Document:

Escrow Agreement dated April 26, 2004 among the registrant, Wilmington Trust
      Company and Strasbourger Pearson Tulcin Wolff Incorporated

    

       

      Exhibit
        10.6

       

      ESCROW
        AGREEMENT

       

      ESCROW
        AGREEMENT dated as of this 26th
        day of
        April, 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.

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

      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:

                	
                  /s/
                    Scott A. Huff

                
	 	
                  Name:

                	
                  Scott
                    A. Huff

                
	 	
                  Title:

                	
                  Financial
                    Services Officer

                
	 	 	 
	 	 	 
	 	
                  MAGNETECH
                    INTEGRATED SERVICES CORP.

                
	 	 	 
	 	
                  By:

                	
                  /s/
                    John A. Martell

                
	 	
                  Name:

                	
                  John
                    A. Martell

                
	 	
                  Title:

                	
                  President

                
	 	 	 
	 	 	 
	 	
                  STRASBOURGER
                    PEARSON TULCIN WOLFF, INC.

                
	 	 	 
	 	
                  By:

                	
                  /s/
                    Michael J. Schumacher

                
	 	
                  Name:

                	
                  Michael
                    J. Schumacher

                
	 	
                  Title:

                	
                  President

                

        

        

        

        
          
             

          

          
            7Funds Escrow Agreement dated August 24, 2005 among the registrant, Loeb and
      Loeb LLP and Laurus Master Fund, Ltd.

    

       

      Exhibit
        10.7

       

      

       

      Execution
        Copy

       

      FUNDS
        ESCROW AGREEMENT

       

      This
        Agreement (“Agreement”) is dated as of the 24th day of August, 2005 among
        Magnetech Integrated Services Corp., an Indiana corporation (the "Company"),
        Laurus Master Fund, Ltd. (the "Purchaser"),
        and
        Loeb & Loeb LLP (the "Escrow
        Agent").

       

      W I T N E S S E T H:

       

      WHEREAS,
        the Purchaser has advised the Escrow Agent that (a) the Company and the
        Purchaser have entered into a Security and Purchase Agreement (the "Security
        Agreement")
        for
        the sale by the Company to the Purchaser of a secured convertible minimum
        borrowing note (the "Minimum
        Borrowing Note"),
        a
        secured revolving note (the “Revolving
        Note”)
        and
        secured convertible term note (the “Term
        Note”),
        (b)
        the Company has issued to the Purchaser a common stock purchase warrant (the
        “Warrant”)
        in
        connection with the issuance of the Term Note, Minimum Borrowing Note and
        the
        Revolving Note, (c) the Company has issued to the Purchaser shares of its
        common
        stock (the “Grant
        Shares”)
        in
        connection with the issuance of the Term Note, Minimum Borrowing Note and
        the
        Revolving Note, and (d) the Company and the Purchaser have entered into a
        Registration Rights Agreement covering the registration of the Grant Shares
        and
        the Company’s common stock underlying the Minimum Borrowing Note, the Term Note
        and the Warrant (the “Registration
        Rights Agreement”);

       

      WHEREAS,
        the Company and the Purchaser wish the Purchaser to deliver to the Escrow
        Agent
        copies of the Documents (as hereafter defined) and the Escrowed Payment (as
        hereafter defined) to be held and released by Escrow Agent in accordance
        with
        the terms and conditions of this Agreement; and

       

      WHEREAS,
        the Escrow Agent is willing to serve as escrow agent pursuant to the terms
        and
        conditions of this Agreement;

       

      NOW
        THEREFORE, the parties agree as follows:

       

      ARTICLE
        I

       

      INTERPRETATION

       

      1.1. Definitions.
        Whenever used in this Agreement, the following terms shall have the meanings
        set
        forth below.

       

      (a) "Agreement"
        means this Agreement, as amended, modified and/or supplemented from time
        to time
        by written agreement among the parties hereto.

      
        
          
          

        

        
          
            

          

        

        
          
          

        

      

       

      (b) "Closing
        Payment" means the closing payment to be paid to Laurus Capital Management,
        LLC,
        the fund manager, as set forth on Schedule
        A
        hereto.

       

      (c) “Disbursement
        Letter” means that certain letter delivered to the Escrow Agent by each of the
        Purchaser and the Company setting forth wire instructions and amounts to
        be
        funded at the Closing.

       

      (d) "Documents"
        means copies of the Disbursement Letter, the Security and Purchase Agreement,
        the Term Note, the Minimum Borrowing Note, the Revolving Note, the Warrant,
        the
        Registration Rights Agreement and the Grant Shares.

       

      (e) “Escrowed
        Payment" means $7,000,000.

       

      1.2. Entire
        Agreement.
        This
        Agreement constitutes the entire agreement among the parties hereto with
        respect
        to the matters contained herein and supersedes all prior agreements,
        understandings, negotiations and discussions of the parties, whether oral
        or
        written. There are no warranties, representations and other agreements made
        by
        the parties in connection with the subject matter hereof except as specifically
        set forth in this Agreement.

       

      1.3. Extended
        Meanings.
        In this
        Agreement words importing the singular number include the plural and vice
        versa;
        words importing the masculine gender include the feminine and neuter genders.
        The word "person" includes an individual, body corporate, partnership, trustee
        or trust or unincorporated association, executor, administrator or legal
        representative.

       

      1.4. Waivers
        and Amendments.
        This
        Agreement may be amended, modified, superseded, cancelled, renewed or extended,
        and the terms and conditions hereof may be waived, in each case only by a
        written instrument signed by all parties hereto, or, in the case of a waiver,
        by
        the party waiving compliance. Except as expressly stated herein, no delay
        on the
        part of any party in exercising any right, power or privilege hereunder shall
        operate as a waiver thereof, nor shall any waiver on the part of any party
        of
        any right, power or privilege hereunder preclude any other or future exercise
        of
        any other right, power or privilege hereunder.

       

      1.5. Headings.
        The
        division of this Agreement into articles, sections, subsections and paragraphs
        and the insertion of headings are for convenience of reference only and shall
        not affect the construction or interpretation of this Agreement.

       

      1.6. Law
        Governing this Agreement; Consent to Jurisdiction.
        THIS
        AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
        OF THE
        STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. With
        respect to any suit, action or proceeding relating to this Agreement or to
        the
        transactions contemplated hereby (“Proceedings”), each party hereto irrevocably
        submits to the exclusive jurisdiction of the courts of the County of New
        York,
        State of New York and the United States District 

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      court
        located in the county of New York in the State of New York. Each party hereto
        hereby irrevocably and unconditionally (a) waives trial by jury in any
        Proceeding relating to this Agreement and for any related counterclaim and
        (b)
        waives any objection which it may have at any time to the laying of venue
        of any
        Proceeding brought in any such court, waives any claim that such Proceedings
        have been brought in an inconvenient forum and further waives the right to
        object, with respect to such Proceedings, that such court does not have
        jurisdiction over such party. As between the Company and the Purchaser, the
        prevailing party shall be entitled to recover from the other party its
        reasonable attorneys’ fees and costs. In the event that any provision of this
        Agreement is determined by a court of competent jurisdiction to be invalid
        or
        unenforceable, then the remainder of this Agreement shall not be affected
        and
        shall remain in full force and effect.

       

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

       

      ARTICLE
        II

       

      APPOINTMENT
        OF AND DELIVERIES TO THE ESCROW AGENT

       

      2.1. Appointment.
        The
        Company and the Purchaser hereby irrevocably designate and appoint the Escrow
        Agent as their escrow agent for the purposes set forth herein, and the Escrow
        Agent by its execution and delivery of this Agreement hereby accepts such
        appointment under the terms and conditions set forth herein.

       

      2.2. Copies
        of Documents to Escrow Agent.
        On or
        about the date hereof, the Purchaser shall deliver to the Escrow Agent copies
        of
        the Documents executed by the Company and/or Purchaser, as applicable.

       

      2.3. Delivery
        of Escrowed Payment to Escrow Agent.
        On or
        about the date hereof, the Purchaser shall deliver to the Escrow Agent the
        Escrowed Payment.

       

      2.4. 
        Intention to Create Escrow Over the Escrowed Payment.
        The
        Purchaser and the Company intend that the Escrowed Payment shall be held
        in
        escrow by the Escrow Agent and released from escrow by the Escrow Agent only
        in
        accordance with the terms and conditions of this Agreement.

       

      ARTICLE
        III

       

      RELEASE
        OF ESCROW

       

      3.1. Release
        of Escrow.
        Subject
        to the provisions of Section 4.2, the Escrow Agent shall release the Escrowed
        Payment from escrow as follows:

       

      (a) Promptly
        following receipt by the Escrow Agent of (i) copies of the fully executed
        Documents and this Agreement, (ii) the Escrowed Payment in immediately available
        funds, (iii) joint written instructions ("Joint
        Instructions")
        

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      executed
        by the Company and the Purchaser setting forth the payment direction
        instructions with respect to the Escrowed Payment and (iv) Escrow Agent’s verbal
        instructions from David Grin and/or Eugene Grin (each of whom is a director
        of
        the Purchaser) and John Martell or Rich Mullin (each of whom is an officer
        of
        the Company) indicating that all closing conditions relating to the Documents
        have been satisfied and directing that the Escrowed Payment be disbursed
        by the
        Escrow Agent in accordance with the Joint Instructions, then the Escrowed
        Payment shall be deemed released from escrow and shall be promptly disbursed
        in
        accordance with the Joint Instructions. The Joint Instructions shall include,
        without limitation, Escrow Agent’s authorization to retain from the Escrowed
        Payment Escrow Agent’s fee for acting as Escrow Agent hereunder and the Closing
        Payment for delivery to Laurus Capital Management, LLC in accordance with
        the
        Joint Instructions.

       

      (b) Upon
        receipt by the Escrow Agent of a final and non-appealable judgment, order,
        decree or award of a court of competent jurisdiction (a "Court
        Order")
        relating to the Escrowed Payment, the Escrow Agent shall remit the Escrowed
        Payment in accordance with the Court Order. Any Court Order shall be accompanied
        by an opinion of counsel for the party presenting the Court Order to the
        Escrow
        Agent (which opinion shall be satisfactory to the Escrow Agent) to the effect
        that the court issuing the Court Order is a court of competent jurisdiction
        and
        that the Court Order is final and non-appealable.

       

      3.2. Acknowledgement
        of Company and Purchaser; Disputes.
        The
        Company and the Purchaser acknowledge that the only terms and conditions
        upon
        which the Escrowed Payment are to be released from escrow are as set forth
        in
        Sections 3 and 4 of this Agreement. The Company and the Purchaser reaffirm
        their
        agreement to abide by the terms and conditions of this Agreement with respect
        to
        the release of the Escrowed Payment. Any dispute with respect to the release
        of
        the Escrowed Payment shall be resolved pursuant to Section 4.2 or by written
        agreement between the Company and Purchaser.

       

      ARTICLE
        IV

       

      CONCERNING
        THE ESCROW AGENT

       

      4.1. Duties
        and Responsibilities of the Escrow Agent.
        The
        Escrow Agent's duties and responsibilities shall be subject to the following
        terms and conditions:

       

      (a) The
        Purchaser and the Company acknowledge and agree that the Escrow Agent (i)
        shall
        not be required to inquire into whether the Purchaser, the Company or any
        other
        party is entitled to receipt of any Document or all or any portion of the
        Escrowed Payment; (ii) shall not be called upon to construe or review any
        Document or any other document, instrument or agreement entered into in
        connection therewith; (iii) shall be obligated only for the performance of
        such
        duties as are specifically assumed by the Escrow Agent pursuant to this
        Agreement; (iv) may rely on and shall be protected in acting or refraining
        from
        acting upon any written notice, instruction, instrument, statement, request
        or
        document furnished to it hereunder and believed by the Escrow 

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      Agent
        in
        good faith to be genuine and to have been signed or presented by the proper
        person or party, without being required to determine the authenticity or
        correctness of any fact stated therein or the propriety or validity or the
        service thereof; (v) may assume that any person purporting to give notice
        or
        make any statement or execute any document in connection with the provisions
        hereof has been duly authorized to do so; (vi) shall not be responsible for
        the
        identity, authority or rights of any person, firm or company executing or
        delivering or purporting to execute or deliver this Agreement or any Document
        or
        any funds deposited hereunder or any endorsement thereon or assignment thereof;
        (vii) shall not be under any duty to give the property held by Escrow Agent
        hereunder any greater degree of care than Escrow Agent gives its own similar
        property; and (viii) may consult counsel satisfactory to Escrow Agent
        (including, without limitation, Loeb & Loeb, LLP or such other counsel of
        Escrow Agent’s choosing), the opinion of such counsel to be full and complete
        authorization and protection in respect of any action taken, suffered or
        omitted
        by Escrow Agent hereunder in good faith and in accordance with the opinion
        of
        such counsel.

       

      (b) The
        Purchaser and the Company acknowledge that the Escrow Agent is acting solely
        as
        a stakeholder at their request and that the Escrow Agent shall not be liable
        for
        any action taken by Escrow Agent in good faith and believed by Escrow Agent
        to
        be authorized or within the rights or powers conferred upon Escrow Agent
        by this
        Agreement. The Purchaser and the Company hereby, jointly and severally,
        indemnify and hold harmless the Escrow Agent and any of Escrow Agent's partners,
        employees, agents and representatives from and against any and all actions
        taken
        or omitted to be taken by Escrow Agent or any of them hereunder and any and
        all
        claims, losses, liabilities, costs, damages and expenses suffered and/or
        incurred by the Escrow Agent arising in any manner whatsoever out of the
        transactions contemplated by this Agreement and/or any transaction related
        in
        any way hereto, including the fees of outside counsel and other costs and
        expenses of defending itself against any claims, losses, liabilities, costs,
        damages and expenses arising in any manner whatsoever out the transactions
        contemplated by this Agreement and/or any transaction related in any way
        hereto,
        except for such claims, losses, liabilities, costs, damages and expenses
        incurred by reason of the Escrow Agent’s gross negligence or willful misconduct.
        The Escrow Agent shall owe a duty only to the Purchaser and the Company under
        this Agreement and to no other person. 

       

      (c) The
        Purchaser and the Company shall jointly and severally pay the Escrow Agent
        a fee
        of $2,500 as complete compensation, subject to Section 4.1(b), for the
        performance of its duties and responsibilities hereunder. 

       

      (d) The
        Escrow Agent may at any time resign as Escrow Agent hereunder by giving five
        (5)
        business days prior written notice of resignation to the Purchaser and the
        Company. Prior to the effective date of resignation as specified in such
        notice,
        the Purchaser and Company will issue to the Escrow Agent a Joint Instruction
        authorizing delivery of the Documents and the Escrowed Payment to a substitute
        Escrow Agent selected by the Purchaser and the Company. If no successor Escrow
        Agent is named by the Purchaser and the Company, the Escrow Agent may apply
        to a
        court of 

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      competent
        jurisdiction in the State of New York for appointment of a successor Escrow
        Agent, and deposit the Documents and the Escrowed Payment with the clerk
        of any
        such court and/or otherwise commence an interpleader or similar action for
        a
        determination of where to deposit the same.

       

      (e) The
        Escrow Agent does not have and will not have any interest in the Documents
        and
        the Escrowed Payment, but is serving only as escrow agent, having only
        possession thereof. 

       

      (f) The
        Escrow Agent shall not be liable for any action taken or omitted by it in
        good
        faith and reasonably believed by it to be authorized hereby or within the
        rights
        or powers conferred upon it hereunder, nor for action taken or omitted by
        it in
        good faith, and in accordance with advice of counsel (which counsel may be
        Loeb
& Loeb, LLP or such other counsel of the Escrow Agent’s choosing), and shall
        not be liable for any mistake of fact or error of judgment or for any acts
        or
        omissions of any kind except to the extent any such liability arose from
        its own
        willful misconduct or gross negligence.

       

      (g) This
        Agreement sets forth exclusively the duties of the Escrow Agent with respect
        to
        any and all matters pertinent thereto and no implied duties or obligations
        shall
        be read into this Agreement.

       

      (h) The
        Escrow Agent shall be permitted to act as counsel for the Purchaser or the
        Company, as the case may be, in any dispute as to the disposition of the
        Documents and the Escrowed Payment, in any other dispute between the Purchaser
        and the Company, whether or not the Escrow Agent is then holding the Documents
        and/or the Escrowed Payment and continues to act as the Escrow Agent hereunder.
        

       

      (i) The
        provisions of this Section 4.1 shall survive the resignation of the Escrow
        Agent
        or the termination of this Agreement.

       

      4.2. Dispute
        Resolution; Judgments.
        Resolution of disputes arising under this Agreement shall be subject to the
        following terms and conditions:

       

      (a) If
        any
        dispute shall arise with respect to the delivery, ownership, right of possession
        or disposition of the Documents and/or the Escrowed Payment, or if the Escrow
        Agent shall in good faith be uncertain as to its duties or rights hereunder,
        the
        Escrow Agent shall be authorized, without liability to anyone, to (i) refrain
        from taking any action other than to continue to hold the Documents and the
        Escrowed Payment pending receipt of a Joint Instruction from the Purchaser
        and
        the Company, (ii) commence an interpleader or similar action, suit or proceeding
        for the resolution of any such dispute; and/or (iii) deposit the Documents
        and
        the Escrowed Payment with any court of competent jurisdiction in the State
        of
        New York, in which event the Escrow Agent shall give written notice thereof
        to
        the Purchaser and the Company and shall thereupon be relieved and discharged
        from all further obligations pursuant to this Agreement. The Escrow Agent
        may,
        but shall be under no duty to, institute or defend any legal proceedings
        which
        relate to the Documents and the Escrowed Payment. The 

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      Escrow
        Agent shall have the right to retain counsel if it becomes involved in any
        disagreement, dispute or litigation on account of this Agreement or otherwise
        determines that it is necessary to consult counsel which such counsel may
        be
        Loeb & Loeb LLP
        or
such
        other counsel of the Escrow Agent’s choosing.

       

      (b) The
        Escrow Agent is hereby expressly authorized to comply with and obey any Court
        Order. In case the Escrow Agent obeys or complies with a Court Order, the
        Escrow
        Agent shall not be liable to the Purchaser and the Company or to any other
        person, firm, company or entity by reason of such compliance.

       

      ARTICLE
        V

       

      GENERAL
        MATTERS

       

      5.1. Termination.
        This
        escrow shall terminate upon disbursement of the Escrowed Payment in accordance
        with the terms of this Agreement or earlier upon the agreement in writing
        of the
        Purchaser and the Company or resignation of the Escrow Agent in accordance
        with
        the terms hereof.

       

      5.2. Notices.
        All
        notices, requests, demands and other communications required or permitted
        hereunder shall be in writing and shall be deemed to have been duly given
        one
        (1) day after being sent by telecopy (with copy delivered by overnight courier,
        regular or certified mail):

      

      
        	 	
                (a)

              	
                If
                  to the Company, to: 

              	 	
                Magnetech
                  Integrated Services Corp.

              
	 	 	 	 	
                1125
                  S. Walnut Street

              
	 	 	 	 	
                South
                  Bend, Indiana 46619 

              
	 	 	 	 	
                Facsimile:
                  574-232-7648

              
	 	 	 	 	
                Attention:
                  Chief Financial Officer

              
	 	 	 	 	 
	 	 	
                With
                  a copy to:

              	 	
                Barnes
                  & Thornburg, LLP

              
	 	 	 	 	
                600
                  1st
                  Source Center

              
	 	 	 	 	
                100
                  North Michigan

              
	 	 	 	 	
                South
                  Bend, Indiana 46601

              
	 	 	 	 	
                Facsimile:
                  574-237-1125

              
	 	 	 	 	
                Attention:
                  Richard L. Mintz, Esq.

              
	 	 	 	 	 
	 	
                (b)

              	
                If
                  to the Purchaser, to: 

              	 	
                Laurus
                  Master Fund, Ltd.

              
	 	 	 	 	
                M&C
                  Corporate Services Limited

              
	 	 	 	 	
                P.O.
                  Box 309 GT, Ugland House,

              
	 	 	 	 	
                South
                  Church Street, George Town,

              
	 	 	 	 	
                Grand
                  Cayman, Cayman Islands

              
	 	 	 	 	
                Facsimile:
                  345-949-8080

              
	 	 	 	 	 
	 	
                (c)

              	
                If
                  to the Escrow Agent, to:

              	 	
                Loeb
                  & Loeb LLP

              
	 	 	 	 	
                345
                  Park Avenue

              
	 	 	 	 	
                New
                  York, New York 10154

              
	 	 	 	 	
                Fax:
                  (212) 407-4990

              
	 	 	 	 	
                Attention:
                  Scott J. Giordano, Esq.

              

      

       

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      or
        to
        such other address as any of them shall give to the others by notice made
        pursuant to this Section 5.2.

       

      5.3. Interest.
        The
        Escrowed Payment shall not be held in an interest bearing account nor will
        interest be payable in connection therewith.

       

      5.4. Assignment;
        Binding Agreement.
        Neither
        this Agreement nor any right or obligation hereunder shall be assignable
        by any
        party without the prior written consent of the other parties hereto. This
        Agreement shall inure to the benefit of and be binding upon the parties hereto
        and their respective legal representatives, successors and assigns.

       

      5.5. Invalidity.
        In the
        event that any one or more of the provisions contained herein, or the
        application thereof in any circumstance, is held invalid, illegal, or
        unenforceable in any respect for any reason, the validity, legality and
        enforceability of any such provision in every other respect and of the remaining
        provisions contained herein shall not be in any way impaired thereby, it
        being
        intended that all of the rights and privileges of the parties hereto shall
        be
        enforceable to the fullest extent permitted by law.

       

      5.6. Counterparts/Execution.
        This
        Agreement may be executed in any number of counterparts and by different
        signatories hereto on separate counterparts, each of which, when so executed,
        shall be deemed an original, but all such counterparts shall constitute but
        one
        and the same agreement. This Agreement may be executed by facsimile
        transmission.

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

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

       

      

      
        	 	
                COMPANY:

              
	 	 
	 	
                MAGNETECH
                  INTEGRATED SERVICES CORP.

              
	 	 	 
	 	
                By:

              	 /s/
                John A. Martell
	 	
                Name:

              	John
                A. Martell
	 	
                Title:

              	President 
	 	 
	 	 
	 	
                PURCHASER:

              
	 	 
	 	
                LAURUS
                  MASTER FUND, LTD.

              
	 	 	 
	 	
                By:
                  

              	 /s/
                David Grin
	 	
                Name:

              	 David
                Grin
	 	
                Title:

              	 Director
	 	 
	 	 
	 	
                ESCROW
                  AGENT:

              
	 	 
	 	
                LOEB
                  & LOEB LLP

              
	 	 	 
	 	
                By:
                  

              	 /s/
                Scott J. Giordano
	 	
                Name:

              	 Scott
                J. Giordano
	 	
                Title:

              	 Partner

      

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        A TO FUNDS ESCROW AGREEMENT

       

      

      
        	
                PURCHASER

              	
                PRINCIPAL
                  NOTE AMOUNT

              
	
                LAURUS
                  MASTER FUND, LTD., 

                M&C
                  Corporate Services Limited, P.O. Box 309 GT, Ugland House, South
                  Church
                  Street, George Town, Grand Cayman, Cayman Islands, Fax:
                  345-949-8080

              	
                Term
                  Note in an aggregate principal amount of $3,000,000

                 

                Minimum
                  Borrowing Note in an aggregate principal amount of $4,000,000;
                  and

                 

                Revolving
                  Note in an aggregate principal amount of
                  $7,000,000

              

      

       

      

      
        	
                FUND
                  MANAGER

              	
                CLOSING
                  PAYMENT

              
	
                LAURUS
                  CAPITAL MANAGEMENT, L.L.C.

                825
                  Third Avenue, 14th
                  Floor

                New
                  York, New York 10022

                Fax:
                  212-541-4434

              	
                Closing
                  payment payable in connection with investment by Laurus Master
                  Fund, Ltd.
                  for which Laurus Capital Management, L.L.C. is the
                  Manager.

              
	
                TOTAL

              	
                $360,000

              

      

       

      

       

      WARRANTS:

       

      

      
        	
                WARRANT
                  RECIPIENT

              	
                WARRANTS
                  IN CONNECTION WITH OFFERING

              
	
                LAURUS
                  MASTER FUND, LTD. 

                M&C
                  Corporate Services Limited, P.O. Box 309 GT, Ugland House, South
                  Church
                  Street, George Town, Grand Cayman, Cayman Islands, Fax:
                  345-949-8080

              	
                Warrant
                  execisable into 7,352,941 shares of common stock of the Company
                  issuable
                  in connection with the Minimum Borrowing Note, Term Note and the
                  Revolving
                  Note.

              
	
                TOTAL

              	
                Warrants
                  exercisable into 7,352,941 shares of common stock of the
                  Company

              

      

       

       

       

      
 

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      GRANT
        SHARES:

       

      

      
        	
                SHARE
                  RECIPIENT

              	
                SHARES
                  IN CONNECTION WITH OFFERING

              
	
                LAURUS
                  MASTER FUND, LTD. 

                M&C
                  Corporate Services Limited, P.O. Box 309 GT, Ugland House, South
                  Church
                  Street, George Town, Grand Cayman, Cayman Islands, Fax:
                  345-949-8080

              	
                6,163,588
                  shares of common stock of the Company issuable in connection with
                  the
                  Minimum Borrowing Note, Term Note and the Revolving
                  Note.

              
	
                TOTAL

              	
                6,163,588
                  shares of common stock of the
                  Company

              

      

       

      

      

      11

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