, Marathon
            Ashland Petroleum, CSX Transportation, USS Corporation and Union Pacific
            Railroad.

           

          COMPETITION

           

          The
            level
            of competition the Company faces varies depending on the Company’s business
            group. In magnets, there are four other principal suppliers of magnets
            based in
            the US, including Walker, Ohio Magnets, Winkle and CMT. The Company believes
            that it is one of the largest magnet repair operations in the United
            States and
            one of the top three manufactures of industrial lifting magnets.

           

          In
            motors, the largest single supplier of new motors is believed to be General
            Electric. In addition, they have a national network of motor repair centers.
            However, in general the industry is highly fragmented. According to a
            report by
            Indian River Consulting Group issued in June 2003, (The State of the
            EASA
            Industry - EASA - Electrical Apparatus Service Association), there were
            2,137
            active EASA service centers in the US. The total number is thus likely
            to be
            considerably higher because there are service centers that do not belong
            to
            EASA. Of these, it was estimated that only 5% (106) had revenue in excess
            of
            $15m, and 80% had revenue less than $5m. In the same report, a survey
            found that
            the most important criteria for doing business with certain vendors was,
            in
            order of importance, (i) Customer Service, (ii) Delivery, (iii) Price,
            (iv)
            Service capabilities and (v) Brands carried. It is the combination of
            these
            factors that the Company believes has been important in its success to
            date and
            how it differentiates itself in the market place as well as the increasing
            geographical footprint of the Company.

           


          
            
              
              

            

            
              13

              
                

              

            

            
              
              

            

          


          The
            Company also benefits from dealing with approximately 250 customers with
            currently active accounts, with the top 10 customers accounting for just
            over
            51% of total revenue in 2003. No one customer accounted for more than
            10% of the
            Company’s total revenue.

           

          GEOGRAPHICAL
            FOOTPRINT

           

          With
            its
            head office and main facility located in South Bend, Indiana, the Company
            operates from seven locations in total including operations in Hammond,
            Indianapolis and Merrilville in Indiana, Boardman (Ohio), Huntington
            (West
            Virginia) and Mobile (Alabama). These locations provide good coverage
            across the
            Midwest, although it is planned that more locations will be added as
            and when
            opportunities arise. The customer base served by these locations varies
            depending on the business group within which they operate.

           

          Within
            magnets, the nature of the work is that the magnets travel to wherever
            the most
            cost effective location is to make the repairs or other work required.
            On this
            basis, the exact location is less important than access to efficient
            transportation and the skills (people, equipment, technology etc.) to
            be able to
            conduct the necessary work to the standards and timescales
            required.

           

          Within
            motors, the customer base within a service location territory varies
            based on
            the size and complexity of the motor work required. Small motors (say,
            up to
            500hp) are repaired generally on a more localized basis, within up to
            50-100
            miles of the service location. This distance increases, and may be up
            to 400
            miles for the larger motors (say, over 2000hp). Additional locations
            will then
            act as feeder locations for South Bend or other large shops, where facilities
            exist to handle these larger and more complex motors.

           

          This
            radius of customer coverage generally also holds true for power systems
            work as
            well as field service work. The Company thus believes that by expanding
            its
            locations gradually and on a selected basis, it can open up new opportunities
            across the various business groups within which the Company operates
            today, and
            leverage its existing skills and resources further. This has been evidenced
            to
            some degree by the rapid growth in sales revenue, from $3,271,000 in
            2001 to
            $15,279,000 in 2003.

           

          VALUE
            PROPOSITION

           

          As
            detailed above, MIS has grown rapidly over the last two years. The Company
            believes that the range of services it offers is an advantage over its
            potential
            competitors, many of whom are repair-only shops. As part of broadening
            its value
            proposition, the Company has been focusing more on its predictive maintenance
            services. These include vibration analysis and trending, thermographic
            imaging
            and analysis, tribology and oil particle analysis and trending, ultrasonic
            testing and motor circuit evaluation and analysis. MIS believes it has
            technologically advanced personnel and equipment available for these
            services.
            Preventative maintenance services include services done on-site to help
            extend
            equipment reliability and life span. The MagnetracTM asset management
            program
            provides a monitoring service to help with predictive and preventative
            maintenance for electro lifting magnets and associated systems. During
            2004, the
            Company intends to adapt further the MagnetracTM program for motors and
            other
            equipment that would be suitable to tracking purposes along with predictive
            and
            preventative maintenance.

           


          
            
              
              

            

            
              14

              
                

              

            

            
              
              

            

          


          This
            focus on preventative and predictive maintenance is supported by industry
            data.
            The June 2003 EASA Report predicted that in the next three years, outsourced
            service expenditures would increase by nine percent as compared to fix-it
            repairs (53% v 47%).

           

          The
            Company also focuses on education and training, recognizing the need
            to improve
            skill and technology levels. The Education and Training Group provides
            custom
            and standardized training in the area of industrial maintenance. The
            Company has
            a multi-craft training program that is recognized by Vincennes University
            in
            Vincennes, Indiana, which allows participants to earn college credits
            for
            approved programs offered by the Company. Customized training programs
            and
            skills testing programs are also provided in this area. The Education
            and
            Training Group exemplifies the Company’s commitment to offering in-house
            training for its own personnel.

           

          The
            foregoing points reflect the Company’s overall objective to increase the
            reliability of the customer’s equipment, reduce operating costs and extend
            equipment life.

           

          MARKETING
            AND SALES STRATEGY

           

          The
            Company today uses internal and external sales staff to generate business
            in the
            various business groups in which the Company operates. This is expected
            to
            continue and if and when new locations are opened, the Company believes
            will
            further increase sales.

           

          The
            education and training courses that are conducted bring customers and
            their
            staff a better understanding of the Company’s range of products and services, as
            well as raising skill levels generally. The Company believes that this
            helps
            build stronger relationships, and make it more likely that customers
            will turn
            to the Company first when they need help.

           

          The
            Company is also looking constantly to improve the range of technologies
            either
            available to its employees internally, or to offer to its customers.
            During
            2004, the Company intends to further adapt the MagnetracTM program for
            motors
            and other equipment that would be suitable to tracking purposes along
            with
            predictive and preventative maintenance. Not only will this help add
            value to
            the service proposition offered to its customers, it will further differentiate
            the Company from the smaller, less well-equipped service locations.

           

          The
            Education and Training Group provide custom and standardized training
            in the
            area of industrial maintenance. The Company has a multi-craft training
            program
            that is recognized by Vincennes University that allows participants to
            earn
            college credits for approved programs offered by the Company. Customized
            training programs and skills testing programs are also provided in this
            area.
            This group exemplifies the Company’s commitment to offering in-house training
            for its own personnel.

           

          RELATED
            PARTY TRANSACTIONS

           

          The
            Company leases real estate for its operations in South Bend and Hammond,
            Indiana, Boardman, Ohio and Mobile, Alabama from several different limited
            liability companies, all of which are indirectly owned by John A. Martell,
            the
            President and Founder of the Company and the majority shareholder of
            the
            Corporation. For the 2004 fiscal year of the Company, the total estimated
            rental
            payments payable by the Company under all such lease agreements is $292,525.
            In
            addition to rental payments due under the lease agreements, the Company
            is
            responsible for 

           


          
            
              
              

            

            
              15

              
                

              

            

            
              
              

            

          


          the
            payment of all utilities, taxes and assessments, maintenance and repairs,
            insurance and other expenses relating to the real estate.

           

          The
            Company has received two loans from Mr. Martell. The first loan (the
“5-Year
            Loan”) is in the principal amount of $3,000,000 and is payable over a term
            of 60
            months (the “Initial Term”), unless the term is extended as described below. The
            5-Year Loan bears interest at a rate of 1 % below the prime rate, which
            rate is
            adjusted on the first business day of each month during the Initial Term.
            Interest only is payable on the outstanding principal balance of the
            5-Year Loan
            on the first day of each month during the Initial Term. The first interest
            payment was made on February 1, 2004. The entire principal balance and
            all
            accrued interest are due and payable on December 31, 2008. As noted,
            however,
            the Company may extend the 5-Year Loan for an additional 60 months (the
            “Extended Term”). If the 5-Year Loan is extended, the Company must make equal
            monthly principal installments of $50,000, plus accrued interest during
            the
            Extended Term, commencing on February 1, 2009. All remaining principal
            and
            accrued interest is due on December 31, 2013. During the Extended Term,
            the
            5-Year Loan will bear interest at the prime rate plus 1%, adjusted monthly.
            The
            5-Year Loan is unsecured.

           

          The
            second loan received by the Company from Mr. Martell (the “Short-Term Loan”) is
            in the principal amount of $196,000. The Short-Term Loan bears interest
            at the
            prime rate and is adjusted monthly. The entire principal balance and
            all accrued
            interest thereon is due and payable by the Company on December 31, 2004.
            The
            Short-Term Loan is unsecured.

           

          LEADERSHIP

           

          John
            A. Martell - President, Chief Executive Officer and founder of the
            Company

           

          Mr.
            Martell has over 20 years experience in the industry at a senior executive
            level. He was Vice-President and one of the founding shareholders of
            Trans Tech
            Electric Inc., which was a specialty electrical contractor operating
            in Indiana
            and Arizona. In 1998 this company, along with three others, became one
            of the
            founding members of Quanta Service, Inc., (NYSE:PWR). Mr. Martell served
            as a
            member of the founding board of directors of Quanta Service, Inc. from
            February
            1998 to May 2001. In November, 2001, Mr. Martell left Trans Tech Electric
            Inc.
            to focus on the business and operations of MIS. When Quanta Service Inc.
            went
            public in 1998, the four founding companies had combined revenues of
            $150m per
            annum. By 2001, revenues had grown to almost $2bn per year with over
            9,000
            employees. Mr. Martell has a BS degree in Electrical Engineering from
            the
            University of Notre Dame, and a Certificate in Executive Management,
            also from
            the University of Notre Dame.

           

          William
            Wisniewski - Vice President of Operations

           

          Mr.
            Wisniewski joined MIS about a year ago as the National Sales Manager.
            In August
            of 2003, he took on the additional role of Operations Manager and in
            January of
            2004 he became Vice President of Operations. Prior to joining MIS he
            most
            recently spent 6 years with Reliance Electric, a Division of Rockwell
            Automation, holding the following positions: Regional Manger for the
            Philadelphia, Pittsburgh, Cincinnati, and Chicago Services Centers, Chicago
            Plant Manager and National Mechanical Manager. Prior to Reliance, he
            spent 24
            years with Calumet Armature in Chicago as Vice President and General
            Manager.

           


          
            
              
              

            

            
              16

              
                

              

            

            
              
              

            

          


          Michael
            J. Kuzmits - Controller

           

          Mr.
            Kuzmits recently joined MIS as Controller, having previously been employed
            by
            Creation Windows for 8 years in various roles, most recently as financial
            controller. In this later role he was responsible for financial statements
            of
            six locations and a $100m per year business, part of a $2.5bn public
            company.
            Mr. Kuzmits has a Bachelor degree in Business Administration from the
            University
            of Notre Dame and recently completed a Masters Degree in Accounting from
            Indiana
            University of South Bend.

           

          In
            addition, each of the key areas has a senior executive responsible for
            their
            location and for monitoring activities in other locations.

           

          Loren
            Hecker - Manager of the Magnet Group

           

          Mr.
            Hecker is manager of the Magnet group, based in South Bend, but also
            with
            responsibility for both the Hammond (Indiana) and Boardman (Ohio) plants.
            His
            responsibilities also include being the Service Center Manager of the
            motor,
            magnet and machining divisions in Hammond. Mr. Hecker worked for Meade
            Magnets
            for 36 years, most recently as president of that company. He held this
            position
            until the acquisition by MIS in August 2001. Mr. Hecker has designed
            and
            produced several magnet training seminars and is the instructor of these
            programs. He has also served a 3 year term from 2000-2003 as an advisory
            board
            member with the Purdue University’s statewide Technical Assistance
            Program.

           

          Henry
            Oppermann - Manager of Merrillville

           

          Mr.
            Oppermann has over 24 years experience in the apparatus repair industry.
            Working
            for GE in a number of industries, he came to the Chicago region in 1985
            to grow
            the switchgear business to become the largest power systems group in
            the US
            serving numerous industries including the nuclear industry. He graduated
            in
            engineering from Clarkson University in Potsdam, NY.

           

          Al
            Jeske - Service Center Manager - Motor Group 1

           

          Mr.
            Jeske
            has over 31 years experience in the motor business, having held various
            manufacturing and engineering positions in the apparatus repair and the
            OEM
            motor industries, including Vice President of engineering, manufacturing
            and
            operations. This experience includes opening and relocating of production
            facilities. Today, he is the Service Center Manager of South Bend, as
            well as
            the motor and machine shops at Hammond. He has a Bachelor of Science
            degree from
            the Milwaukee School of Engineering.

           

          Bob
            Grounds - Service Center Manager - Motor Group II

           

          Mr.
            Grounds has 28 years experience in the repair industry, specializing
            in the
            utility and steel industries. Today he is Service Center Manager of the
            Huntington, WV location, and is responsible for both service centers
            in
            Indianapolis, IN and Mobile, AL.

           

          The
            Corporation expects that additional outside executives will be invited
            to join
            the Board of Directors, who will broaden the experience available to
            the
            Corporation. Potential candidates have been identified and will be appointed
            as
            soon as practicable.

           


          
            
              
              

            

            
              17

              
                

              

            

            
              
              

            

          


          FINANCIAL
            INFORMATION

           

          CAPITALIZATION
            OF THE CORPORATION

          


          
            	 	 	
                    Shares

                    Outstanding

                    Prior
                      to

                    Offering

                  	 	
                    Shares

                    Offered

                    Including

                    Conversion

                    of
                      MIS Series

                    A
                      Stock

                  	 	
                    Shares

                    Outstanding

                    following

                    offering

                    assuming
                      full

                    subscription

                    (no
                      dilution)

                  	 	
                    Shares

                    Outstanding

                    following

                    offering

                    assuming
                      full

                    subsription

                    (full
                      dilution)

                  	 
	 	 	 	 	 	 	 	 	 	 
	
                    Shares
                      of common stock (1)

                  	 	 	
                    79,450,000

                  	 	 	
                    16,050,0002

                  	 	 	
                    95,500,000

                  	 	 	
                    100,000,000

                  	 
	
                    Warrants(3)

                  	 	 	
                    0

                  	 	 	
                    4,500,000

                  	 	 	
                    4,500,000

                  	 	 	
                    0

                  	 
	
                    Total

                  	 	 	
                    79,450,000

                  	 	 	
                    20,550,000

                  	 	 	
                    100,000,000

                  	 	 	
                    100,000,000

                  	 


          

          


          


          
            	
                    (1)

                  	
                    As
                      of the date hereof, 200 million shares of Common Stock are
                      authorized.
                      Upon completion of the Offering (assuming the Maximum Offering
                      is sold)
                      and the conversion of the Series A Stock, 100 million shares
                      of Common
                      Stock will be issued on a fully diluted basis and Mr. Martell
                      will own
                      79,450,000 of such shares. In addition, 20 million shares of
                      preferred
                      stock are authorized, of which nil will be issued upon completion
                      of the
                      Offering.

                  


          

           

          
            	
                    (2)

                  	
                    Includes
                      11,250,000 of shares of Common Stock to be issued to investors
                      in the
                      Offering assuming full subscription, 4,750,000 shares to be
                      issued to the
                      investors pursuant to the terms in the Bridge Financing, in
                      connection
                      with the automatic conversion of 750,000 shares of Series A
                      Stock into
                      shares of Common Stock and 50,000 shares of Common Stock to
                      be issued to
                      the Placement Agent upon completion of the
                      Offering.

                  


          

           

          
            	
                    (3)

                  	
                    Assuming
                      full subscription, the Placement Agent will receive 4,500,000
                      ten-year
                      warrants to purchase shares of Common Stock at $0.0001 per
                      share.

                  


          

           

          USE
            OF PROCEEDS

           

          The
            net
            proceeds to the Corporation from the sale of the shares of Common Stock
            offered
            by this Memorandum (after deducting Placement Agent Fees and estimated
            offering
            expenses) are currently estimated to be approximately $1,950,000. The
            funds are
            expected to be used to (i) fund future growth and development, (ii) fund
            marketing and promotion costs, (iii) acquire plant and equipment and
            (iv) for
            general and administrative costs and working capital.

           

          FINANCIAL
            STATEMENTS

           

          Attached
            as Appendix “A” are the Company’s unaudited, management-compiled financial
            statements for the fiscal year ended December 31, 2003. These financial
            statements include the separate and combined financial statements of
            MIS and its
            wholly-owned subsidiary, Martell Electric LLC (“ME”).

           


          
            
              
              

            

            
              18

              
                

              

            

            
              
              

            

          


          A
            summary
            of the results for the last three financial years are as follows:

           

          


          
            	
                    Year
                      Ended December 31,

                  	
                    2003

                  	
                    2002

                  	
                    2001

                  
	 	
                    $’000

                  	
                    $’000

                  	
                    $’000

                  
	
                    Sales
                      revenue

                  	
                    15,279

                  	
                    11,792

                  	
                    3,271

                  
	
                    Gross
                      Profit

                  	
                    3,396

                  	
                    2,084

                  	
                    316

                  
	
                    Gross
                      Profit %

                  	
                    22.2%

                  	
                    17.7%

                  	
                    9.7%

                  
	
                    Net
                      Loss

                  	
                    (1,039)

                  	
                    (1,073)

                  	
                    (1,166)

                  


          

          


          Note
            the
            above numbers only reflect MIS for true comparative purposes. ME only
            began
            operations in the second part of 2002 and its operations are not deemed
            to be
            material in that period. In 2003, ME achieved sales revenue of $212,000
            and a
            net loss of $74,000.

           

          The
            above
            results also reflect MIS’s investment in infrastructure - both new locations and
            personnel - ahead of the incremental contribution from additional revenue.
            The
            Company expects to be able to leverage such benefits as the business
            continues
            to grow, although there can be no assurance that either will in fact
            be the
            case.

           


          
            
              
              

            

            
              19

              
                

              

            

            
              
              

            

          


          RISK
            FACTORS

           

          BUSINESS
            RISKS

           

          You
            should consider carefully the risks described below and all of the other
            information in this Private Placement Memorandum before making a decision
            to
            invest in the offered securities.

           

          The
            Company has a short operating history, which may make it difficult to
            forecast
            accurately future revenues and other operating results.

           

          MIS
            began
            its current operations in July 2000. Its wholly owned subsidiary, Martell
            Electric LLC, only began operations in late 2002. As a result, we have
            a limited
            operating history upon which an evaluation of its business and prospects
            may be
            made. The Company’s limited operating history may make it difficult or
            impossible for analysts or investors to accurately forecast its future
            revenues
            and other operating results.

           

          The
            Company has incurred net losses since inception, and may not be as profitable
            as
            anticipated.

           

          For
            the
            fiscal year ending December 31, 2003 we incurred net losses totaling
            $1,039,000.
            This reflects investment in the infrastructure of the business to support
            a
            higher level of revenue than that being currently achieved. While the
            Company
            believes it is nearing a profitable level of revenue, there can be no
            guarantee
            that this level, or a profitable revenue mix, will ever be achieved.
            The Company
            expects to continue to make substantial expenditures for sales, infrastructure
            and other purposes, which may be fixed in the short term. As a result,
            we can
            provide no assurance as to the level, if any, of profitability in 2004
            and
            beyond. The ability to increase revenues and achieve and maintain profitability
            in the future, will primarily depend on the Company’s ability to increase sales
            of its existing products and services, maintain a reasonable cost structure
            and
            expand its geographical coverage. No assurance can be given that the
            Company
            will be able to increase its revenue at a rate that equals or exceeds
            expenditures.

           

          The
            Company has numerous competitors in its industry that offer services
            and
            products that could compete with the Company’s services and products and that
            have greater financial and other competitive resources than the
            Company.

           

          The
            markets for repairing, rebuilding and manufacturing industrial magnets
            and
            repairing specific electric motors are highly competitive and management
            does
            not expect any reduction in this competition in the future. An increase
            in
            competitive pressures in these markets or our failure to compete effectively
            may
            result in pricing reductions, reduced gross margins and loss of market
            share.
            Many of our competitors have longer operating histories, greater name
            recognition, more customers and significantly greater financial, marketing,
            technical and other competitive resources than the Company. As a result,
            these
            companies may be able to adapt more quickly to new technologies and changes
            in
            customer needs, or to devote greater resources to the development, promotion
            and
            sale of their products and services. While the Company believes its overall
            product and service proposition is distinguishable from those of its
            competition, the competition could develop new products or services that
            could
            directly compete with the Company’s products and services.

           


          
            
              
              

            

            
              20

              
                

              

            

            
              
              

            

          


          The
            Company has limited experience in making acquisitions, and its limited
            management may be distracted from its existing operations.

           

          Although
            the Company has opened new locations in recent years, further significant
            growth
            is anticipated to come from the addition of new locations or acquisitions.
            There
            can be no assurance that the Company will be successful in finding suitable
            acquisitions, or that they will be available at prices acceptable to
            the
            Company. In addition, as the number of locations increases, new management
            will
            be needed for these locations, as well as increasing the complexity of
            the
            operations for the corporate management. There can be no assurance that
            we will
            be able to find suitable management for these operations as its needs
            increase.

           

          The
            Company may have to reduce or cease operations if it is unable to obtain
            the
            funding necessary to meet its future working capital
            requirements.

           

          MIS’s
            future revenues may be insufficient to support the expenses of its operations
            and the expansion of the business. The Company may therefore need additional
            equity or debt capital to finance operations. If we are unable to generate
            sufficient cash flow from operations or obtain funds through additional
            financing, we may have to reduce some or all of the sales and marketing
            efforts.
            Management believes that existing cash and cash equivalents balances,
            along with
            the existing line of credit, including the potential net proceeds from
            the
            proposed Offering should be sufficient to meet on-going capital requirements
            for
            at least the next eighteen months. We may however, require additional
            funding
            sooner than anticipated. We may face significant risks associated with
            the
            successful execution of our business strategy and may need to raise additional
            capital in order to fund more rapid expansion, to expand our marketing
            activities, to develop new, or enhance existing, services or products
            and to
            respond to competitive pressures or to acquire complementary services,
            businesses or technologies. If we are not successful in generating sufficient
            cash flow from operations, we may need to raise additional capital through
            public or private financing, strategic relationships or other arrangements.
            Additional capital, if needed, might not be available on terms acceptable
            to us,
            or at all. If adequate funds are not available or not available on acceptable
            terms, we may be unable to develop or enhance our products and services,
            take
            advantage of future opportunities, or respond to competitive pressures
            or
            unanticipated requirements which may have a material adverse effect on
            our
            business, financial condition or operating results. In addition, if additional
            capital were raised through the issuance of equity securities, the percentage
            of
            our stock owned by our then-current stockholders would be further reduced.
            Furthermore, these equity securities might have rights, preferences or
            privileges senior to those of our common and convertible preferred
            stock.

           

          Strain
            on the Company’s resources caused by its rapid growth may result in the
            inability to effectively manage the business.

           

          MIS’s
            business plan and financial projections are based on its projected rapid
            growth
            and geographic expansion. MIS’s current systems, management and resources may be
            inadequate if the Company continues to grow rapidly in size and complexity.
            Any
            rapid expansion may place significant strain on the administrative, operational
            and financial resources of the Company. In addition, management may be
            unable to
            effectively manage the business if they are unable to timely and successfully
            alleviate the strain on our resources caused by rapid growth.

           


          
            
              
              

            

            
              21

              
                

              

            

            
              
              

            

          


          The
            Company may be unable to adequately expand its operational systems to
            accommodate growth, which could harm its ability to deliver its
            technology.

           

          The
            Company’s operational systems have not been tested at the customer volumes that
            may be required in the future. The Company may encounter performance
            difficulties when operating with a substantially greater number of customers.
            In
            implementing new systems, the Company may experience periodic interruptions
            affecting all or a portion of its systems. Such interruptions could harm
            the
            Company’s ability to deliver its products and services and could result in the
            loss of current customers

           

          The
            Company’s ability to execute its business plan will be impaired if it does not
            retain key employees.

           

          The
            Company’s future success will depend largely on the efforts and abilities of
            senior management and key staff performing technical development, operations,
            customer support and sales. These employees are not obligated to continue
            their
            employment with MIS and may leave the Company at any time. Departure
            by key
            employees may impair the Company’s ability to succeed.

           

          Operating
            results may vary because of factors management cannot
            control.

           

          The
            Company’s operating results may fluctuate significantly in the future as a
            result of a variety of factors, many of which are beyond management’s control.
            These factors include the costs of new technology, the relative speed
            and
            success with which the Company can acquire customers for its products
            and
            services, capital expenditures for equipment, sales and marketing and
            promotional activities and other costs, changes in the Company’s pricing
            policies, suppliers and competitors, changes in operating expenses, increased
            competition in the Company’s markets, and other general economic and seasonal
            factors.

           

          The
            Company is dependent on its executive officers and additional management
            that
            will be hired in the future to effectuate its business
            plan.

           

          The
            loss
            of the services of one or more of the Company’s executive officers could have a
            material adverse effect on the business, operating results and financial
            condition of the Company. Management cannot guarantee that it will be
            able to
            retain its key personnel. The future success of the Company also depends
            on
            management’s continuing ability to attract, assimilate and retain highly
            qualified sales, technical and managerial personnel, as well as outside
            directors. There can be no assurance that management can attract, assimilate
            or
            retain such personnel in the future. The Company does not currently maintain
            key
            man insurance for any of its executives.

           

          The
            Corporation’s shares are not publicly traded and are subject to certain
            limitations on transfer. As a result, investors may have to hold their
            shares
            for a long time without the ability to liquidate their equity
            interest.

           

          Investors
            should be aware of the potentially long-term nature of their investment
            in the
            shares of the Corporation. The offer and the sale of the shares of Common
            Stock
            will not be registered under the Securities Act or under any state securities
            laws. The Corporation is offering these

           


          
            
              
              

            

            
              22

              
                

              

            

            
              
              

            

          


          shares
            of
            Common Stock pursuant to exemptions from registration, which depend in
            part upon
            investor’s investment intent. Investors will be required to represent that they
            are purchasing such Securities for their own account for investment purposes
            and
            not with a view to resale or distribution, Investors may not transfer
            their
            shares unless such transfer is registered under the Securities Act and
            applicable state securities laws, or an exemption from such securities
            laws is
            available. The shares will contain a legend to such effect. As a condition
            to
            any transfer, the Corporation may require the transferor to provide it
            with an
            opinion of legal counsel stating that the transfer is legal. There is
            no public
            trading market for the shares and there can be no assurance that any
            trading
            market will develop. Accordingly, investors may be required to bear the
            economic
            risks of their investment for an indefinite period of time.

           

          Management
            of the business is controlled by Magnetech’s officers and directors who will be
            able to dictate all of its policies and actions, which investors will
            be unable
            to control since they will be minority shareholders.

           

          After
            giving effect to all of the shares of the Offered Securities that could
            be
            issued in this Offering, Mr. Martell will maintain control of a majority
            of such
            shares, on a fully diluted basis. Consequently, Mr. Martell will be able
            to
            elect a majority of the Corporation’s directors and thereby control the
            management policies of the Corporation and the Company as well as determine
            the
            outcome of corporate actions requiring shareholder approval by majority
            action.
            The terms of the Placement Agency Agreement provide that the Placement
            Agent may
            elect two of the Corporation’s five directors, but Mr. Martell will still elect
            a majority of the directors.

           

          
            OFFERING
              RISKS

             

          

          The
            Price of the Offering was arbitrarily determined.

           

          The
            offering price of the shares of Common Stock and other terms of the Offering
            were determined by the Company and the Placement Agent, in their sole
            discretions through arms-length negotiations, and are not necessarily
            related to
            the Company’s asset value, book value, financial condition, or any other
            recognized indicators of value.

           

          Management
            will have discretion in use of funds.

           

          The
            Corporation anticipates applying the net proceeds of the Offering to
            the items
            described above under the “Use of Proceeds” section of this Memorandum. However,
            there can be no assurance that these proceeds will be used exactly as
            described
            therein. In particular, in the event that competitive or other forces
            within the
            Company’s industry, or if the Company’s estimates of the cost of the proposed
            uses of these proceeds ultimately turn out to be inaccurate, the Corporation
            and
            the Company intend to adapt to such circumstances and may feel it necessary
            to
            reallocate the uses of the proceeds of the Offering among the uses described
            in
            the “Use of Proceeds” section or to other uses deemed appropriate by the
            Corporation or the Company. As such, management of the Company shall
            have broad
            discretion, subject to their fiduciary duties, in the application of
            the
            proceeds from the sale of the shares of Common Stock.

           


          
            
              
              

            

            
              23

              
                

              

            

            
              
              

            

          


          You
            should make an independent evaluation of the shares and the
            Company.

           

          While
            the
            Corporation believes this Memorandum, together with the Stock Purchase
            Agreement
            and other exhibits to this Memorandum, contains sufficient information
            to assist
            prospective investors in making an informed investment decision, prospective
            investors are encouraged to ask questions of the Company and request
            additional
            information concerning the shares of Common Stock, Private Placement
            and the
            business of the Company. The Company will provide prospective investors
            with
            answers to their questions and any such additional information to the
            extent
            that it is available or can be obtained without unreasonable effort or
            expense.
            No federal or state commission, department or agency has made any evaluation,
            finding, recommendation or endorsement with respect to the shares of
            Common
            Stock.

           

          Subscriber
            funds may be tied up for up to 135 days.

           

          Under
            the
            terms of the Offering, a subscriber’s funds may be tied up for the Offering
            Period of 90 days, which may be extended for up to 45 days, and then
            returned
            without interest in the event there is no closing under the Offering
            or if the
            subscriber’s subscription is not accepted by the Corporation.

           


          
            
              
              

            

            
              24

              
                

              

            

            
              
              

            

          


          PLACEMENT
            AGENT

           

          Strasbourger
            Pearson Tulcin Wolff Inc. is acting as Placement Agent in the sale of
            the shares
            of Common Stock offered hereby. Assuming the Maximum Offering is sold
            in the
            Financing, the Placement Agent will receive 10% of the purchase price
            of the
            shares of Common Stock sold, 50,000 shares of the corporation’s Common Stock and
            4,500,000 warrants to purchase shares of the Corporation’s Common Stock at an
            exercise price of $0.0001 per share. The Corporation will also reimburse
            the
            Placement Agent for its accountable expenses incurred in connection with
            the
            Offering. The Placement Agent and their officers, employees and affiliates
            may
            purchase shares of Common Stock in the Offering.

           

          The
            offering of the shares of Common Stock is being made on a “best efforts - any or
            all” basis. No subscription will be accepted until the Corporation or the
            Placement Agent has received a fully executed Stock Purchase Agreement,
            Investor
            Questionnaire and any other documents that may be required by the Corporation
            or
            the Placement Agent.

           

          The
            Placement Agent will offer the shares of Common Stock only to prospective
            investors who meet the conditions of investment discussed herein under
“Investor
            Suitability Standards,” and will otherwise conduct the Financing as required
            under Rule 506 of Regulation D.

           

          The
            Corporation has agreed to indemnify and hold harmless the Placement Agent
            for
            any liability or cost incurred by the Placement Agent arising from any
            suit,
            action, proceeding or investigation in connection with the Placement
            Agent’s
            acting on its behalf in the Offering.

           

          The
            price
            of the shares of Common Stock has been determined by negotiations between
            the
            Corporation and the Placement Agent. Among the factors considered in
            such
            negotiations are prevailing market conditions, estimates of the Company’s
            business potential, the present state of its development and other factors
            deemed relevant. The terms of the shares of Common Stock do not necessarily
            bear
            any relationship to the Corporation’s or the Company’s asset value or net book
            value.

           

          INVESTOR
            SUITABILITY STANDARDS

           

          This
            investment is suitable only for accredited investors, as that term is
            defined in
            Regulation D under the Securities Act. The shares of common stock issuable
            in
            this Offering are subject to transfer restrictions and cannot readily
            be sold,
            transferred, or assigned. There is no public market for the Corporation’s
            securities and there can be no assurance that a public market will ever
            develop.
            Accordingly, this investment is suitable only for investors who have
            no need for
            liquidity, and can afford to lose their entire investment.

           

          The
            term
“accredited investor” refers to any person or entity who comes within any of the
            following categories or the Company reasonably believes comes within
            any of the
            following categories:

           

          a) Any
            bank
            as defined in Section 3(a)(2) of the Securities Act, or any savings and
            loan
            association or other institution as defined in Section 3(a)(5)(A) of
            the
            Securities Act whether acting in its individual or fiduciary capacity;
            any
            broker or dealer registered pursuant to Section 15 of the Securities
            Exchange
            Act of 1934; insurance company as defined in Section 

           


          
            
              
              

            

            
              25

              
                

              

            

            
              
              

            

          


          2(13)
            of
            the Securities Act; investment company registered under the Investment
            Company
            Act of 1940 or a business development company as defined in Section 2(a)(48)
            of
            the Investment Company Act of 1940; Small Business Investment Company
            licensed
            by the U.S. Small Business Administration under Section 301(c) or (d)
            of the
            Small Business Investment Act of 1958; any plan established and maintained
            by a
            state, its political subdivisions, or any agency or instrumentality of
            a state
            or its political subdivisions, for the benefit of employees, if such
            plan has
            total assets in excess of $5,000,000; employee benefit plan within the
            meaning
            of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”), if
            the investment decision is made by a plan fiduciary, as defined in Section
            3(2)
            of ERISA, which is either a bank, a savings and loan association, insurance
            company, registered investment advisor, or if the employee benefit plan
            has
            total assets in excess of $5,000,000 or if a self-directed plan, with
            investment
            decisions made solely by persons that are accredited investors;

           

          b) Any
            private business development company as defined in Section 202(a)(22)
            of the
            Investment Advisors Act of 1940;

           

          c) Any
            organization described in Section 501(c)(3) of the Internal Revenue Code,
            corporation, Massachusetts or similar business trust or partnership not
            formed
            for the specific purpose of acquiring the securities offered, with total
            assets
            in excess of $5,000,000;

           

          d) Any
            director or executive officer of the Company;

           

          e) Any
            trust
            with total assets in excess of $5,000,000 not formed for the specific
            purpose of
            acquiring the securities offered, whose purchase is directed by a sophisticated
            person as described in Rule 506 of Regulation D;

           

          f) Any
            natural person whose individual net worth or joint net worth with that
            person’s
            spouse, at the time of his purchase, exceeds $1,000,000;

           

          g) Any
            natural person who had an individual income in excess of $200,000 in
            each of the
            two most recent years or joint income with that person’s spouse in excess of
            $300,000 in each of those years and has a reasonable expectation of reaching
            the
            same income in the current year; or

           

          h) Any
            entity in which all of the equity owners are accredited investors.

           

          The
            above
            suitability standards are minimum requirements for prospective investors,
            and
            the satisfaction of these standards does not mean that the shares of
            common
            stock are a suitable investment for a prospective investor. Each prospective
            investor who is an individual must also sign representations that the
            prospective investor meets the following criteria:

           

          a) He
            or she
            has no need for liquidity in this investment and is able to bear the
            economic
            risks of this investment;

           

          b) He
            or she
            has such knowledge and experience in financial and business matters as
            to be
            able to evaluate the merits and risks of an investment in the shares
            of Common
            Stock; and

           


          
            
              
              

            

            
              26

              
                

              

            

            
              
              

            

          


          c) He
            or she
            is purchasing for his or her own account, for investment and not with
            a view to
            resale.

           

          The
            Corporation has the right to reject a subscription in whole or in part
            if in its
            sole discretion it believes that the prospective investor does not meet
            the
            suitability requirements, or the shares of Common Stock are otherwise
            an
            unsuitable investment for the prospective investor.

           

          Foreign
            investors in the shares of Common Stock will be required to represent
            and
            warrant that they have complied with all securities laws of their jurisdiction
            of citizenship or residence, and they are not relying on the Corporation
            to
            ensure such compliance

           


          
            
              
              

            

            
              27

              
                

              

            

            
              
              

            

          


          


           

          APPENDIX
            A

           

           

          UNAUDITED
            FINANCIAL STATEMENTS

           

           

          

            


             


            
              
                
                

              

              
                28

                
                  

                

              

              
                
                

              

            


            FINANCIAL
              STATEMENTS

             

            Following
              are the Company’s unaudited, management-compiled pro-forma financial statements
              for the fiscal year ended December 31, 2003 and the balance sheets
              as at
              December 31, 2003.

             

            
              	 	 	
                      Magnetech
                        Integrated Services Corp.

                    	 
	 	 	 	 
	 	 	
                      Proforma
                        Balance Sheet - December 31, 2003

                    	 
	 	 	 	 	 	 	 	 
	 	 	
                      Magnetech

                      Industrial

                      Services,
                        Inc.

                    	 	
                      Martell

                      Electric
                        LLC

                    	 	
                      Pro
                        forma

                    	 
	 	 	$ 	 	
                      $

                    	 	
                      $

                    	 
	
                      Cash

                    	 	 	
                      (457,684

                    	
                      )

                    	 	
                      (12,490

                    	
                      )

                    	 	
                      (470,174

                    	
                      )

                    
	
                      Accounts
                        Receivable-Trade

                    	 	 	
                      3,077,946

                    	 	 	
                      94,243

                    	 	 	
                      3,172,189

                    	 
	
                      Accounts
                        Receivable-Inter-Co

                    	 	 	
                      225,095

                    	 	 	
                      112,666

                    	 	 	
                      0

                    	 
	
                      Prepaid
                        Expenses

                    	 	 	
                      147,112

                    	 	 	
                      1,521

                    	 	 	
                      148,632

                    	 
	
                      Inventory

                    	 	 	
                      2,890,967

                    	 	 	
                      30,092

                    	 	 	
                      2,921,059

                    	 
	
                      Other
                        Current Assets

                    	 	 	
                      49,827

                    	 	 	
                      0

                    	 	 	
                      49,827

                    	 
	
                      CURRENT
                        ASSETS

                    	 	 	
                      5,933,263

                    	 	 	
                      226,032

                    	 	 	
                      6,159,295

                    	 
	
                      Fixed
                        Assets

                    	 	 	
                      2,334,769

                    	 	 	
                      73,927

                    	 	 	
                      2,408,695

                    	 
	
                      Accumulated
                        Depreciation

                    	 	 	
                      (561,387

                    	
                      )

                    	 	
                      (5,330

                    	
                      )

                    	 	
                      (566,717

                    	
                      )

                    
	
                      NET
                        FIXED ASSETS

                    	 	 	
                      1,773,381

                    	 	 	
                      68,597

                    	 	 	
                      1,841,978

                    	 
	
                      Patents/Covenants

                    	 	 	
                      154,032

                    	 	 	
                      0

                    	 	 	
                      154,032

                    	 
	
                      Accumulated
                        Amortization

                    	 	 	
                      (102,937

                    	
                      )

                    	 	
                      0

                    	 	 	
                      (102,937

                    	
                      )

                    
	
                      PATENTS/COVENANTS

                    	 	 	
                      51,095

                    	 	 	
                      0

                    	 	 	
                      51,095

                    	 
	
                      OTHER
                        NONCURRENT ASSETS

                    	 	 	
                      0

                    	 	 	
                      50

                    	 	 	
                      50

                    	 
	 	 	 	 	 	 	 	 	 	 	 
	
                      TOTAL
                        ASSETS

                    	 	 	
                      7,757,739

                    	 	 	
                      294,679

                    	 	 	
                      8,052,418

                    	 
	 	 	 	 	 	 	 	 	 	 	 
	
                      Accounts
                        Payable-Trade

                    	 	 	
                      1,916,457

                    	 	 	
                      51,669

                    	 	 	
                      1,968,125

                    	 
	
                      Accounts
                        Payable-Inter-Co

                    	 	 	
                      112,666

                    	 	 	
                      225,095

                    	 	 	
                      0

                    	 
	
                      Accruals

                    	 	 	
                      591,640

                    	 	 	
                      71,839

                    	 	 	
                      663,479

                    	 
	
                      Long
                        Term Debt-current portion

                    	 	 	
                      1,546,315

                    	 	 	
                      0

                    	 	 	
                      1,546,315

                    	 
	
                      CURRENT
                        LIABILITIES

                    	 	 	
                      4,167,078

                    	 	 	
                      348,602

                    	 	 	
                      4,515,680

                    	 
	 	 	 	 	 	 	 	 	 	 	 
	
                      LONG-TERM
                        DEBT

                    	 	 	
                      3,200,000

                    	 	 	
                      19,879

                    	 	 	
                      3,219,879

                    	 
	 	 	 	 	 	 	 	 	 	 	 
	
                      TOTAL
                        LIABILITIES

                    	 	 	
                      7,367,078

                    	 	 	
                      368,481

                    	 	 	
                      7,735,559

                    	 
	 	 	 	 	 	 	 	 	 	 	 
	
                      Common
                        Stock

                    	 	 	
                      1,000,000

                    	 	 	
                      500

                    	 	 	
                      1,000,500

                    	 
	
                      Retained
                        Earnings

                    	 	 	
                      (3,712,294

                    	
                      )

                    	 	
                      (74,302

                    	
                      )

                    	 	
                      (3,786,596

                    	
                      )

                    
	
                      Profit
                        year to date

                    	 	 	
                      0

                    	 	 	
                      0

                    	 	 	
                      0

                    	 
	
                      Additional
                        Paid in Capital

                    	 	 	
                      3,102,955

                    	 	 	
                      0

                    	 	 	
                      3,102,955

                    	 
	
                      EQUITY

                    	 	 	
                      390,661

                    	 	 	
                      (73,802

                    	
                      )

                    	 	
                      316,858

                    	 
	 	 	 	 	 	 	 	 	 	 	 
	
                      LIABILITIES
                        & EQUITY

                    	 	 	
                      7,757,739

                    	 	 	
                      294,679

                    	 	 	
                      8,052,418

                    	 


            


            
              
                
                

              

              
                29

                
                  

                

              

              
                
                

              

            


            


            
              	 	 	
                      Magnetech
                        Integrated Services Corp.

                    	 
	 	 	 	 
	 	 	
                      Proforma
                        Income Statement - year ending December 31, 2003

                    	 
	 	 	 	 	 	 	 	 
	 	 	
                      Magnetech

                      Industrial

                      Services,
                        Inc.

                    	 	
                      Martell

                      Electric
                        LLC

                    	 	
                      Pro
                        forma

                    	 
	 	 	 $	 	
                      $

                    	 	
                      $

                    	 
	
                      Sales
                        Revenues

                    	 	 	
                      15,279,443

                    	 	 	
                      212,113

                    	 	 	
                      15,491,556

                    	 
	 	 	 	 	 	 	 	 	 	 	 
	
                      Cost
                        of Sales

                    	 	 	
                      11,883,883

                    	 	 	
                      223,853

                    	 	 	
                      12,107,736

                    	 
	 	 	 	 	 	 	 	 	 	 	 
	
                      Gross
                        Profit

                    	 	 	
                      3,395,560

                    	 	 	
                      (11,740

                    	
                      )

                    	 	
                      3,383,820

                    	 
	
                      GP
                        %

                    	 	 	
                      22.2

                    	
                      %

                    	 	
                      -5.5

                    	
                      %

                    	 	
                      21.8

                    	
                      %

                    
	 	 	 	 	 	 	 	 	 	 	 
	
                      Selling,
                        general and administration
                        expenses

                    	 	 	
                      4,309,064

                    	 	 	
                      62,562

                    	 	 	
                      4,371,626

                    	 
	 	 	 	 	 	 	 	 	 	 	 
	
                      Operating
                        Income (Loss)

                    	 	 	
                      (913,504

                    	
                      )

                    	 	
                      (74,302

                    	
                      )

                    	 	
                      (987,806

                    	
                      )

                    
	 	 	 	 	 	 	 	 	 	 	 
	
                      Interest
                        expense

                    	 	 	
                      125,624

                    	 	 	
                      0

                    	 	 	
                      125,624

                    	 
	 	 	 	 	 	 	 	 	 	 	 
	
                      Net
                        (Loss)

                    	 	 	
                      (1,039,128

                    	
                      )

                    	 	
                      (74,302

                    	
                      )

                    	 	
                      (1,113,430

                    	
                      )

                    
	 	 	 	 	 	 	 	 	 	 	 
	
                      EBITDA

                    	 	 	
                      (608,190

                    	
                      )

                    	 	
                      (68,972

                    	
                      )

                    	 	
                      (677,162

                    	
                      )

                    


            

            


          

           

        


         

        
          
            
            

          

          
            30

            
              

            

          

          
            
            

          

        

         

      

    

    
      Schedule
        3.1(a)



    Subsidiaries

    


    


    Magnetech
      Industrial Services, Inc.

    Martell
      Electric LLC


    
      
        
        

      

      
        
          

        

      

      
        
        

      

    

     

     

    Schedule
      3.1(c)

    


    Capitalization
      and Registration Rights

     

    
 

    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. 

    


    


    
      
        
        

      

      
        
          

        

      

      
        
        

      

    

    


    
      


      Schedule
        3.1(e)



    Conflicts

    


    


    


    None.

    


    
      
        
        

      

      
        
          

        

      

      
        
        

      

    

    


    
      Schedule
        3.1(f)



    Consents
      and Approvals

    


    


    Pursuant
      to that certain Business Loan Agreement by and between Magnetech and St. Joseph
      Capital Bank (the “Bank”) dated September 13, 2002, as amended by that certain
      First Amendment to Business Loan Agreement dated November 5, 2003, and that
      certain Second Amendment to Business Loan Agreement dated March 24, 2004, the
      Bank is required to consent, and has consented, to the transactions contemplated
      by this Agreement and the Transaction Documents. 

    


    


    
      
        
        

      

      
        
          

        

      

      
        
        

      

    

    


    
      Schedule
        3.1(g)



    Litigation


    


    


    None.

     

    
      
        
        

      

      
        
          

        

      

      
        
        

      

    

    
       

      Schedule
        3.1(h)

      
 

    

    Defaults
      and Violations


    


    


    None.

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    


    


    EXHIBIT
      A

    


    REGISTRATION
      RIGHTS AGREEMENT

    


    


    This
      Registration Rights Agreement, dated as of May __, 2004 is entered into between
      Magnetech Integrated Services Corp. an Indiana corporation (the “Company”) and
      the Purchasers listed on Schedule 1 hereto (each a “Holder”).

    


    The
      parties hereto agree as follows.

    


    


    1. Registration
      Rights.

     

    1.1 Definitions.
      For
      purposes of this Agreement:

     

    


    (a) The
      term
“Act”
      means
      the Securities Act of 1933, as amended.

     

    (b) The
      term
“Form
      S-3”
      means
      such form under the Act as in effect on the date hereof or any successor form
      under the Act that permits inclusion or incorporation of substantial information
      by reference to the Company’s prior and subsequent public filings under the 1934
      Act.

     

    (c) The
      term
“Common
      Stock”
      means
      the common stock of the Company.

     

    (d) The
      term
“Holder”
      means
      the Purchasers listed on Schedule 1 hereto and any assignee thereof in
      accordance with Section 1.12 hereof.

     

    (e) The
      term
“1934
      Act”
      shall
      mean the Securities Exchange Act of 1934, as amended, or any similar successor
      federal statute and the rules and regulations thereunder, all as the same shall
      be in effect from time to time.

     

    (f) The
      term
“Other
      Stockholders”
      shall
      mean persons other than Holders who, by virtue of agreements with the Company,
      are entitled to include their securities in certain registrations
      hereunder.

     

    (f) The
      term
“Placement
      Agency Agreement”
      shall
      that that certain placement agency agreement amoung Strasbourger Pearson Tulcin
      Wolff Inc and Magnetech Industrial Services, Inc. and Magnetech Integrated
      Services Corp. dated April 26, 2004.

    


    (g) The
      term
“register”,
      “registered,”
      and
“registration”
      refer
      to a registration effected by preparing and filing a registration statement
      or
      similar document in compliance with the Act, and the declaration or ordering
      of
      effectiveness of such registration statement or document.

     

    (h) The
      term
“Registrable
      Securities”
      means
      (i) the shares of Common Stock issued to the Holders pursuant to the Stock
      Purchase Agreements and the shares issuable upon the exercise of the warrants
      issued to Strasbourger Pearson Tulcin Wolff, Inc. pursuant to the Placement
      Agency Agreement, and (ii) any other shares of Common Stock of the Company
      

     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    issued
      as
      (or issuable upon the conversion or exercise of any warrant, right or other
      security which is issued as) a dividend or other distribution with respect
      to,
      or in exchange for or in replacement of the shares referenced in (i) above,
      excluding in all cases, however, any Registrable Securities sold by a person
      in
      a private transaction in which his rights under this Agreement are not assigned
      or any shares of Common Stock which have been sold to the public either pursuant
      to a registration statement or Rule 144.

     

    (i) The
      number of shares of “Registrable
      Securities then outstanding”
      shall
      be determined by the number of shares of Common Stock outstanding which are,
      and
      the number of shares of Common Stock issuable pursuant to then exercisable
      or
      convertible securities which are, Registrable Securities.

     

    (j) The
      term
“Rule
      144”
      shall
      mean Rule 144 as promulgated by the SEC under the Act, as such Rule may be
      amended from time to time, or any similar successor rule that may be promulgated
      by the SEC.

     

    (k) The
      term
“SEC”
      shall
      mean the Securities and Exchange Commission or any other federal agency at
      the
      time administering the Act.

     

    (l) The
      term
“Stock
      Purchase Agreements”
      shall
      mean (i) that certain stock purchase agreement between Magnetech Industrial
      Services Inc. and the purchasers listed on Schedule 1 thereto dated February
      26,
      2004 and (ii) that certain stock purchase agreement between Magnetech Integrated
      Services Corp. and the purchasers listed on Schedule 1 thereto dated May [
      ]
      2004.

    


    1.2 Piggyback
      Registration.

     

    (a) The
      Company and the Holder agree that the Registrable Securities will be included
      in
      the Company’s Form SB-2 Registration Statement anticipated to be prepared by
      counsel to the Company, which filing the Company agrees to use its reasonable
      best efforts to make not later than 120 days from the date hereof and to cause
      to be declared effective not later than 165 days from the date hereof. The
      Company and the Holder have further agreed that such inclusion will satisfy
      the
      registration rights given to Holder pursuant to this Agreement; provided,
      however, that such inclusion satisfies such obligation only if the registration
      statement is declared effective not later than 165 days from the date hereof;
      provided
      however,
      if the
      Company has not filed a Form SB-2 Registration Statement that includes the
      Registrable Securities within 120 days from the date hereof, for each thirty
      (30) days that such Form SB-2 is not filed the Company shall pay the Holders
      liquidated damages equal to one percent (1%) of the total issued share capital
      of the Company in Common Stock. With respect to the aforementioned liquidated
      damage award, each Holder shall receive shares of Common Stock, pro rata, based
      on the number of Registrable Securities owned by such Holder. Notwithstanding
      the foregoing, if the Company shall furnish to Holders a certificate signed
      by
      the Chief Executive Officer of the Company stating that in the good faith
      judgment of the Board of Directors of the Company, it would be seriously
      detrimental to the Company and its stockholders for such registration statement
      to be filed owing to a material pending transaction or other issue and it is
      therefore essential to defer the filing of such registration statement, the
      Company shall not be required to pay such liquidated damages.

     

    


    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    


     

    1.3 Demand
      Registration

    


    (a) In
      the
      event that the SB-2 Registration Statement is not filed by the Company within
      125 days from the date hereof pursuant to Section 1.2 hereof, a Holder or
      Holders shall be entitled to initiate registration request hereunder
      (“Initiating
      Holders) The
      Initiating Holders shall so advise the Company in writing that the Company
      file
      a registration statement under the Act registering the Registrable Securities.
      The Company shall file a Form SB-2 Registration Statement no later than 45
      days
      from the date of such registration request and be declared effective not later
      than 90 days from the date thereof. The Company and the Holder shall further
      agree that such filing will satisfy the piggyback registration rights given
      to
      Holder pursuant to this Agreement; provided, however, that such inclusion
      satisfies such obligation only if the registration statement is declared
      effective not later than 90 days from the date of the request from the
      Initiating Holders.

     

    (b) Notwithstanding
      the foregoing, if the Company shall furnish to Holders requesting a registration
      statement pursuant to this Section 1.3, a certificate signed by the Chief
      Executive Officer of the Company stating that in the good faith judgment of
      the
      Board of Directors of the Company, it would be seriously detrimental to the
      Company and its stockholders for such registration statement to be filed owing
      to a material pending transaction and
      it is
      therefore essential to defer the filing of such registration statement, the
      Company shall have the right to defer taking action with respect to such filing
      for a period of not more than 120 days after receipt of the request of the
      Initiating Holders.

     

    (c) In
      addition, the Company shall not be obligated to effect, or to take any action
      to
      effect, any registration pursuant to this Section 1.3
      in any
      particular jurisdiction in which the Company would be required to execute a
      general consent to service of process in effecting such registration,
      qualification or compliance, unless the Company is already subject to service
      in
      such jurisdiction and except as may be required by the Act.

     

    1.4 Obligations
      of the Company.
      Whenever
      required under this Section 1 to effect the registration of any Registrable
      Securities, the Company shall, as expeditiously as reasonably
      possible:

     

    (a) Prepare
      and file with the SEC a registration statement with respect to such Registrable
      Securities and use its best efforts to cause such registration statement to
      become effective, and, upon the request of the Holders of a majority of the
      Registrable Securities registered thereunder, keep such registration statement
      effective until the Registrable Securities registered thereunder have been
      sold
      by the Holders (or such shorter period as the Holders may consent to in
      writing).

     

    (b) Prepare
      and file with the SEC such amendments and supplements to such registration
      statement and the prospectus used in connection with such registration statement
      as may be necessary to comply with the provisions of the Act with respect to
      the
      disposition of all securities covered by such registration
      statement.

     

    (c) Furnish
      to the Holders such number of copies of a prospectus, including a preliminary
      prospectus, in conformity with the requirements of the Act, and such other
      documents as they may reasonably request in order to facilitate the disposition
      of Registrable Securities owned by them.

    
 

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      (d) Use
        its
        best efforts to register and qualify the securities covered by such registration
        statement under such other securities or Blue Sky laws of such jurisdictions
        as
        shall be reasonably requested by the Holders; provided
        that
        the
        Company shall not be required in connection therewith or as a condition thereto
        to qualify to do business or to file a general consent to service of process
        in
        any such states or jurisdictions, unless the Company is already subject to
        service in such jurisdiction and except as may be required by the
        Act.

       

    

    (e) In
      the
      event of any underwritten public offering, enter into and perform its
      obligations under an underwriting agreement, in usual and customary form, with
      the managing underwriter of such offering. Each Holder participating in such
      underwriting shall also enter into and perform its obligations under such an
      agreement.

     

    (f) Notify
      each Holder of Registrable Securities covered by such registration statement
      at
      any time when a prospectus relating thereto is required to be delivered under
      the Act of the happening of any event as a result of which the prospectus
      included in such registration statement, as then in effect, includes an untrue
      statement of a material fact or omits to state a material fact required to
      be
      stated therein or necessary to make the statements therein not misleading in
      light of the circumstances then existing.

     

    (g) Use
      its
      best efforts to cause all such Registrable Securities registered hereunder
      to be
      listed on the securities exchange or Nasdaq trading system on which similar
      securities of the Company are then listed or trade.

     

    (h) Furnish,
      at the request of any Holder requesting registration of Registrable Securities
      pursuant to this Section 1, on the date that such Registrable Securities are
      delivered to the underwriters for sale in connection with a registration
      pursuant to this Section 1, if such securities are being sold through
      underwriters, or, if such securities are not being sold through underwriters,
      on
      the date that the registration statement with respect to such securities becomes
      effective, (i) an opinion, dated such date, of the counsel representing the
      Company for the purposes of such registration, in form and substance as is
      customarily given to underwriters in an underwritten public offering, addressed
      to the underwriters, if any, and to the Holders requesting registration of
      Registrable Securities and (ii) a letter dated such date, from the independent
      certified public accountants of the Company, in form and substance as is
      customarily given by independent certified public accountants to underwriters
      in
      an underwritten public offering, addressed to the underwriters, if any, and
      to
      the Holders requesting registration of Registrable Securities.

     

    1.5 Furnish
      Information.
      It shall
      be a condition precedent to the obligations of the Company to take any action
      pursuant to this Section 1 with respect to the Registrable Securities of any
      selling Holder that such Holder shall furnish to the Company such information
      regarding itself, the Registrable Securities held by it, and the intended method
      of disposition of such securities as shall be required to effect the
      registration of such Holder’s Registrable Securities. 

     

    1.6 Expenses
      of Registration.

     

    (a) Demand
      Registration. All
      expenses other than underwriting discounts and commissions incurred in
      connection with registrations, filings or qualifications pursuant to Section
      1.3, including (without limitation) all registration, filing and qualification
      fees, printers’ and accounting fees, and fees and disbursements of counsel for
      the Company shall be borne by the Company; provided, however, that the Company
      shall not be required to pay for any 

     

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    


    expenses
      of any registration proceeding begun pursuant to Section 1.3 if the registration
      request is subsequently withdrawn at the request of the Holders of a majority
      of
      the Registrable Securities to be registered (in which case all participating
      holders shall bear such expenses), unless the Holders of a majority of the
      Registrable Securities agree to forfeit their right to one demand registration
      pursuant to Section 1.3; provided further, however, that if at the time of
      such
      withdrawal, the Holders have learned of a material adverse change in the
      condition, business, or prospects of the Company from that known to the Holders
      at the time of their request and have withdrawn the request with reasonable
      promptness following disclosure by the Company of such material adverse change,
      then the Holders shall not be required to pay any of such expenses and shall
      retain their rights pursuant to Section 1.2 or Section 1.3.

     

    (b) Piggyback
      Registration.
      All
      expenses other than underwriting discounts and commissions incurred in
      connection with any registration, filing or qualification of Registrable
      Securities with respect to the registrations pursuant to Section 1.2 for each
      Holder (which right may be assigned as provided in Section 1.11, including
      (without limitation) all registration, filing, and qualification fees, printers
      and accounting fees relating or apportionable thereto and the fees and
      disbursements of one counsel for the selling Holders selected by them, but
      excluding underwriting discounts and commissions relating to Registrable
      Securities shall be borne by the Company.

     

    1.7 Underwriting
      Requirements.
      In
      connection with any offering involving an underwriting of shares of the
      Company’s capital stock, the Company shall not be required under Section 1.2 to
      include any of the Holders’ securities in such underwriting unless they accept
      the terms of the underwriting as agreed upon between the Company and the
      underwriters, and then only in such quantity as the underwriters determine
      in
      their sole discretion will not jeopardize the success of the offering by the
      Company. If the total amount of securities, including Registrable Securities,
      requested by stockholders to be included in such offering exceeds the amount
      of
      securities sold other than by the Company that the underwriters determine in
      their sole discretion is compatible with the success of the offering, then
      the
      Company shall be required to include in the offering only that number of such
      securities, including Registrable Securities, which the underwriters determine
      in their sole discretion will not jeopardize the success of the offering (the
      securities so included to be apportioned pro rata among the selling stockholders
      according to the total amount of securities entitled to be included therein
      owned by each selling stockholder or in such other proportions as shall mutually
      be agreed to by such selling stockholders) but in no event shall (i) the amount
      of securities of the selling Holders included in the offering be reduced below
      fifty percent of the total amount of securities included in such offering,
      or
      (ii) notwithstanding (i) above, any shares being sold by a stockholder
      exercising a demand registration right similar to that granted in Section 1.2
      be
      excluded from such offering. For purposes of the preceding parenthetical
      concerning apportionment, for any selling stockholder which is a holder of
      Registrable Securities and which is a partnership or corporation, the partners,
      retired partners and stockholders of such holder, or the estates and family
      members of any such partners and retired partners and any trusts for the benefit
      of any of the foregoing persons shall be deemed to be a single “selling
      stockholder”, and any pro-rata reduction with respect to such “selling
      stockholder” shall be based upon the aggregate amount of shares carrying
      registration rights owned by all entities and individuals included in such
      “selling stockholder”, as defined in this sentence.

    


    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    


    
      


      1.8 Delay
        of Registration.
        No
        Holder shall have any right to obtain or seek an injunction restraining or
        otherwise delaying any such registration as the result of any controversy
        that
        might arise with respect to the interpretation or implementation of this
        Section
        1.

       

    

    1.9 Indemnification.
      In the
      event any Registrable Securities are included in a registration statement under
      this Section 1:

     

    (a) To
      the
      extent permitted by law, the Company will indemnify and hold harmless each
      Holder, any underwriter (as defined in the Act) for such Holder and each person,
      if any, who controls such Holder or underwriter within the meaning of the Act
      or
      the 1934 Act, against any losses, claims, damages, or liabilities (joint or
      several) to which they may become subject under the Act, the 1934 Act or other
      federal or state law, insofar as such losses, claims, damages, or liabilities
      (or actions in respect thereof) arise out of or are based upon any of the
      following statements, omissions or violations (collectively a “Violation”):
      (i)
      any untrue statement or alleged untrue statement of a material fact contained
      in
      such registration statement, including any preliminary prospectus or final
      prospectus contained therein or any amendments or supplements thereto, (ii)
      the
      omission or alleged omission to state therein a material fact required to be
      stated therein, or necessary to make the statements therein not misleading,
      or
      (iii) any violation or alleged violation by the Company of the Act, the 1934
      Act, any state securities law or any rule or regulation promulgated under the
      Act; and the Company will pay to each such Holder, underwriter or controlling
      person, as incurred, any legal or other expenses reasonably incurred by them
      in
      connection with investigating or defending any such loss, claim, damage,
      liability, or action; provided,
      however,
      that
      the indemnity agreement contained in this subsection 1.9(a) shall not apply
      to
      amounts paid in settlement of any such loss, claim, damage, liability, or action
      if such settlement is effected without the consent of the Company (which consent
      shall not be unreasonably withheld), nor shall the Company be liable in any
      such
      case for any such loss, claim, damage, liability, or action to the extent that
      it arises out of or is based upon a Violation which occurs in reliance upon
      and
      in conformity with written information furnished expressly for use in connection
      with such registration by any such Holder, underwriter or controlling
      person.

     

    (b) To
      the
      extent permitted by law, each selling Holder will indemnify and hold harmless
      the Company, each of its directors, each of its officers who has signed the
      registration statement, each person, if any, who controls the Company within
      the
      meaning of the Act, any underwriter, any other Holder selling securities in
      such
      registration statement and any controlling person of any such underwriter or
      other Holder, against any losses, claims, damages, or liabilities (joint or
      several) to which any of the foregoing persons may become subject, under the
      Act, the 1934 Act or other federal or state law, insofar as such losses, claims,
      damages, or liabilities (or actions in respect thereto) arise out of or are
      based upon any Violation, in each case to the extent (and only to the extent)
      that such Violation occurs in reliance upon and in conformity with written
      information furnished by such Holder expressly for use in connection with such
      registration; and each such Holder will pay, as incurred, any legal or other
      expenses reasonably incurred by any person intended to be indemnified pursuant
      to this subsection 1.9(b), in connection with investigating or defending any
      such loss, claim, damage, liability, or action; provided,
      however,
      that
      the indemnity agreement contained in this subsection 1.9(b) shall not apply
      to
      amounts paid in settlement of any such loss, claim, damage, liability or action
      if such settlement is effected without the consent of the Holder, which consent
      shall not be unreasonably withheld; provided,
      that,
      in no event shall any indemnity under this subsection 1.9(b) exceed the


     

    


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    


    net
      proceeds from the offering received by such Holder, except in the case of
      willful fraud by such Holder.

     

    (c) Promptly
      after receipt by an indemnified party under this Section 1.9 of notice of the
      commencement of any action (including any governmental action), such indemnified
      party will, if a claim in respect thereof is to be made against any indemnifying
      party under this Section 1.9, deliver to the indemnifying party a written notice
      of the commencement thereof and the indemnifying party shall have the right
      to
      participate in, and, to the extent the indemnifying party so desires, jointly
      with any other indemnifying party similarly noticed, to assume the defense
      thereof with counsel mutually satisfactory to the parties; provided,
      however,
      that an
      indemnified party (together with all other indemnified parties which may be
      represented without conflict by one counsel) shall have the right to retain
      one
      separate counsel, with the fees and expenses to be paid by the indemnifying
      party, if representation of such indemnified party by the counsel retained
      by
      the indemnifying party would be inappropriate due to actual or potential
      differing interests between such indemnified party and any other party
      represented by such counsel in such proceeding. The failure to deliver written
      notice to the indemnifying party within a reasonable time of the commencement
      of
      any such action, if prejudicial to its ability to defend such action, shall
      relieve such indemnifying party of any liability to the indemnified party under
      this Section 1.10, but the omission so to deliver written notice to the
      indemnifying party will not relieve it of any liability that it may have to
      any
      indemnified party otherwise than under this Section 1.9.

     

    (d) If
      the
      indemnification provided for in this Section 1.9 is held by a court of competent
      jurisdiction to be unavailable to an indemnified party with respect to any
      loss,
      liability, claim, damage, or expense referred to therein, then the indemnifying
      party, in lieu of indemnifying such indemnified party hereunder, shall
      contribute to the amount paid or payable by such indemnified party as a result
      of such loss, liability, claim, damage, or expense in such proportion as is
      appropriate to reflect the relative fault of the indemnifying party on the
      one
      hand and of the indemnified party on the other in connection with the statements
      or omissions that resulted in such loss, liability, claim, damage, or expense
      as
      well as any other relevant equitable considerations; provided
      that in
      no event shall any contribution by a Holder under this subsection 1.9(d) exceed
      the net proceeds from the offering received by such Holder or the amount such
      person would have been obligated to pay if indemnification had been available.
      The relative fault of the indemnifying party and of the indemnified party shall
      be determined by reference to, among other things, whether the untrue or alleged
      untrue statement of a material fact or the omission to state a material fact
      relates to information supplied by the indemnifying party or by the indemnified
      party and the parties’ relative intent, knowledge, access to information and
      opportunity to correct or prevent such statement or omission.

     

    (e) Notwithstanding
      the foregoing, to the extent that the provisions on indemnification and
      contribution contained in the underwriting agreement entered into in connection
      with the underwritten public offering are in conflict with the foregoing
      provisions, the provisions in the underwriting agreement shall control for
      the
      parties to that agreement.

     

    (f) The
      obligations of the Company and Holders under this Section 1.9 shall survive
      the
      completion of any offering of Registrable Securities in a registration statement
      under this Section 1, and otherwise.

    
 

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
      1.10 Reports
        Under Securities Exchange Act of 1934.
        With a
        view to making available to the Holders the benefits of Rule 144 promulgated
        under the Act and any other rule or regulation of the SEC that may at any
        time
        permit a Holder to sell securities of the Company to the public without
        registration, the Company agrees to:

       

    

    (a) make
      and
      keep public information available, as those terms are understood and defined
      in
      SEC Rule 144, at all times so long as the Company remains subject to the
      periodic reporting requirements under Section 13 or 15(d) of the 1934
      Act;

     

    (b) file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the Act and the 1934 Act; and

     

    (c) furnish
      to any Holder, so long as the Holder owns any Registrable Securities, forthwith
      upon request (i) a written statement by the Company that it has complied with
      the reporting requirements of SEC Rule 144, the Act and the 1934 Act, (ii)
      a
      copy of the most recent annual or quarterly report of the Company and such
      other
      reports and documents so filed by the Company, and (iii) such other information
      as may be reasonably requested in availing any Holder of any rule or regulation
      of the SEC which permits the selling of any such securities without registration
      or pursuant to such form.

     

    1.11 Assignment
      of Registration Rights.
      The
      rights to cause the Company to register Registrable Securities pursuant to
      this
      Section 1 may be assigned (but only with all related obligations) by a Holder
      to
      a transferee or assignee of such securities that is an affiliate (as such term
      is
      defined in Rule 405 of the Act) of the Holder, provided:
      (a) the
      Company is, within a reasonable time after such transfer, furnished with written
      notice of the name and address of such transferee or assignee and the securities
      with respect to which such registration rights are being assigned; (b) such
      transferee or assignee agrees in writing to be bound by and subject to the
      terms
      and conditions of this Agreement, including without limitation the provisions
      of
      Section 1.13 below;
      and (c) such assignment shall be effective only if immediately following such
      transfer the further disposition of such securities by the transferee or
      assignee is restricted under the Act. For the purposes of determining the number
      of shares of Registrable Securities held by a transferee or assignee, the
      holdings of transferees and assignees of a partnership who are partners or
      retired partners of such partnership (including spouses and ancestors, lineal
      descendants and siblings of such partners or spouses who acquire Registrable
      Securities by gift, will or intestate succession) shall be aggregated together
      and with the partnership; provided that all assignees and transferees who would
      not qualify individually for assignment of registration rights shall have a
      single attorney-in-fact for the purpose of exercising any rights, receiving
      notices or taking any action under this Section 1.

     

    1.12 Limitations
      on Subsequent Registration Rights.
      From and
      after the date of this Agreement, the Company shall not, without the prior
      written consent of the Holders of a majority of the outstanding Registrable
      Securities, enter into any agreement with any holder or prospective holder
      of
      any securities of the Company which would allow such holder or prospective
      holder (a) to include such securities in any registration filed under Section
      1.2 hereof, unless under the terms of such agreement, such holder or prospective
      holder may include such securities in any such registration only to the extent
      that the inclusion of his securities will not reduce the amount of the
      Registrable Securities of the Holders which is included or (b) to make a demand
      registration which could result in such registration statement being declared
      effective prior to the earlier of either of the dates set forth in subsection
      1.2(a) or within one 

     

    


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    


    hundred
      twenty (120) days of the effective date of any registration effected pursuant
      to
      Section 1.2. 

     

    1.13 Termination
      of Registration Rights.
      No
      Holder shall be entitled to exercise any right provided for in this Section
      1
      after the earlier of (i) five (5) years from the date hereof with respect to
      Demand Registration Rights, or (ii) such time as Rule 144 or another similar
      exemption (without recourse to Rule 144(k) unless such Holder holds less than
      or
      equal to 2% of the Stock) under the Securities Act is available for the sale
      of
      all of such Holder’s shares during a three (3)-month period without
      registration, 

     

    2. Miscellaneous.

     

    2.1 Successors
      and Assigns.
      Except
      as otherwise provided herein, the terms and conditions of this Agreement shall
      inure to the benefit of and be binding upon the respective successors and
      assigns of the parties (including transferees of any shares of Registrable
      Securities). Nothing in this Agreement, express or implied, is intended to
      confer upon any party other than the parties hereto or their respective
      successors and assigns any rights, remedies, obligations, or liabilities under
      or by reason of this Agreement, except as expressly provided in this
      Agreement.

     

    2.2 Governing
      Law.
      This
      Agreement shall be governed by and construed under the laws of the State of
      New
      York as applied to agreements among New York residents entered into and to
      be
      performed entirely within New York.

     

    2.3 Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

     

    2.4 Titles
      and Subtitles.
      The
      titles and subtitles used in this Agreement are used for convenience only and
      are not to be considered in construing or interpreting this
      Agreement.

     

    2.5 Notices.
      Unless
      otherwise provided, any notice required or permitted under this Agreement shall
      be given in writing and shall be deemed effectively given upon personal delivery
      to the party to be notified or upon deposit with the United States Post Office,
      by registered or certified mail, postage prepaid and addressed to the party
      to
      be notified at the address indicated for such party on the signature page
      hereof, or at such other address as such party may designate by ten (10) days’
      advance written notice to the other parties.

     

    2.6 Expenses.
      If any
      action at law or in equity is necessary to enforce or interpret the terms of
      this Agreement, the prevailing party shall be entitled to reasonable attorneys’
      fees, costs and necessary disbursements in addition to any other relief to
      which
      such party may be entitled.

     

    2.7 Amendments
      and Waivers.
      Any term
      of this Agreement may be amended and the observance of any term of this
      Agreement may be waived (either generally or in a particular instance and either
      retroactively or prospectively), only with the written consent of the Company
      and the holders of a majority of the Registrable Securities then outstanding.
      Any amendment or waiver effected in accordance with this paragraph shall be
      binding upon each holder of any Registrable Securities then outstanding, each
      future holder of all such Registrable Securities and the Company.

     

    2.8 Severability.
      If one
      or more provisions of this Agreement are held to be unenforceable under
      applicable law, such provision shall be excluded from this Agreement and


     

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    


    the
      balance of the Agreement shall be interpreted as if such provision was so
      excluded and shall be enforceable in accordance with its terms.

     

    2.9 Aggregation
      of Stock.
      All
      shares of Registrable Securities held or acquired by affiliated entities or
      persons shall be aggregated together for the purpose of determining the
      availability of any rights under this Agreement.

     

    2.10 Entire
      Agreement; Amendment; Waiver.
      This
      Agreement (including the Exhibits hereto, if any) constitutes the full and
      entire understanding and agreement between the parties with regard to the
      subjects hereof and thereof.

     

    


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    


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

    


    


    
      	 	
              Magnetech
                Integrated Services Corp.

            
	 	 	 
	 	 	 
	 	 	 
	 	
              By:

            	 
	 	
              Name:

            
	 	 	 
	 	 	 
	 	 	 
	 	
              Purchaser

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	
              By:

            	 
	 	
              Name:

            


    

    


    
      
        
        

      

      
        11

        
          

        

      

    

    
      Schedule
        1

       

      Purchaser(s)

    

    
      
         

        MAGNETECH
          INTEGRATED SERVICES CORP.

      

      
        Private
          Placement of Common Stock


        
          	
                  Name

                	 	
                  Closing
                    Date

                	
                   

                	
                  Amount

                	
                   

                	
                  Shares

                	 
	 	 	 	 	 	 	 	 
	
                  Pershing
                    as Cust., IRA FBO Tomas D'Avanzo

                	 	 	
                  6/3/2004

                	 	
                  $

                	
                  75,000.00

                	 	 	
                  375,000

                	 
	
                  Robert
                    H. Cole

                	 	 	
                  6/3/2004

                	 	
                  $

                	
                  30,000.00

                	 	 	
                  150,000

                	 
	
                  David
                    L. Cohen

                	 	 	
                  6/3/2004

                	 	
                  $

                	
                  55,000.00

                	 	 	
                  275,000

                	 
	
                  Frederick
                    B. Epstein

                	 	 	
                  6/3/2004

                	 	
                  $

                	
                  100,000.00

                	 	 	
                  500,000

                	 
	
                  Jay
                    Shrager & Carole Shrager JTWROS

                	 	 	
                  6/3/2004

                	 	
                  $

                	
                  45,000.00

                	 	 	
                  225,000

                	 
	
                  Gary
                    M. Glasscock

                	 	 	
                  6/3/2004

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  125,000

                	 
	
                  David
                    R. Cole

                	 	 	
                  6/3/2004

                	 	
                  $

                	
                  30,000.00

                	 	 	
                  150,000

                	 
	
                  Reese
                    Cole Partnership Ltd.

                	 	 	
                  6/3/2004

                	 	
                  $

                	
                  100,000.00

                	 	 	
                  500,000

                	 
	
                  James
                    J. Thompson, III

                	 	 	
                  6/3/2004

                	 	
                  $

                	
                  40,000.00

                	 	 	
                  200,000

                	 
	
                  Matthew
                    A. Dancy

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  150,000.00

                	 	 	
                  750,000

                	 
	
                  Gregg
                    M. Gaylord & Linda S. Gaylord LV TR 1/18/99

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  250,000

                	 
	
                  Dr.
                    Frank Lake, III

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  250,000

                	 
	
                  Dr.
                    Leo Mazzocchi & Nancy T. Mazzocchi JTWROS

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  250,000

                	 
	
                  Joseph
                    Rienzi & Judith Rienzi JTWROS

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  250,000

                	 
	
                  Larry
                    Rosenfield

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  125,000

                	 
	
                  Dr.
                    Gilbert R. Schorlemmer

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  20,000.00

                	 	 	
                  100,000

                	 
	
                  William
                    Sybesma

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  125,000

                	 
	
                  William
                    Wisniewski & Jane Wisniewski JTWROS

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  20,000.00

                	 	 	
                  100,000

                	 
	
                  Joseph
                    Gazzola & Josephine Gazzola JTWROS

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  125,000

                	 
	
                  Mollie
                    Ann Peters

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  15,000.00

                	 	 	
                  75,000

                	 
	
                  Richard
                    Campanella & Janis Campanella JTWROS

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  10,000.00

                	 	 	
                  50,000

                	 
	
                  Stanley
                    Merves

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  250,000

                	 
	
                  Tom
                    Wrenn

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  125,000

                	 
	
                  David
                    L. Cohen

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  145,000.00

                	 	 	
                  725,000

                	 
	
                  Lawrence
                    E. Jaffe Mon. Pen. Plan UAD 1/1/98

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  125,000

                	 
	
                  RS
                    & VS Ltd.

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  250,000

                	 
	
                  Somerset
                    Farms Profit Sharing Plan UA DTD 5/28/92

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  250,000

                	 
	
                  Jay
                    Shrager & Carole Shrager JTWROS

                	 	 	
                  7/8/2004

                	 	
                  $

                	
                  55,000.00

                	 	 	
                  275,000

                	 
	
                  Dr.
                    Domenic Strazzulla

                	 	 	
                  10/20/2004

                	 	
                  $

                	
                  75,000.00

                	 	 	
                  375,000

                	 
	
                  Gregg
                    Goebel & Marilyn Goebel JTWROS

                	 	 	
                  10/20/2004

                	 	
                  $

                	
                  10,000.00

                	 	 	
                  50,000

                	 
	
                  Stephen
                    T. Skoly, Jr.

                	 	 	
                  10/20/2004

                	 	
                  $

                	
                  15,000.00

                	 	 	
                  75,000

                	 
	
                  SwissFinanz
                    Partner AG

                	 	 	
                  10/20/2004

                	 	
                  $

                	
                  125,000.00

                	 	 	
                  625,000

                	 
	
                  Pershing
                    LLC as Cust., SEP FBO Henry Fortier, III

                	 	 	
                  10/20/2004

                	 	
                  $

                	
                  23,700.00

                	 	 	
                  118,500

                	 
	
                  Jay
                    Shrager & Carole Shrager JTWROS

                	 	 	
                  10/20/2004

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  250,000

                	 
	
                  Garry
                    J. Fadale

                	 	 	
                  10/20/2004

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  250,000

                	 
	
                  Pershing
                    LLC as Cust., IRA FBO Thomas D'Avanzo

                	 	 	
                  10/20/2004

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  125,000

                	 
	
                  David
                    L. Cohen

                	 	 	
                  10/20/2004

                	 	
                  $

                	
                  60,000.00

                	 	 	
                  300,000

                	 
	
                  Thomas
                    J. Keeney

                	 	 	
                  10/20/2004

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  250,000

                	 
	
                  William
                    Sybesma & Martina Jane Sybesma JTWROS

                	 	 	
                  10/20/2004

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  250,000

                	 
	
                  William
                    M. Greenfield

                	 	 	
                  11/8/2004

                	 	
                  $

                	
                  10,000.00

                	 	 	
                  50,000

                	 
	
                  Jody
                    Nelson

                	 	 	
                  11/8/2004

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  250,000

                	 
	
                  Pershing
                    LLC - Cust., IRA FBO Henry Fortier, III, Roth Account

                	 	 	
                  11/8/2004

                	 	
                  $

                	
                  1,300.00

                	 	 	
                  6,500

                	 
	
                  Garry
                    J. Fadale

                	 	 	
                  11/8/2004

                	 	
                  $

                	
                  100,000.00

                	 	 	
                  500,000

                	 
	
                  Gregg
                    M. Gaylord & Linda S. Gaylord LV TR 1/18/99

                	 	 	
                  11/8/2004

                	 	
                  $

                	
                  30,000.00

                	 	 	
                  150,000

                	 
	
                  Nasrollah
                    Jahdi

                	 	 	
                  11/8/2004

                	 	
                  $

                	
                  30,000.00

                	 	 	
                  150,000

                	 
	
                  Jay
                    Shrager & Carole Shrager JTWROS

                	 	 	
                  11/8/2004

                	 	
                  $

                	
                  30,000.00

                	 	 	
                  150,000

                	 
	
                  Frederick
                    B. Epstein

                	 	 	
                  11/8/2004

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  125,000

                	 
	
                  SwissFinanz
                    Partner AG

                	 	 	
                  12/13/2004

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  125,000

                	 
	
                  James
                    Ladner

                	 	 	
                  12/13/2004

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  125,000

                	 
	
                  Garry
                    J. Fadale

                	 	 	
                  12/31/2004

                	 	
                  $

                	
                  300,000.00

                	 	 	
                  1,500,000

                	 
	 	 	 	 	 	 	 	 	 	 	 
	
                  TOTALS

                	 	 	 	 	
                  $

                	
                  2,550,000.00

                	 	 	
                  12,750,000

                	 


        

      

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    
      EXHIBIT
        B

       

      ESCROW
        AGREEMENT

       

      ESCROW
        AGREEMENT dated as of this __ day of May, 2004 by and among Magnetech Integrated
        Services Corp., an Indiana corporation (the “Company”), Wilmington Trust
        Company, a financial institution chartered under the laws of the State of
        Delaware (the “Agent”),
        and
        Strasbourger Pearson Tulcin Wolff Inc., a New York corporation (“Strasbourger”).

       

      W
        I T
        N E S S E T H:

       

      WHEREAS,
        the Company is offering 16,000,000 shares of Common Stock (“MISC
        Shares”)
        at
        $0.20 per MISC Share (inclusive of the $750,000 of Series A Convertible
        Redeemable Preferred Stock sold in the pre-bridge financing by the Company’s
        subsidiary Magnetech Industrial Services, Inc., which closed on February
        26,
        2004, and which automatically convert into 4,750,000 MISC Shares of this
        Offering (as such term is defined below), (the “Offering”)
        through Strasbourger; and

       

      WHEREAS:

       

      (a) The
        Offering will commence immediately and will continue until the earlier to
        occur
        of (i) the sale of the maximum number of MISC Shares that comprise the Offering
        and (ii) August ___, 2004, unless extended by up to 45 days by the Company
        and
        Strasbourger (the “Offering
        Period”);

       

      (b) Once
        the
        Offering has been sold, the Company and Strasbourger may conduct one or more
        closings (each a “Closing”)
        on the
        sale of such MISC Shares;

       

      (c) Tendered
        subscriptions for all MISC Shares shall be subject to acceptance by the Company,
        which subscriptions may be reduced in the sole discretion of the Company
        or
        rejected for any reason in the sole discretion of the Company; 

       

      (d) Proceeds
        received upon the subscription of the MISC Shares shall be held in escrow
        by the
        Agent pending the Closing on the MISC Shares, and disbursed upon the Closing;
        and

       

      (e) If
        the
        Offering is not sold prior to the end of the Offering Period and there is
        no
        Closing, the Offering will be terminated and all funds received from Purchasers
        will be returned, without accrued interest and without any deduction. The
        day
        that the Offering Period terminates is hereinafter referred to as the
“Termination
        Date.”

       

      NOW,
        THEREFORE, in consideration of the mutual promises herein contained and
        intending to be legally bound, the parties hereby agree as follows:

       

      1. Appointment
        of Agent.
        The
        Company hereby appoints Wilmington Trust Company as escrow agent in accordance
        with the terms and conditions set forth herein, and Wilmington Trust Company
        hereby accepts such appointment.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


       

      2. Delivery
        of Subscription Proceeds.
        All
        checks, drafts, or other instruments received from subscribers as payment
        for
        the Units will be delivered by the Company to the Agent, made payable to
        “Wilmington Trust Company, as Escrow Agent for Magnetech Integrated Services
        Corp.” Prior to Closing or earlier termination of the Offering, the Company will
        provide the Agent with a chart setting forth, as to each subscriber, his
        name,
        address, social security number or employer identification number, number
        of
        MISC Shares subscribed for, and the amount paid in connection with such
        subscription. The Agent is hereby empowered on behalf of the Company to endorse
        and collect all checks, drafts, wire funds transfers, promissory notes or
        other
        instruments received on account of subscriptions for MISC Shares.

       

      3. Agent
        to Hold and Disburse Funds.
        The
        Agent will hold in a special account established for the benefit of the Company
        and disburse all funds received by it pursuant to the terms of this Escrow
        Agreement, as follows:

       

      3.1 All
        funds
        received by the Agent pursuant to the terms of this Escrow Agreement shall
        be
        held in a non-interest bearing account with the Agent and may be invested
        in The
        Wilmington U.S. Government Portfolio fund. It is understood that all checks
        received by the Agent are subject to clearance time, and the funds represented
        thereby cannot be drawn until such time as the same constitutes good and
        collected funds.

       

      3.2 In
        the
        event that prior to the Termination Date the Agent has received funds (and
        such
        funds are cleared within three days after the Termination Date) or other
        instruments in payment for subscriptions from the sale of the Offering, the
        Agent will, on the date of each Closing (the “Closing
        Date”),
        pursuant to (a) written instructions signed by the Company and Strasbourger
        and
        (b) written confirmation from counsel to either the Company or Strasbourger
        that
        all conditions for the release of the funds have been met, pay to the Company,
        Strasbourger and/or to any other person designated in such instructions,
        the
        proceeds received by the Agent from the sale of such Units (less the funds
        the
        Company is obligated to pay as a fee to the Agent pursuant to Section 7
        hereof, unless otherwise paid by the Company).

       

      3.3 In
        the
        event that a Closing does not occur prior to the end of the Offering Period
        or
        if no written instructions are received by the Agent from the Company and
        Strasbourger relative to funds received by the Agent from one or more
        subscribers to the Offering within three business days after the Termination
        Date, the Agent will return the escrowed funds to each Subscriber without
        deduction and without interest by check mailed to the address set forth in
        the
        chart delivered pursuant to Section 2. The Agent shall assume the Offering
        Period terminates on August ___, 2004 unless notified otherwise in writing
        by
        the Company or Strasbourger.

       

      4. Exculpation
        and Indemnification of Agent.

       

      4.1 The
        Agent
        shall have no duties or responsibilities other than those expressly set forth
        herein. The Agent shall have no duty to enforce any obligation of any person
        to
        make any payment or delivery, or to direct or cause any payment or delivery
        to
        be made, or to enforce any obligation of any person to perform any other
        act.
        The Agent shall be under no liability to the other parties hereto or to anyone
        else by reason of any failure on the part of any party hereto or any maker,
        guarantor, endorser or other signatory of any document or any other person
        to
        perform such person's obligations under any such document. Except for amendments
        to this Agreement referred to below, and except for instructions given to
        the
        Agent by the Company and Strasbourger relating 


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      


       

      to
        the
        escrow deposit under this Agreement, the Agent shall not be obligated to
        recognize any agreement between any and all of the persons referred to herein,
        notwithstanding that references thereto may be made herein and whether or
        not it
        has knowledge thereof.

       

      4.2 The
        Agent
        shall not be liable to the Company or to anyone else for any action taken
        or
        omitted by it, or any action suffered by it to be taken or omitted, in good
        faith and in the exercise of its own best judgment. The Agent may rely
        conclusively and shall be protected in acting upon any order, notice, demand,
        certificate, opinion or advice of counsel (including counsel chosen by the
        Agent), statement, instrument, report or other paper or document (not only
        as to
        its due execution and the validity and effectiveness of its provisions, but
        also
        as to the truth and acceptability of any information therein contained),
        which
        is believed by the Agent to be genuine and to be signed or presented by the
        proper person or persons. The Agent shall not be bound by any notice or demand,
        or any waiver, modification, termination or rescission of this Agreement
        or any
        of the terms thereof, unless evidenced by a writing delivered to the Agent
        signed by the proper party or parties and, if the duties or rights of the
        Agent
        are affected, unless it shall give its prior written consent thereto. In
        the
        event the Agent receives conflicting instructions hereunder, the Agent shall
        be
        fully protected in refraining from acting until such conflict is resolved
        to the
        satisfaction of the Agent.

       

      4.3 The
        Agent
        shall not be responsible for the sufficiency or accuracy of the form of,
        or the
        execution, validity, value or genuineness of, any document or property received,
        held or delivered by it hereunder, or of any signature or endorsement thereon,
        or for any lack of endorsement thereon, or for any description therein; nor
        shall the Agent be responsible or liable to the other parties hereto or to
        anyone else in any respect on account of the identity, authority or rights
        of
        the persons executing or delivering or purporting to execute or deliver any
        document or property of this Agreement. The Agent shall have no responsibility
        with respect to the use or application of any funds or other property paid
        or
        delivered by the Agent pursuant to the provisions hereof. The Agent shall
        not be
        liable to the Company or to anyone else for any loss which may be incurred
        by
        reason of any investment of any monies which it holds hereunder provided
        the
        Agent has complied with the provisions of Section 3.1 hereunder.

       

      4.4 The
        Agent
        shall have the right to assume in the absence of written notice to the contrary
        from the proper person or persons that a fact or an event by reason of which
        an
        action would or might be taken by the Agent does not exist or has not occurred,
        without incurring liability to the other parties hereto or to anyone else
        for
        any action taken or omitted, or any action suffered by it to be taken or
        omitted, in good faith and in the exercise of its own best judgment, in reliance
        upon such assumption. Agent shall be entitled to consult with legal counsel
        in
        the event that a question or dispute arises with regard to the construction
        of
        any of the provisions hereof, and shall incur no liability and shall be fully
        protected in acting in accordance with the advice or opinion of such
        counsel.

       

      Agent
        shall not be required to take any action which, in the Agent’s sole and absolute
        judgment, could involve it in expense or liability in excess of its fees
        and
        reimbursable expenses hereunder unless furnished with security and indemnity
        which it deems, in its sole and absolute discretion, to be
        satisfactory.

       

      4.5 To
        the
        extent that the Agent becomes liable for the payment of taxes, including
        withholding taxes, in respect of income derived from the investment of funds
        held hereunder or any 


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      


       

      payment
        made hereunder, the Agent may pay such taxes. The Agent may withhold from
        any
        payment of monies held by it hereunder such amount as the Agent estimates
        to be
        sufficient to provide for the payment of such taxes not yet paid, and may
        use
        the sum withheld for that purpose. The Agent shall be indemnified and held
        harmless against any liability for taxes and for any penalties or interest
        in
        respect of taxes, on such investment income or payments in the manner provided
        in Section 4.6.

       

      4.6 The
        Agent
        will be indemnified and held harmless by the Company from and against any
        and
        all expenses, including reasonable counsel fees and disbursements, or loss
        suffered by the Agent in connection with any action, suit or other proceeding
        involving any claim, or in connection with any claim or demand, which in
        any
        way, directly or indirectly, arises out of or relates to this Agreement,
        the
        services of the Agent hereunder, the monies or other property held by it
        hereunder or any income earned from investment of such monies; provided,
        however, that such indemnification shall not extend to proven acts of gross
        negligence, willful misconduct or bad faith by the Agent. The Agent shall
        have a
        lien for the amount of any such expenses or loss on the monies and other
        property held by it hereunder and shall be entitled to reimburse itself from
        such monies or property for the amount of any such expense or loss. Promptly
        after the receipt by the Agent or notice of any demand or claim or the
        commencement of any action, suit or proceeding, the Agent shall, if a claim
        in
        respect thereof is to be made against the Company, notify the Company thereof
        in
        writing, but the failure by the Agent to give such notice shall not relieve
        the
        Company from any liability which the Company may have to the Agent hereunder.
        Notwithstanding any obligation to make payments and deliveries hereunder,
        the
        Agent may retain and hold for such time as it deems necessary such amount
        of
        monies or property as it shall, from time to time, in its sole discretion,
        deem
        sufficient to indemnify itself for any such loss or expense and for any amounts
        due it under Section 7. The terms of this Section 4.6 shall survive the
        termination of this Agreement.

       

      4.7 For
        the
        purposes hereof, the term “expense
        or loss”
        shall
        include all amounts paid or payable to satisfy any claim, demand or liability,
        or in settlement of any claim, demand, action, suit or proceeding settled
        with
        the express written consent of the Agent, and all costs and expenses, including,
        but not limited to, reasonable counsel fees and disbursements, paid or incurred
        in investigating or defending against any such claim, demand, action, suit
        or
        proceeding.

       

      5. Termination
        of Agreement and Resignation of Agent.

       

      5.1 This
        Escrow Agreement shall terminate on the final disposition of the monies and
        property held in escrow hereunder, provided that the rights of the Agent
        and the
        obligations of the other parties hereto under Sections 4 and 7 shall survive
        the
        termination hereof.

       

      5.2 The
        Agent
        may resign at any time and be discharged from its duties as Agent hereunder
        by
        giving the Company and Strasbourger at least 30 days' notice thereof. As
        soon as
        practicable after its resignation, the Agent shall turn over to a successor
        escrow agent appointed by the Company all monies and property held hereunder
        (less such amount as the Agent is entitled to retain pursuant to Section
        7) upon
        presentation of the document appointing the new escrow agent and its acceptance
        thereof. If no new Agent is so appointed within the 60-day period following
        such
        notice of resignation, the Agent may deposit the aforesaid monies and property
        with any court it deems appropriate.


      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      


       

      6. Form
        of Payments by Agent.

       

      6.1 Any
        payments by the Agent to subscribers or to persons other than the Company
        pursuant to the terms of this Agreement shall be made by check, payable to
        the
        order of each respective subscriber or other person, or by wire
        transfer.

       

      6.2 Except
        as
        otherwise specifically indicated, all amounts referred to herein are expressed
        in United States Dollars and all payments by the Agent shall be made in such
        dollars.

       

      7. Compensation
        of Agent.
        For
        services rendered, the Agent shall receive as compensation $3,500 and all
        interest income on the funds received pursuant to this Agreement. The Agent
        shall also be entitled to reimbursement from the Company for all reasonable
        expenses paid or incurred by it in the administration of its duties hereunder,
        including, but not limited to, all counsel, advisors' fees and disbursements
        and
        all reasonable taxes or other governmental charges upon presentation of
        supporting documentation, if requested by the Company. It is anticipated
        that
        such disbursement shall not exceed $1,000 barring any unforeseen
        circumstances.

       

      8. Notices.
        All
        notices, requests, demands and other communications provided for herein shall
        be
        in writing, shall be delivered by overnight courier providing a receipt of
        delivery or by certified or registered mail, shall be deemed given when received
        and shall be addressed to the parties hereto at their respective addresses
        listed below or to such other persons or addresses as the relevant party
        shall
        designate as to itself from time to time in writing delivered in like
        manner.

       

      


      
        	
                 if to the Company: 

                 

              	 
	
                1125
                  S. Walnut Street

                South
                  Bend, IN 46619

                Attention:
                  John A Martell

              	
                Telephone:
                  (574) 234-8131

                Facsimile:
                  (574) 232-7648

              
	
                 

                with a copy to:

                 

              	 
	
                Barnes
                  & Thornburg

                600
                  1st
                  Source Bank Building

                100
                  N. Michigan St

                South
                  Bend, IN 46601

                Attention:
                  Richard L. Mintz, Esq.

              	
                Telephone:
                  (574) 233-1171 

                Facsimile:
                  (574) 237-1125 

              
	
                 

                if
                  to the Agent:

                 

              	 
	
                Wilmington
                  Trust Company

                1100
                  North Market Street

                Wilmington,
                  DE 19890

                Attention:
                  Scott Huff

              	
                Telephone:
                  (302) 636-6449

                Facsimile:
                  (302) 636-4145

              


      


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      


      


      
        	
                 if to Strasbourger:

                 

              	 
	
                Strasbourger
                  Pearson Tulcin Wolff Inc.

                33
                  Whitehall Street, 17th
                  Floor

                New
                  York, NY 10004

                Attention:
                  Ron Moschetta

              	
                Telephone:
                  (646) 459-6972

                Facsimile:
                  (212) 785-1833

              
	
                 

                with a copy to:

                 

              	 
	
                Gottbetter
                  & Partners, LLP

                488
                  Madison Ave, 12th
                  Floor

                New
                  York, NY 10022

                Attention:
                  Louis R. Cammarosano

              	
                Telephone:
                  (212) 400-6900

                Facsimile:
                  (212) 400-6901

              


      

       

      9. Further
        Assurances.
        From
        time to time on and after the date hereof, the Company shall deliver or cause
        to
        be delivered to the Agent such further documents and instruments and shall
        do
        and cause to be done such further acts as the Agent shall reasonably request
        (it
        being understood that the Agent shall have no obligation to make any such
        request) to carry out more effectively the provisions and purposes of this
        Agreement, to evidence compliance herewith or to assure itself that it is
        protected in acting hereunder.

       

      10. Consent
        to Service of Process.
        Each of
        the Company, Strasbourger and Agent hereby irrevocably consents to the
        jurisdiction of the courts of the State of New York and of any federal court
        located in such State in connection with any action, suit or other proceeding
        arising out of or relating to this Agreement or any action taken or omitted
        hereunder, and waives personal service of any summons, complaint or other
        process and agrees that the service thereof may be made by certified or
        registered mail directed to each of the Company and Strasbourger at its address
        for purposes of notices hereunder.

       

      11. Miscellaneous.

       

      11.1 If
        for
        any reason the escrow deposits are not received by the Agent as contemplated
        herein, the Company shall reimburse the Agent for all expenses, including
        reasonable counsel fees and disbursements, paid or incurred by it in making
        preparations for providing the services contemplated hereby.

       

      11.2 This
        Agreement shall be construed without regard to any presumption or other rule
        requiring construction against the party causing such instrument to be drafted.
        The terms “hereby,”“hereof,”“hereto,”“hereunder” and any similar terms, as used
        in this Agreement, refer to the Agreement in its entirety and not only to
        the
        particular portion of this Agreement where the term is used. The word “person”
        shall mean any natural person, partnership, company, government and any other
        form of business or legal entity. All words or terms used in this Agreement,
        regardless of the number or gender in which they are used, shall be deemed
        to
        include any other number and any other gender as the context may require.
        This
        Agreement shall not be admissible in evidence to construe the provisions
        of any
        prior agreement. The rule of ejusdem generis shall not be applicable herein
        to
        limit a general statement, which is followed by or referable to an enumeration
        of specific matters, to matters similar to the matters specifically
        mentioned.


      
        
          
          

        

        
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      11.3 This
        Agreement and the rights and obligations hereunder of the Company may be
        assigned by the Company only to a successor to the Company's entire business.
        This Agreement and the rights and obligations hereunder of the Agent may
        be
        assigned by the Agent only to a successor to its entire business. This Agreement
        shall be binding upon and inure to the benefit of each party's respective
        successors, and permitted assigns. No other person shall acquire or have
        any
        rights under or by virtue of this Agreement. This Agreement may not be changed
        orally or modified, amended or supplemented without an express written agreement
        executed by the Agent and the Company. This Agreement is intended to be for
        the
        sole benefit of the parties hereto, and (subject to the provisions of this
        Section 11.3) their respective successors, and assigns, and none of the
        provisions of this Agreement are intended to be, nor shall they be construed
        to
        be, for the benefit of any third person.

       

      11.4 This
        Agreement shall be governed by and construed in accordance with the internal
        laws of the State of New York. The representations and warranties contained
        in
        this Agreement shall survive the execution and delivery hereof and any
        investigations made by any party. The headings in this Agreement are for
        purposes of reference only and shall not limit or otherwise affect any of
        the
        terms hereof.

       

      12. Execution
        in Counterparts.
        This
        Agreement may be executed in any number of counterparts, each of which shall
        be
        deemed to be an original as against any party whose signature appears thereon,
        and all of which shall together constitute one and the same instrument. This
        Agreement shall become binding when one or more counterparts hereof,
        individually or taken together, shall bear the signature of all of the parties
        reflected hereon as the signatures.

       

      IN
        WITNESS WHEREOF, the parties have executed and delivered this Agreement on
        the
        day and year first above written.

       

      


      
        	 	
                WILMINGTON
                  TRUST COMPANY

              
	 	
                By:

              	 
	 	 	
                Name:

              
	 	 	
                Title:

              
	 	 
	 	
                MAGNETECH
                  INTEGRATED SERVICES CORP.

              
	 	
                By:

              	 
	 	 	
                Name:

              
	 	 	
                Title:

              
	 	 
	 	
                STRASBOURGER
                  PEARSON TULCIN WOLFF, INC.

              
	 	
                By:

              	 
	 	 	
                Name:

              
	 	 	
                Title:

              


      

       

       

       

      7