Document:

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.

    

    
      
        
        

      

      
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    “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).

    
      
        
        

      

      
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      “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
      

    

    
      
        
        

      

      
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    (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
      

     

    

    
      
        
        

      

      
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    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 

     

    

    
      
        
        

      

      
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    (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 

     

    

    
      
        
        

      

      
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    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 

     

    

    
      
        
        

      

      
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    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
      

     

    

    
      
        
        

      

      
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    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.

      
        
          
          

        

        
          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:

              	 
	 	 	
                Name:

              
	 	 	
                Title:

              
	 	 
	 	
                MAGNETECH
                  INTEGRATED SERVICES CORP.

              
	 	
                By:

              	 
	 	 	
                Name:

              
	 	 	
                Title:

              
	 	 
	 	
                STRASBOURGER
                  PEARSON TULCIN WOLFF, INC.

              
	 	
                By:

              	 
	 	 	
                Name:

              
	 	 	
                Title:

              

      

       

       

       

      7Form of Subordinated Convertible Debenture Purchase Agreement among the registrant,
      Strasbourger Pearson Tulcin Wolff, Inc. and the purchasers scheduled therein

    

      Exhibit
        10.5

      

      
        	
                 

                 

                 

                 

                FORM
                  OF

                SUBORDINATED
                  CONVERTIBLE DEBENTURE PURCHASE AGREEMENT

                 

                Among

                 

                MAGNETECH
                  INTEGRATED SERVICES CORP.,

                 

                STRASBOURGER
                  PEARSON TULCIN WOLFF, INC.

                 

                And

                 

                THE
                  PURCHASER LISTED ON

                SCHEDULE
                  1 HERETO

                 

                 

                __________,
                  2005

                 

                 

                 

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      TABLE
        OF CONTENTS

      

      
        	
                ARTICLE
                  I

              	 	
                CERTAIN
                  DEFINITIONS

              	
                1

              
	
                1.1

              	 	 	
                Certain
                  Definitions

              	
                1

              
	 	 	 	 	 
	
                ARTICLE
                  II

              	 	
                PURCHASE
                  AND SALE OF CONVERTIBLE DEBENTURES; ISSUANCE OF WARRANTS

              	
                4

              
	
                2.1

              	 	 	
                Purchase
                  and Sale; Purchase Price; Issuance of Warrant

              	
                4

              
	
                2.2

              	 	 	
                Execution
                  and Delivery of Documents; the Closings

              	
                4

              
	 	 	 	 	 
	
                ARTICLE
                  III

              	 	
                REPRESENTATIONS
                  AND WARRANTIES

              	
                6

              
	
                3.1

              	 	 	
                Representations,
                  Warranties and Agreements of the Company

              	
                6

              
	
                3.2

              	 	 	
                Representations
                  and Warranties of the Purchaser

              	
                9

              
	 	 	 	 	 
	
                ARTICLE
                  IV

              	 	
                OTHER
                  AGREEMENTS OF THE PARTIES

              	
                11

              
	
                4.1

              	 	 	
                Manner
                  of Offering

              	
                11

              
	
                4.2

              	 	 	
                Furnishing
                  of Information

              	
                11

              
	
                4.3

              	 	 	
                Notice
                  of Certain Events

              	
                11

              
	
                4.4

              	 	 	
                Copies
                  and Use of Disclosure Documents and Non-Public Filings

              	
                12

              
	
                4.5

              	 	 	
                Blue
                  Sky Laws

              	
                12

              
	
                4.6

              	 	 	
                Integration

              	
                12

              
	
                4.7

              	 	 	
                Furnishing
                  of Rule 144(c) Materials

              	
                12

              
	
                4.8

              	 	 	
                Solicitation
                  Materials

              	
                12

              
	
                4.9

              	 	 	
                Subsequent
                  Financial Statements

              	
                13

              
	
                4.10

              	 	 	
                Prohibition
                  on Certain Actions

              	
                13

              
	
                4.11

              	 	 	
                Listing
                  of Common Stock

              	
                13

              
	
                4.12

              	 	 	
                Conversion
                  and Exercise Procedures

              	
                13

              
	
                4.13

              	 	 	
                Indemnification

              	
                13

              
	
                4.14

              	 	 	
                Exclusivity

              	
                15

              
	
                4.15

              	 	 	
                No
                  Violation of Applicable Law

              	
                15

              
	
                4.16

              	 	 	
                Redemption
                  Restrictions

              	
                16

              
	
                4.17

              	 	 	
                Merger
                  or Consolidation

              	
                16

              
	
                4.18

              	 	 	
                Liquidated
                  Damages

              	
                16

              
	
                4.19

              	 	 	
                Company’s
                  Right of Redemption

              	
                16

              
	
                4.20

              	 	 	
                Remedies

              	
                16

              
	 	 	 	 	 
	
                ARTICLE
                  V

              	 	
                EVENTS
                  OF DEFAULT

              	
                17

              
	
                5.1

              	 	 	
                Event
                  of Default

              	
                17

              
	
                5.2

              	 	 	
                Remedies

              	
                17

              
	 	 	 	 	 
	
                ARTICLE
                  VI

              	 	
                LEGAL
                  FEES AND DEFAULT INTEREST RATE

              	
                18

              
	 	 	 	 	 
	
                ARTICLE
                  VII

              	 	
                THE
                  AGENT

              	
                18

              
	
                7.1

              	 	 	
                Appointment
                  of Agent

              	
                18

              
	
                7.2

              	 	 	
                Notices

              	
                19

              
	
                7.3

              	 	 	
                Exculpation

              	
                19

              
	
                7.4

              	 	 	
                Reliance

              	
                20

              
	
                7.5

              	 	 	
                Expenses
                  and Indemnification

              	
                21

              
	
                7.6

              	 	 	
                Other
                  Purchers

              	
                21

              
	
                7.7

              	 	 	
                Removal
                  or Resignation of Agent

              	
                21

              
	 	 	 	 	 
	
                ARTICLE
                  VIII

              	 	
                MISCELLANEOUS

              	
                22

              
	
                8.1

              	 	 	
                Fees
                  and Expenses

              	
                22

              
	
                8.2

              	 	 	
                Entire
                  Agreement; Amendments

              	
                22

              
	
                8.3

              	 	 	
                Notices

              	
                22

              
	
                8.4

              	 	 	
                Amendments;
                  Waivers

              	
                23

              
	
                8.5

              	 	 	
                Headings

              	
                23

              
	
                8.6

              	 	 	
                Successors
                  and Assigns

              	
                23

              
	
                8.7

              	 	 	
                No
                  Third Party Beneficiaries

              	
                23

              
	
                8.8

              	 	 	
                Governing
                  Law; Venue; Service of Process

              	
                24

              
	
                8.9

              	 	 	
                Survival

              	
                24

              
	
                8.10

              	 	 	
                Counterpart
                  Signatures

              	
                24

              
	
                8.11

              	 	 	
                Publicity

              	
                24

              
	
                8.12

              	 	 	
                Severability

              	
                24

              

      

      

      
        
          i

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                LIST
                  OF SCHEDULES:

              
	 	 
	
                Schedule
                  1

              	
                Purchaser

              
	
                Schedule
                  3.1(a)

              	
                Subsidiaries

              
	
                Schedule
                  3.1(c)

              	
                Capitalization
                  and Registration Rights

              
	
                Schedule
                  3.1(d)

              	
                Equity
                  and Equity Equivalent Securities

              
	
                Schedule
                  3.1(e)

              	
                Conflicts

              
	
                Schedule
                  3.1(f)

              	
                Consents
                  and Approvals

              
	
                Schedule
                  3.1(g)

              	
                Litigation

              
	
                Schedule
                  3.1(h)

              	
                Defaults
                  and Violations

              

      

      

      
        	
                LIST
                  OF EXHIBITS:

              
	 	 
	
                Exhibit
                  A

              	
                Debenture

              
	
                Exhibit
                  B

              	
                Warrant

              
	
                Exhibit
                  C

              	
                Registration
                  Rights Agreement

              
	
                Exhibit
                  D

              	
                Security
                  Agreement

              
	
                Exhibit
                  E

              	
                Subordination
                  Agreement

              
	
                Exhibit
                  F

              	
                Escrow
                  Agreement

              
	
                Exhibit
                  G

              	
                Legal
                  Opinion

              
	
                Exhibit
                  H

              	
                Officer’s
                  Certificate

              
	
                Exhibit
                  I

              	
                Company
                  Certificate

              

      

      

      

      
        
          
            

          

          ii

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

      THIS
        SUBORDINATED CONVERTIBLE DEBENTURE PURCHASE AGREEMENT (“Agreement”) is made and
        entered into as of __________, 2005, among Magnetech Integrated Services
        Corp.,
        a corporation organized and existing under the laws of the State of Indiana
        (together with its subsidiaries, the “Company”), Strasbourger Pearson Tulcin
        Wolff, Inc. (the “Agent”) 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 ____________ Dollars ($_______) aggregate principal amount
        of
        the Company’s 6% Subordinated Secured Convertible Debenture, due February 28,
        2007 for a price equal to the aggregate principal amount thereof in the form
        of
Exhibit
        A
        (“Debenture”), annexed hereto and made a part hereof.

       

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

       

      ARTICLE
        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.

      

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

      

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

      

      “Bankruptcy
        Code” shall have the meaning set forth in Section 5.1(c) hereof.

      

      “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 power to direct the share of voting power with respect to
        a
        majority of the issued and outstanding voting shares of the
        company.

      

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

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

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

       

      “Commission”
        means the Securities and Exchange Commission.

      

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

      

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

      

      “Control
        Person” shall have the meaning set forth in Section 4.13(a)(i)
        hereof.

      

      “Debenture”
        shall have the meaning set forth in the recital.

      

      “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 (a) all documents and written materials provided to the
        Purchaser and/or its representatives in connection with the Company and this
        offering, including, but not limited to, the Company’s Private Placement
        Memorandum, dated January 25, 2005 and (b) the Schedules required to be
        furnished to the Purchaser by or on behalf of the Company pursuant to Section
        3.1 hereof.

      

      “Escrow
        Agent” means Wilmington Trust Company, 1100 North Market Street, Wilmington, DE
        19890.

      

      “Escrow
        Agreement” means the Escrow Agreement among the Company, the Escrow Agent and
        Strasbourger.

      

      “Event
        of
        Default” shall have the meaning set forth in Section 5.1.

      

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

      

      “Execution
        Date” means the date of this Agreement first written above.

      

      “Indemnified
        Party” shall have the meaning set forth in Section 4.13(b) hereof.

      

      “Indemnifying
        Party” shall have the meaning set forth in Section 4.13(b) hereof.

      

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

      

      “Losses”
        shall have the meaning set forth in Section 4.13(a) hereof.

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      “Magnetech”
        means Magnetech Industrial Services, Inc., an Indiana corporation and a wholly
        owned subsidiary of the Company.

      

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

      

      “NASD”
        means the National Association of Securities Dealers, Inc.

      

      “Nasdaq”
        shall mean the Nasdaq Stock Market, Inc.

      

      “Non-Public
        Filings” shall have the meaning set forth in Section 4.2 hereof.

      

      “OTCBB”
        shall mean the NASD over-the counter Bulletin Board or
        similar organization or agency succeeding to its functions.

      

      “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(a).

      

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

      “Registration
        Rights Agreement” means the Registration Rights Agreement between the Purchaser
        and the Company, annexed as Exhibit
        C
        hereto.

      

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

      

      “Restriction
        Period” shall have the meaning set forth in Section 4.14.

      

      “SEC”
        means the Securities and Exchange Commission.

      

      “Securities”
        means the Debenture, the Underlying Shares, the Warrant and the Warrant
        Shares.

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

      

      “Security
        Agreement” means the Security Agreement between the Purchaser and the Company,
        annexed as Exhibit
        D
        hereto.

      

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

      

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      “Subordination
        Agreement” means the Subordination Agreement among the Company, Magnetech, the
        Holders of the Debentures and MLB Financial.

      

      “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 agreements executed pursuant to this Agreement.

      

      “Underlying
        Shares” means the shares of duly issued Common Stock, into which the Debenture
        is convertible in accordance with the terms hereof and the
        Debenture.

      

      “Warrant”
        means the Common Stock purchase warrant issued to the Purchaser and/or its
        assigns, annexed as Exhibit
        B
        hereto,
        pursuant to which the Purchaser and/or its assigns shall have the right to
        acquire the Warrant Shares at $.001 per share.

      

      “Warrant
        Shares” means the shares of duly issued Common Stock, for which the Warrant may
        be exercised in accordance with the terms hereof and of the
        Warrant.

      

      ARTICLE
        II

       

      PURCHASE
        AND SALE OF CONVERTIBLE DEBENTURE; ISSUANCE OF WARRANT 

       

      2.1 Purchase
        and Sale; Purchase Price; Issuance of Warrant.

       

      (a) Subject
        to the terms and conditions set forth herein, the Company shall issue and
        sell
        and the Purchaser shall purchase an aggregate principal amount of ______________
        Dollars ($_______) (the “Purchase Price”) of the Debenture. The Debenture shall
        have the rights, preferences and privileges as set forth in the Debenture
        annexed as Exhibit A.

       

      (b) The
        Purchase Price for the Debenture shall be paid in cash and shall be equal
        to the
        aggregate principal amount of the Debenture.

       

      (c) In
        consideration for the payment of the Purchase Price by the Purchaser, the
        Company shall issue ______ Warrants to the Purchaser.

      2.2 Execution
        and Delivery of Documents; The Closings.

       

      (a) The
        Closing of the purchase and sale of the Debentures and Warrants (the “Closing”)
        shall take place after the execution and delivery of this Agreement and within
        three (3) Business Days following the receipt of aggregate gross proceeds
        of
        $1,000,000 in payment for the Debentures and Warrants (the “Initial Closing
        Date”); provided, however, that after the 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      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 (A) original
        and duly executed Debenture registered in the name of the Purchaser and/or
        its
        assigns in the amount set forth in Schedule 1
        and (B)
        an original and duly executed Warrant registered in the name of the Purchaser
        and/or its assigns;
        

       

      (ii) the
        Company and the Purchaser shall execute and deliver to each other an executed
        Registration Rights Agreement; 

       

      (iii) the
        Company shall deliver to the Purchaser the legal opinion of counsel to the
        Company substantially in the form of Exhibit G
        annexed
        hereto, addressed to Strasbourger and the Purchaser; 

      

      (iv) the
        Company shall execute and deliver to the Purchaser (A) a certificate of its
        Chief Executive Officer, in the form of Exhibit
        H
        annexed
        hereto, certifying that attached thereto is a copy of resolutions duly adopted
        by the Board of Directors of the Company authorizing the Company to execute
        and
        deliver the Transaction Documents and to enter into the transactions
        contemplated thereby; and (B) a certificate of the Company’s Chief Executive
        Officer, dated the Closing Date, in the form of Exhibit
        I
        annexed
        hereto, certifying that the representations and warranties of the Company
        contained in Article III hereof are true and correct in all material respects
        on
        the Closing Date (except for representations and warranties that speak of
        a
        specific date, which representations and warrants shall be true, correct
        and
        complete in all material respects as of such date);

      

      (v) the
        Agent
        shall execute and deliver to the Company an executed Subordination Agreement
        and
        Security Agreement; and

      

      (vi) all
        other
        documents, instruments and writings required to have been delivered by the
        Company at or prior to the Closing pursuant to this Agreement.

      

      (b) 
        The
        Purchaser shall deliver to the Escrow Agent the Purchase Price by wire transfer
        of immediately available funds upon execution of this Agreement.

      

      (c) Proceeds
        received in payment for the Debentures and Warrants 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.

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      ARTICLE
        III

       

      REPRESENTATIONS
        AND WARRANTIES

       

      3.1 Representations,
        Warranties and Agreements of the Company. The Company hereby makes the following
        representations and warranties to the Purchaser, all of which shall survive
        the
        Closing; 

       

      (a) Organization
        and Qualification. The Company is a corporation, duly incorporated, validly
        existing and in good standing under the laws of the State of Indiana, with
        the
        requisite corporate power and authority to own and use its properties and
        assets
        and to carry on its business as currently conducted. The Company has no
        subsidiaries other than as set forth on Schedule
        3.1(a) attached
        hereto (collectively, the “Subsidiaries”). Each of the Subsidiaries is a
        corporation duly incorporated, validly existing and in good standing under
        the
        laws of the jurisdiction of its incorporation, 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 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 to carry out its obligations
        hereunder and thereunder. The execution and delivery of this Agreement and
        each
        of the other Transaction Documents to which it is a party by the Company
        and the
        consummation by it of the transactions contemplated hereby and thereby have
        been
        duly authorized by all necessary action on the part of the Company. Each
        of this
        Agreement and each of the other Transaction Documents to which it is a party
        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 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 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.
        Except as described in this Agreement, or disclosed in Schedule 3.1(c),
        there
        are no outstanding options, voting agreements or merger agreements,
        arrangements, warrants, script, rights to subscribe to, registration rights,
        calls or commitments of any character whatsoever relating to, or, except
        as a
        result of the purchase and sale of the Debenture hereunder, securities, rights
        or obligations convertible into or exchangeable for, or giving any person
        any
        right to subscribe for or acquire, any shares of Common Stock or other
        securities, or contracts, 

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      commitments,
        understandings, or arrangements by which the Company or any Subsidiary is
        or may
        become bound to issue additional shares of Common Stock or other securities,
        or
        securities or rights convertible or exchangeable into shares of Common Stock
        or
        other securities. Neither the Company nor any Subsidiary is in violation
        of any
        of the provisions of its respective Certificate of Incorporation, bylaws
        or
        other charter documents.

       

      (d) Issuance
        of Securities. The Debenture and the Warrant have been duly and validly
        authorized for issuance, offer and sale pursuant to this Agreement and, the
        Underlying Shares and Warrant Shares when issued and delivered as provided
        hereunder or in the Debenture and Warrant against payment in accordance with
        the
        terms hereof, shall be valid and binding obligations of the Company enforceable
        against the Company in accordance with their respective terms. The Company
        has
        and at all times while the Debenture and the Warrant are outstanding will
        continue to maintain an adequate reserve of shares of Common Stock to enable
        it
        to perform its obligations under this Agreement, the Warrant and the Debenture
        except as otherwise permitted in this Agreement, the Warrant or the Debenture.
        When issued in accordance with the terms hereof, the Securities will be duly
        authorized, validly issued, fully paid and non-assessable. Except as set
        forth
        in Schedule 3.1(d)
        or
Schedule
        3.1(c)
        hereto,
        there is no equity, equity equivalent security, debt or equity lines of credit
        outstanding that is substantially similar to the Debenture, including any
        security having a floating conversion rate; provided, however, that, except,
        as
        otherwise provided herein, nothing contained in this Section 3.1(d)
        shall
        be deemed to permit the Company to issue any convertible security or instrument
        or equity line of credit.

       

      (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 Certificate of
        Incorporation or bylaws (each as amended through the date hereof) or
        (ii) be subject to obtaining any of the consents 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 or its Subsidiaries
        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 clause (ii),
        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 its respective certificate of incorporation or
        bylaws
        or in any material respect of any law, ordinance or regulation of any
        governmental authority.

       

      (f) Consents
        and Approvals. Other than the approval of its board of directors, which has
        been
        obtained, and its stockholders, if required, which has also been obtained,
        and
        except as specifically set forth in
        Schedule 3.1(f),
        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

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      Person
        in
        connection with the execution, delivery and performance by the Company of
        this
        Agreement and each of the other Transaction Documents (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 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, the Debenture,
        the Warrant, the Underlying Shares or the Warrant 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
        or any of its Subsidiaries to perform fully on a timely basis its obligations
        under the Transaction Documents.

       

      (h) No
        Default or Violation. Except as set forth in Schedule 3.1(h)
        hereto,
        neither the Company nor any Subsidiary (i) is in default under or in vio-lation
        of any indenture, loan or credit agreement or any other agreement or instrument
        to which it is a party or by which it or any of its properties is bound,
        except
        such defaults or violations 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) Certain
        Fees. No fees or commission will be payable by the Company to any investment
        banker, broker, placement agent or bank with respect to the consummation
        of the
        transactions contemplated hereby, except for the fees payable to
        Strasbourger.

       

      (j) Disclosure
        Documents. The Disclosure Documents taken as a whole 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.

       

      (k) Manner
        of
        Offering. Assuming the Purchaser’s representations and warranties contained in
        Section 3.2 are true and correct, the Securities are being offered and sold
        to
        the Purchaser without registration under the Securities Act in a private
        placement that is exempt from registration pursuant Section 4(2) of the
        Securities Act to Rule 506 of Regulation D.

       

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

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      offering,
        issuance or sale of the Securities to the registration requirements of Section
        5
        of the Securities Act.

       

      (m) No
        Undisclosed Liabilities. Except for the transactions contemplated in this
        Agreement, there are no material liabilities of the Company or any Subsidiary,
        whether absolute, accrued, contingent or otherwise.

       

      (n)
         Absence
        of Material Adverse Change. Since the date of this Agreement, there have
        been no
        events, changes or occurrences which have had or are reasonably likely to
        have,
        individually or in the aggregate, a Material Adverse Effect on the Company
        or
        the market or value of the Company’s Common Stock.

       

      The
        Purchaser acknowledges and agrees that the Company makes no representation
        or
        warranty with respect to itself or the transactions contemplated hereby other
        than those specifically set forth in Section 3.1 hereof.

       

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

       

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

       

      (b) Investment
        Intent. The Purchaser is acquiring the Debenture and the Warrant to be purchased
        by it hereunder, and will acquire the Underlying Shares and the Warrant Shares
        relating to such Debenture and the Warrant, for its own account for investment
        purposes only and not with a view to or for distributing or reselling such
        Debenture, Underlying Shares, Warrant or Warrant Shares or any part thereof
        or
        interest therein, without prejudice, however, to the 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 Debenture, Underlying Shares, Warrant or Warrant
        Shares in compliance with applicable federal and state securities laws.
The
        Purchaser is not purchasing the Securities with the funds of any other Person
        nor acting as an underwriter or a conduit for the sale of the Securities
        to the
        public or to others. The Purchaser is not a member of the NASD and 

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      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) Purchaser
        Status. At the time the Purchaser was offered the Debenture to be acquired
        by it
        hereunder, it was, at the date hereof it is and at the Closing it will be
        an
“accredited investor” as defined in Rule 501 of Regulation D under the
        Securities Act. 

       

      (d) 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
        Securities 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.

       

      (e) 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
        Securities 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
        Securities exists and none may develop in the future. The Purchaser is able
        to
        bear the economic risk of an investment in the Securities 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 Securities will
        not
        cause such commitment to become excessive.
        The
        Purchaser has no need for liquidity with respect to the Securities.

       

      (f) Prohibited
        Transactions. The Securities to be acquired by the Purchaser hereunder are
        not
        being acquired, directly or indirectly, with the assets of any “employee benefit
        plan,” within the meaning of Section 3(3) of the Employment Retirement Income
        Security Act of 1974, as amended.

       

      (g) Access
        to
        Information. The Purchaser acknowledges receipt of the Disclosure Documents
        and
        further acknowledges that it has been afforded (i) the opportunity to ask
        such
        questions as it has deemed necessary of, and to receive answers from,
        representatives of the Company concerning the terms and conditions of the
        Securities and the merits and risks of investing in the Securities; (ii)
        access
        to information about the Company and the Company’s financial condition, results
        of operations, business, properties, management and prospects sufficient
        to
        enable it to evaluate its investment in the Securities; 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 contained in the Disclosure
        Documents. The
        Purchaser represents that all of his questions concerning the Company and
        the
        Securities have been answered to his full satisfaction.

       

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

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      under
        the
        Securities Act in a private placement that is exempt from the registration
        provisions of the Securities Act under Section 4(2) and Rule 506 of Regulation
        D
        and (ii) the availability of such exemption depends in part on, and that
        the
        Company will rely upon the accuracy and truthfulness of, the foregoing
        representations and the Purchaser hereby consents to such reliance.

       

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

       

      (j)  Transferability
        of Securities. Purchaser acknowledges that the transferability of the Securities
        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, 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
        Securities under the Securities Act, and applicable state securities laws
        or an
        opinion of counsel for the Corporation that registration is not required
        under
        the Securities Act, and applicable state securities laws.

       

      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.

       

      ARTICLE
        IV

       

      OTHER
        AGREEMENTS OF THE PARTIES

       

      4.1 Manner
        of
        Offering. The Securities are being issued pursuant to Section 4(2) and Rule
        506
        of Regulation D of the Securities Act. 

       

      4.2 Furnishing
        of Information. As long as the Purchaser owns any of the Securities, the
        Company
        will promptly furnish to the Purchaser financial information similar to that
        required to be reported in annual and quarterly reports comparable to those
        required by Section 13(a) or 15(d) of the Exchange Act (the “Non-Public
        Filings”).

       

      4.3 Notice
        of
        Certain Events. The Company shall, on a continuing basis, as long as the
        Purchaser owns any of the Securities, (i) advise the Purchaser promptly
        after obtaining knowledge of, and, if requested by the Purchaser, confirm
        such
        advice in writing, of (A) the issuance by any state securities commission
        of any
        stop order suspending the qualification or exemption from qualification of
        the
        Securities, for offering or sale in any jurisdiction, or the 

       

      
        
          
          

        

        
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      initiation
        of any proceeding for such purpose by any state securities commission or
        other
        regulatory authority, or (B) 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
        each
        case at the time such Disclosure Documents were delivered to the Purchaser
        and
        in the light of the circumstances under which they were made, not misleading,
        (ii) use its commercially reasonable best efforts to prevent the issuance
        of any
        stop order or order suspending the qualification or exemption from qualification
        of the Securities under any state securities or Blue Sky laws, and (iii)
        if at
        any time any state securities commission or other regulatory authority shall
        issue an order suspending the qualification or exemption from qualification
        of
        the Securities under any such laws, use its commercially reasonable best
        efforts
        to obtain the withdrawal or lifting of such order at the earliest possible
        time.

       

      4.4 Copies
        and Use of Disclosure Documents and Non-Public Filings. The Company shall
        furnish the Purchaser, without charge, as many copies of the Disclosure
        Documents and the Non-Public Filings and any amendments or supplements thereto
        as the Purchaser may reasonably request. 

       

      4.5 Blue
        Sky
        Laws. The
        Company shall cooperate with the Purchaser in connection with the exemption
        from
        registration of the Securities under the securities or Blue Sky laws of such
        jurisdictions as the Purchaser may request; provided, however, that neither
        the
        Company nor its Subsidiaries shall be required in connection therewith to
        (a)
        qualify as a foreign corporation where they are not now so qualified, or
        (b)
        submit to taxation or general service of process in such jurisdiction. The
        Company agrees that it will execute all necessary documents and pay all
        necessary state filing or notice fees to enable the Company to sell the
        Securities to the Purchaser.

       

      4.6 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 Securities in a manner
        that
        would require the registration under the Securities Act of the sale of the
        Securities to the Purchaser.

       

      4.7 Furnishing
        of Rule 144(c) Materials. The Company shall, for so long as any of the
        Securities remain outstanding and during any period in which the Company
        is not
        subject to Section 13 or 15(d) of the Exchange Act, make available
        to any
        registered holder of the Securities in connection with any sale thereof and
        any
        prospective purchaser of such Securities from such Person, such information
        in
        accordance with Rule 144(c)(2) promulgated under the Securities Act
        as is
        required to sell the Securities under Rule 144 promulgated under the
        Securities Act.

       

      4.8 Solicitation
        Materials. The Company shall not (i) distribute any offering materials in
        connection with the offering and sale of the Debenture, Warrant, Warrant
        Shares
        or the Underlying 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 Debenture, Warrant, Warrant Shares or the Underlying
        Shares by means of any form of general solicitation or advertising.

       

      
        
          
          

        

        
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      4.9 Subsequent
        Financial Statements. If not otherwise publicly available, upon the written
        request of Purchaser, the Company shall promptly furnish to the Purchaser
        a copy
        of all financial statements for any period subsequent to the period covered
        by
        the financial statements included in the Disclosure Documents until the full
        conversion of the Debenture and exercise of the Warrant. 

       

      4.10 Prohibition
        on Certain Actions. Until the earlier of (a) the full redemption, payment
        or
        conversion of the Debenture and the full exercise of the Warrant and (b)
        the
        Maturity Date of the Debenture, the Company shall not and shall cause the
        Subsidiaries not to, without the prior written consent of the Purchaser,
        (i)
        amend its certificate or articles of incorporation, by-laws or other charter
        documents so as to adversely affect any rights of the Purchaser; (ii) split,
        combine or reclassify its outstanding capital stock; (iii) declare, authorize,
        set aside or pay any dividend or other distribution with respect to the Common
        Stock; (iv) redeem, repurchase or offer to repurchase or other-wise acquire
        shares of its Common Stock; or (v) enter into any agreement with respect
        to any
        of the foregoing.

       

      4.11 Listing
        of Common Stock. If the Common Stock shall become listed on the OTCBB or
        on
        another exchange, the Company shall (a) use its commercially reasonable
        best efforts to maintain the listing of its Common Stock on the OTCBB or
        such
        other exchange on which the Common Stock is then listed until expiration
        of each
        of the periods during which the Debenture may be converted or the Warrant
        may be
        exercised and (b) shall provide to the Purchaser evidence of such
        listing.

       

      4.12
         Conversion
        and Exercise Procedures. The Debenture sets forth the procedures, including
        the
        form of Notice of Conversion to be provided upon conversion and such other
        information and instructions as may be reasonable necessary to enable the
        Holder
        or its permitted transferee(s) to exercise the right of conversion smoothly
        and
        expeditiously. The Warrant sets forth the procedures, including the form
        of
        Notice of Exercise to be provided upon exercise and such other information
        and
        instructions as the case may be reasonably necessary to enable the Holder
        or its
        permitted transferee(s) to exercise the right of exercise smoothly and
        expeditiously. 

       

      4.13 Indemnification.

       

      (a) Indemnification

       

      (i) The
        Company shall, notwithstanding termination of this Agreement, 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
        reasonable 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.

       

      
        
          
          

        

        
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      (ii) The
        Purchaser shall, notwithstanding termination of this Agreement, indemnify
        and
        hold harmless the Company, its officers, directors, agents and employees,
        each
        Control Person of the Company and the officers, directors, agents and employees
        of each Control Person, to the fullest extent permitted by applicable 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 any other Transaction Documents; provided,
        however, that such Losses shall for this Section 4.13(a)(ii) be limited to
        the
        Purchase Price.

       

      (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 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, but not control, 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 impeded 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 reasonably acceptable to the Indemnifying
        Party
        and 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. 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, provided,
        however, the Indemnifying Party may settle or compromise any asserted liability
        without the consent of the Indemnitee so long as such settlement or compromise
        releases the Indemnitee and does not include any admission or statement of
        fault
        against the Indemnitee.

       

      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 

       

      
        
          
          

        

        
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      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 4.13 shall be available as to a particular
        Indemnified Party if there is a non-appealable final judicial determination
        that
        such Losses arise solely or substantially 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) Contribution.
        If a claim for indemnification under Section 4.13(a) is unavailable to an
        Indemnified Party or is insufficient to hold such Indemnified Party harmless
        for
        any Losses in respect of which this Section 4.13 would apply by its terms
        (other
        than by reason of exceptions provided in this Section 4.13), then each
        Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
        contribute to the amount paid or payable by such Indemnified Party as a result
        of such Losses in such proportion as is appropriate to reflect the relative
        benefits received by the Indemnifying Party on the one hand and the Indemnified
        Party on the other and the relative fault of the Indemnifying Party and
        Indemnified Party in connection with the actions or omissions that resulted
        in
        such Losses as well as any other relevant equitable considerations. The relative
        fault of such Indemnifying Party and Indemnified Party shall be determined
        by
        reference to, among other things, whether there was a judicial determination
        that such Losses arise in part out of the negligence or bad faith of the
        Indemnified Party in performing the obligations of such Indemnified Party
        under
        this Agreement or the Indemnified Party’s breach of its obligations under this
        Agreement. The amount paid or payable by a party as a result of any Losses
        shall
        be deemed to include any attorneys’ or other fees or expenses incurred by such
        party in connection with any Proceeding to the extent such party would have
        been
        indemnified for such fees or expenses if the indemnification provided for
        in
        this Section was available to such party.

       

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

       

      4.14 Exclusivity.
        Until all of the Debentures have been converted into common stock or retired
        (the “Restriction Period”), the Company and its affiliates shall not issue or
        offer any security that is senior or superior to the Debentures, except for
        the
        refinancing of the Company’s $3.0 million Credit Facility with MFB Financial, as
        to payment, liquidation, dividend or collateral, without prior written consent
        of the Agent. The Company shall not engage in any debt or equity financing
        during the Restriction Period except as specifically set forth above. The
        Company may request that the restrictions in this Section be waived.

       

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

       

      
        
          
          

        

        
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      4.16 Redemption
        Restrictions. Notwithstanding any provision of this Agreement to the contrary,
        if any redemption of the Debenture, the Warrant, the Warrant Shares or the
        Underlying Shares otherwise required under this Agreement or the Debenture
        would
        be prohibited in the absence of consent from any lender to the Company, or
        by
        the holders of any class of securities of the Company or any of the
        Subsidiaries, the Company shall use its best efforts to obtain such consent
        as
        promptly as practicable after any such redemption is required. Nothing contained
        in this Section 4.16 shall be construed as a waiver by the Purchaser of any
        rights it may have by virtue of any breach of any representation or warranty
        of
        the Company herein as to the absence of any requirement to obtain any such
        consent.

       

      4.17 Merger
        or
        Consolidation. Until the earlier of (a) the full redemption, payment
        or
        conversion of the Debenture and the full exercise of the Warrant or (b) the
        Maturity Date of the Debenture (as that term is defined in the Debenture),
        the
        Company and each Subsidiary will not, in a single transaction or a series
        of
        related transactions, (i) consolidate with or merge with or into any
        other
        Person, (ii) permit any other Person to consolidate with or merge
        into it,
        or (iii) undergo a Change of Control unless (w) either (A) the Company shall
        be
        the survivor of such merger or consolidation or (B) the surviving Person
        shall
        expressly assume by supplemental agreement all of the obligations of the
        Company
        under the Debenture, the Warrant, this Agreement and the other Transaction
        Documents; (x) immediately before and immediately after giving effect to
        such
        transactions (including any indebtedness incurred or anticipated to be incurred
        in connection with the transactions), no Event of Default shall have occurred
        and be continuing; (y) if the Company is not the surviving entity, such
        surviving entity’s common shares will be listed on either The New York Stock
        Exchange, American Stock Exchange, Nasdaq National Market or Nasdaq SmallCap
        Market, or the OTCBB on or prior to the closing of such transaction(s) and
        (z)
        the Company shall have delivered to the Purchaser an officer’s certificate and
        opinion of counsel, each stating that such consolidation, merger or transfer
        complies with this Agreement, that the agreements relating to such
        transaction(s) provide that the surviving Person agrees to be bound by this
        Agreement and that all conditions precedent in this Agreement relating to
        such
        transaction(s) have been satisfied.

       

      4.18 Liquidated
        Damages. The Company understands and agrees that a material breach by the
        Company of any Section of this Agreement or an Event of Default as contained
        in
        this Agreement or any other Transaction Document will result in substantial
        economic loss to the Commander, which loss will be extremely difficult to
        calculate with precision. Therefore, if, for any reason the Company commits
        such
        a material breach or fails to cure any Event of Default, as compensation
        and
        liquidated damages for such breach or default, and not as a penalty, the
        Company
        aggress to pay the Purchaser an amount equal to 150% of the outstanding
        principal amount of any Debentures then held by the Purchaser and the Purchaser,
        upon receipt of such payment, shall return any unconverted Debenture and
        unexercised Warrant to the Company.

       

      4.19 
        Company’s Right of Redemption. In addition to any right of the Company to redeem
        any unconverted amount of the Debenture, the Company shall have any redemption
        right set forth in the Debenture.

       

      4.20
         Reservation
        of Common Stock. The Company shall take all action reasonably necessary to
        at
        all times have authorized, and reserved for the purpose of issuance, that
        number
        of shares of common Stock equal to the number of shares of Common Stock into
        which the 

       

      
        
          
          

        

        
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      Debentures
        are from time to time convertible and the Warrant are from time to time
        exercisable unless a change is agreed to in writing by the Purchaser and
        the
        Company. If at any time the Company does not have available such shares of
        Common Stock as shall from time to time be sufficient to effect the conversion
        of all of the Debentures of the Company and the exercise of all of the Warrants
        shall call and hold a special meeting of the shareholders within sixty (60)
        days
        of such occurrence, for the sole purpose of increasing the number of shares
        authorized. The Company’s management shall recommend to the shareholders to vote
        in favor of increasing the number of shares of Common Stock authorized.
        Management shall also vote all of its shares in favor of increasing the number
        of authorized shares of Common Stock.

       

      ARTICLE
        V

       

      EVENTS
        OF DEFAULT

       

      5.1 “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. 

       

      5.2 Remedies.
        Notwithstanding anything else contained herein to the contrary, if an Event
        of
        Default has occurred pursuant to Section 5.1, the defaulting party shall
        be
        deemed in default hereof and the non-defaulting party shall be entitled to
        pursue all available rights without further notice. The defaulting party
        shall
        pay all attorney’s fees and costs incurred in enforcing 

       

      
        
          
          

        

        
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      this
        Agreement and the other Transaction Documents. In addition, all unpaid amounts
        shall accrue interest at a rate of 15% per
        annum.

       

      ARTICLE
        VI

       

      LEGAL
        FEES AND DEFAULT INTEREST RATE

       

      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 in enforcing such rights. In the event of an Event of Default by
        any
        party hereunder, interest shall accrue on all unpaid amounts due the aggrieved
        party at the rate of 15% per
        annum,
        compounded annually.

       

      ARTICLE
        VII

       

      THE
        AGENT

       

      7.1 Appointment
        of Agent. In order to expedite the transactions contemplated by this Agreement
        and the other Transaction Documents, Strasbourger is hereby appointed to
        act as
        Agent on behalf of the Purchasers. The Purchaser hereby irrevocably authorizes
        the Agent to take such actions on behalf of the Purchaser and to exercise
        such
        powers as are specifically delegated to the Agent by the terms and provisions
        hereof or of any other Transaction Document, together with such actions and
        powers as are reasonably incidental thereto. The Agent is hereby expressly
        authorized by the Purchaser, without hereby limiting any implied authority,
        (a)
        to execute the Security Agreement and Subordination Agreement on behalf of
        the
        Purchaser, enforce Purchaser’s rights under the Security Agreement and the
        Subordination Agreement and receive on behalf of the Purchaser all
        proceeds
        and payments due to the Purchaser thereunder, and promptly to distribute
        to the
        Purchaser its proper share of all monies so received; (b) to give
        notice on
        behalf of the Purchaser to the Company of any Event of Default specified
        in this
        Agreement and the Debenture of which the Agent has actual knowledge acquired
        in
        connection with its agency hereunder; (c) to act on behalf of the
        Purchasers as specified in this Agreement, the Debenture and the Warrant;
        and
        (d) to distribute to the Purchaser copies of all notices and other materials
        delivered by the Company pursuant to this Agreement as received by the Agent.
        

       

       

      The
        Agent
        shall act in the best interests of the Purchasers, as a whole. Neither the
        Agent
        nor any of its directors, officers, employees or agents shall be liable as
        such
        for any action taken or omitted by any of them except for its or his own
        gross
        negligence or willful misconduct, or be responsible for any statement, warranty
        or representation herein or the contents of any document delivered in connection
        herewith, or be required to ascertain or to make any inquiry concerning the
        performance or observance by the Purchaser of any of the terms, conditions,
        covenants or agreements contained in this Agreement or any other Transaction
        Document. The Agent shall not be responsible to the Purchaser for the due
        execution, genuineness, validity, enforceability or effectiveness of this
        Agreement, any other Transaction Document or other instruments or agreements.
        The Agent shall in all cases be fully protected in acting, or refraining
        from
        acting 

       

      
        
          
          

        

        
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      and,
        except as otherwise specifically provided herein, such instructions and any
        action or inaction pursuant thereto shall be binding on all the Purchasers.
        Neither the Agent nor any of its directors, officers, employees or agents
        shall
        have any responsibility to the Purchaser on account of the failure of or
        delay
        in performance or breach by the Purchaser of any of its obligations hereunder
        or
        to any Purchaser on account of the failure of or delay in performance or
        breach
        by any other Purchaser or the Company of any of their respective obligations
        hereunder or in connection herewith. The Agent may execute any and all duties
        hereunder by or through agents or employees and shall be entitled to rely
        upon
        the advice of legal counsel selected by it with respect to all matters arising
        hereunder or under any other Transaction Document and shall not be liable
        for
        any action taken or suffered in good faith by it in accordance with the advice
        of such counsel. 

       

       

      The
        Purchaser hereby acknowledge that the Agent shall be under no duty to take
        any
        discretionary action permitted to be taken by it pursuant to the provisions
        of
        this Agreement or any other Transaction Document.

       

       

      The
        Purchaser acknowledges that it has, independently and without reliance upon
        the
        Agent or any other Purchaser and based on such documents and information
        as it
        has deemed appropriate, made its own credit analysis and decision to enter
        into
        this Agreement. The Purchaser also acknowledges that it will, independently
        and
        without reliance upon the Agent or any other Purchaser and based on such
        documents and information as it shall from time to time deem appropriate,
        continue to make its own decisions in taking or not taking action under or
        based
        upon this Agreement or any related agreement or any document furnished hereunder
        or thereunder. 

       

      7.2 Notices.
        The Agent shall transmit promptly to each Purchaser each notice received
        by it
        from the Company that the Company is not required to furnish to the Purchasers
        and each of the Purchasers shall transmit promptly to the Agent each notice
        received by it from the Company that is not otherwise required to be delivered
        to the Agent by the terms hereof. The Agent shall be under no obligation
        toward
        any Purchaser to ascertain or inquire as to the performance or observance
        of any
        of the terms, covenants or conditions hereof to be performed or observed
        by the
        Company, but the Agent and each Purchaser shall promptly notify one another
        of
        any Event of Default of which it has actual notice.

       

       

      Each
        Purchaser expressly authorizes the Agent to collect all sums due such Purchaser
        under the Transaction Documents. The Agent shall promptly disburse to the
        Purchasers available funds received by it for the benefit of the
        Purchasers.

       

      7.3 Exculpation.
        In exercising its duties and powers under the Transaction Documents, the
        Agent
        shall exercise the same care that it would exercise in dealing with loans
        for
        its own account, but neither the Agent nor any of its directors, officers,
        employees or attorneys shall be responsible for the truth or accuracy of
        any
        representations or warranties given or made herein or for the validity,
        effectiveness, sufficiency or enforceability of this Agreement, or any other
        Transaction Documents, and the Agent or any of its directors, officers,
        employees or attorneys shall not be liable to any of the Purchasers for any
        action taken or omitted to be taken by it or any of them under the Transaction
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      misconduct
        or gross negligence. The Purchaser represents and warrants to the Agent that
        it
        has made its own independent judgment with respect to entering into this
        Agreement and the other Transaction Documents and undertaking its obligations
        hereunder and thereunder. The Purchaser also acknowledges that it will,
        independently and without reliance upon the Agent or any other Purchaser
        and
        based on such documents and information as it shall deem appropriate at the
        time, continue to make its own credit decisions in taking or not taking action
        under this Agreement and the Transaction Documents. The powers conferred
        by this
        Agreement on the Agent hereunder are solely to protect the Purchasers’ interest
        in the Collateral (as defined in the Security Agreement) and shall not impose
        any duty upon the Agent to exercise any such powers. Except for the safe
        custody
        of any Collateral in its possession and the accounting for monies actually
        received by it under the Transaction Documents, the Agent shall have no duty
        as
        to any Collateral or as to the taking of any necessary steps to preserve
        rights
        against prior parties or any other rights pertaining to the Collateral. Neither
        the Agent nor any of its directors, officers, employees (excluding any
        independent contractors employed by the Agent) or attorneys shall have any
        responsibility (1) to the Company on account of the failure or delay in
        performance or breach of any Purchaser of any of its obligations under the
        Transaction Documents, or (2) to any Purchaser on account of the failure
        of or
        delay in performance or breach by any other Lender or the Debtors of any
        of
        their obligations under the Transaction Documents.

       

      7.4 Reliance.
        The Agent, as Agent hereunder: 

       

       

      (1) shall
        be
        entitled to rely on any communication, instrument or document believed by
        it to
        be genuine or correct and to have been signed or sent by a person or persons
        believed by it to be the proper person or persons; 

       

       

      (2) shall
        be
        entitled to consult with legal counsel, independent public accountants and
        other
        professional advisers and experts selected by it, and shall not be liable
        for
        any action taken or omitted to be taken in good faith by Agent in accordance
        with the advice of such counsel, accountants or experts; 

       

       

      (3) makes
        no
        warranty or representation to any Purchaser and shall not be responsible
        to any
        Purchaser for any statements, warranties or representations made in or in
        connection with the Transaction Documents; 

       

       

      (4) shall
        not
        have any duty to ascertain or to inquire as to the performance or observance
        of
        any of the terms, covenants or conditions of the Transaction Documents on
        the
        part of the Company or to inspect the property (including the books and records)
        of the Company, 

       

       

      (5) shall
        not
        be responsible to any Purchaser for the due execution, legality, validity,
        enforceability, genuineness, sufficiency or venue of this Agreement or any
        other
        instrument or document furnished pursuant hereto; and 

       

       

      (6) shall
        incur no liability under or in respect of the Transaction Documents by acting
        upon notice, consent, certificate or other instrument or writing (which may
        be
        by telegram, telecopier, cable or telex) believed by it to be genuine and
        signed
        or sent by the proper party or parties.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      7.5 Expenses
        and Indemnification. Each Purchaser agrees:

       

      (1) to
        reimburse the Agent, as agent hereunder, on demand, pro rata in accordance
        with
        its Debenture Percentage (as defined in the Security Agreement), for all
        reasonable expenses incurred by the Agent in connection with the preparation,
        execution, operation and enforcement of, or legal advice in respect of rights
        or
        responsibilities under, this Agreement and any document delivered in connection
        herewith, to the extent that such expenses are not timely reimbursed or
        reimbursable by the Debtors, and

       

       

      (2) to
        indemnify and hold harmless the Agent and any of its directors, officers
        or
        employees, on demand, pro rata in accordance with its Debenture Percentage,
        from
        and against all liabilities, obligations, losses, damages, penalties, actions,
        judgments, suits, costs, expenses or disbursements of any kind or nature
        whatsoever that may be imposed on, incurred by, or asserted against the Agent
        in
        any way relating to or arising out of the Transaction Documents or any action
        taken or omitted by the Agent under the Transaction Documents, to the extent
        that expenses and costs incurred by it in connection with such liability
        are not
        reimbursed by the Company, provided that no Purchaser shall be liable for
        any
        portion of such liabilities, obligations, losses, damages, penalties, actions,
        judgments, suits, costs, expenses or disbursements resulting from the Agent’s
        gross negligence or willful misconduct.

       

      7.6 Other
        Purchasers. None of the Purchasers shall be deemed to be agent of any other
        Purchaser; none of such Purchasers or any of their respective directors,
        officers or employees shall have any responsibility to the Company on account
        of
        the failure or delay in performance or breach of any other Purchaser of any
        of
        its obligations under the Transaction Documents or to any other Purchaser
        on
        account of the failure of or delay in performance or breach by any other
        Purchaser or the Company of its obligations under the Transaction
        Documents.

       

      7.7 Removal
        or Resignation of Agent. The Agent may resign at any time by giving written
        notice thereof to the Purchasers and the Company and shall not be removed
        and
        upon any such resignation the Required Purchasers shall have the right to
        appoint a successor Agent. "Required Purchasers" shall mean any Purchaser
        or
        Purchasers holding Debentures evidencing, in the aggregate, an amount equal
        to
        not less than 66% of the aggregate principal amount of all Debentures then
        outstanding. If no successor Agent shall have been so appointed by the Required
        Purchasers, and shall have accepted such appointment, within thirty (30)
        days
        after the retiring Agent's giving of notice of resignation or the Required
        Purchasers' removal of the retiring Agent, then the retiring Agent may, on
        behalf of the Purchasers, appoint a successor Agent. Upon the acceptance
        by a
        successor Agent of its appointment as Agent hereunder, such successor Agent
        shall thereupon succeed to and become vested with all the rights, powers,
        privileges and duties of the retiring Agent, and the retiring Agent shall
        be
        discharged from its duties and obligations under the Transaction Documents.
        After any retiring Agent's resignation or removal hereunder as Agent, the
        provisions of this Article VII shall inure to its benefit as to any actions
        taken or omitted to be taken by it while it was Agent under this
        Agreement.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      ARTICLE
        VIII

       

      MISCELLANEOUS

       

      8.1 Fees
        and
        Expenses. Except as set forth in this Agreement each party shall pay the
        fees
        and expenses of its advisers, counsel, accountants and other experts, if
        any,
        and all other expenses incurred by such party incident to the negotiation,
        preparation, execution, delivery and performance of this Agreement. The Company
        shall pay all stamp and similar taxes and duties levied in connection with
        the
        issuance of the Debenture and the Warrant (and, upon conversion or exercise
        thereof, the Underlying Shares and the Warrant Shares) pursuant hereto. The
        Purchaser shall be responsible for any taxes (other than income 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.
        Whether or not the transactions contemplated hereby and thereby are consummated
        or this Agreement is terminated. The Company shall pay (i) all costs,
        expenses, fees and all taxes incident to and in connection with: (A) the
        preparation, printing and distribution of any registration statement required
        hereunder and all amendments and supplements thereto (including, without
        limitation, financial statements and exhibits), and all preliminary and final
        Blue Sky memoranda and all other agreements, memoranda, correspondence and
        other
        documents prepared and delivered in connection herewith, (B) the issuance
        and delivery of the Securities, (C) the exemption from registration
        of the
        Securities for offer and sale to the Purchaser under the securities or Blue
        Sky
        laws of the applicable jurisdiction, (D) furnishing such copies of
        any
        registration statement required hereunder, the preliminary and final
        prospectuses and all amendments and supplements thereto, as may reasonably
        be
        requested for use in connection with resales of the Securities, and (E) all
        fees and expenses of counsel and accountants of the Company. 

       

      8.2 Entire
        Agreement; Amendments. This Agreement, together with all of the Exhibits
        and
        Schedules annexed hereto, and any other Transaction Document contain the
        entire
        understanding of the parties with respect to the subject matter hereof and
        supersede 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.

       

      8.3 Notices.
        Any notice, request, demand, waiver, consent, approval, or other communication
        which is required or permitted to be given to any party hereunder shall be
        in
        writing and shall be deemed to have been duly given only if delivered to
        the
        party personally or sent to the party by facsimile upon electronic confirmation
        and receipt (promptly followed by a hard-copy delivered in accordance with
        this
        Section 8.3) or three days after being mailed by registered or certified
        mail
        (return receipt requested), with postage and registration or if sent by
        nationally recognized overnight courier, one day after being mailed
        certification fees thereon prepaid, addressed to the party at its address
        set
        forth below:

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      

      
        	 	
                If
                  to the Company:

              	 	
                Magnetech
                  Integrated Services Corp.

                1125
                  South Walnut Street

                South
                  Bend, Indiana 46679

                Tel:
                  (574) 234-8131

                Fax:
                  (574) 232-7648

              
	 	 	 	 
	 	
                With
                  copies to:

              	 	
                Barnes
                  & Thornburg, LLP

                600
                  1st
                  Source Bank Building

                100
                  N. Michigan Street

                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

              
	 	 	 	 
	 	
                If
                  to Escrow Agent:

              	 	
                Wilmington
                  Trust Company

                1100
                  North Market Street

                Wilmington,
                  DE 19890

                Tel:
                  (302) 636-6449

                Fax:
                  (302) 636-4145

              

      

      

      or
        such
        other address as may be designated hereafter by notice given pursuant to
        the
        terms of this Section 7.3.

       

      8.4 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 Holders of a 2/3 of the principal balance of the Debentures then
        outstanding, or, in the case of a waiver, by the party against whom enforce-ment
        of any such waiver is sought. No waiver of any default with respect to any
        provision, condition or require-ment of this Agreement shall be deemed to
        be a
        continuing waiver in the future or a waiver of any other provision, condition
        or
        requirement hereof, nor shall any delay or omission of either party to exercise
        any right hereunder in any manner impair the exercise of any such right accruing
        to it thereafter.

       

      8.5 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.

       

      8.6 Successors
        and Assigns. This Agreement shall be binding upon and inure to the benefit
        of
        the parties and their respective successors and permitted assigns. This
        Agreement and any of the rights, interests or obligations hereunder may be
        assigned by the Purchaser to an accredited investor without the consent of
        the
        Company as long as such assignee agrees to be bound by this Agreement. This
        Agreement and any of the rights, interests or obligations hereunder may not
        be
        assigned by the Company without the prior written consent of the Purchaser.
        

       

      8.7 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.

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      8.8 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 New York. The parties hereto agree that
        the
        internal laws of the State of New York 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 shall
        be
        brought exclusively in the state and/or federal courts situated in the County
        and State of New York. Service of process in any action 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
        other party at its principal address set forth in this Agreement.

       

      8.9 Survival.
        The agreements and covenants of the parties contained in Article IV
        and
        this Article VII shall survive the Closing (or any earlier termination
        of
        this Agreement).

       

      8.10 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.

       

      8.11 Publicity.
        The Company and the Purchaser shall consult with each other in issuing any
        press
        releases or otherwise making public statements with respect to the transactions
        contemplated hereby and neither party shall issue any such press release
        or
        otherwise make any such public statement without the prior written consent
        of
        the other, which consent shall not be unreasonably withheld or delayed, unless
        counsel for the disclosing party deems such public statement to be required
        by
        applicable federal and/or state securities laws. Except as otherwise required
        by
        applicable law or regulation, the Company will not disclose to any third
        party
        (excluding its legal counsel, accountants, and representatives) the name
        of the
        Purchaser.

       

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

       

      [Signature
        Page Follows]

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      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:  Chief
                  Executive Officer

              
	 	 	 
	 	
                Agent:

              
	 	 
	 	
                STRASBOURGER
                  PEARSON TULCIN WOLFF, INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	
              
	 	 	
                Name:

              
	 	 	
                Title:

              
	 	 
	 	
                (As
                  to Article VII only)

              
	 	 	 
	 	
                Purchaser:

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	 /s/
                Michael J. Schumacher
	 	
                Name:
                  

              	
                 Michael J. Schumacher

              
	 	
                Title:
                  

              	 President

      

      

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      Schedule
        1

      

      Purchaser

      

      
        MAGNETECH
          INTEGRATED SERVICES CORP.

        
          Private
            Placement of Subordinated Secured Convertible
            Debentures

        

        
          	
                  Purchaser

                	 	
                  Closing
                    Date

                	 	
                  Principal
                    Amount 

                  of
                    Debentures

                	 	
                  Warrants

                	 
	 	 	 	 	 	 	 	 
	
                  David
                    L. Cohen

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  100,000.00

                	 	 	
                  105,729

                	 
	
                  Michael
                    Poujol & Angela Poujol JTWROS

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  250,000.00

                	 	 	
                  264,323

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

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Pershing
                    as Cust., IRA FBO Thomas D'Avanzo

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Dr.
                    Frank Lake, III

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  30,000.00

                	 	 	
                  31,719

                	 
	
                  Dr.
                    Leo Mazzocchi & Nancy T. Mazzocchi JTWROS

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  26,432

                	 
	
                  William
                    Sybesma & Martina Jane Sybesma JTWROS

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  75,000.00

                	 	 	
                  79,297

                	 
	
                  Gary
                    M. Glasscock

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  100,000.00

                	 	 	
                  105,729

                	 
	
                  Dr.
                    Domenic Strazzulla

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  RS
                    & VS Ltd., SJDE LLC Gen. Partner

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  26,432

                	 
	
                  Stephen
                    T. Skoly, Jr.

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Thomas
                    J. Keeney

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  26,432

                	 
	
                  Paul
                    Quattrocchi & Danielle Quattrocchi JTWROS

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  26,432

                	 
	
                  Dr.
                    Barry G. Landry

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Robert
                    L. Thompson MD TR ISERP Profit Sharing Plan FBO Robert L. Thompson
                    MD

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  26,432

                	 
	
                  Dr.
                    Michael O. Bernstein

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Steven
                    A. Lamb

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Norman
                    Dudey TR The Norman Dudey Trust U A Dated 6/10/1991 FBO Norman
                    Dudey

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Frank
                    R. Cserpes Jr. & Sharon M. Cserpes TRS Frank R. Cserpes Jr. Trust DTD
                    4/12/02 AMD DTD 1/22/03

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Edward
                    Lagomarsino

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  250,000.00

                	 	 	
                  264,323

                	 
	
                  Pershing
                    as Cust., SEP FBO Rodney Schorlemmer

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Mollie
                    Ann Peters

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  20,000.00

                	 	 	
                  21,146

                	 
	
                  Paul
                    V. Nugent Jr. & Jeanne Mentus Nugent JTWROS

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  26,432

                	 
	
                  Albert
                    Jim Barboni

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  30,000.00

                	 	 	
                  31,719

                	 
	
                  StarInvest
                    Group, Inc.

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  400,000.00

                	 	 	
                  422,917

                	 
	
                  SwissFinanz
                    Partner AG

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  130,000.00

                	 	 	
                  137,448

                	 
	
                  Marcel
                    Riedel

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  20,000.00

                	 	 	
                  21,146

                	 
	
                  Alfred
                    Schneider

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  20,000.00

                	 	 	
                  21,146

                	 
	
                  Maya
                    Salzmann

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Daniel
                    Stahl

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  80,000.00

                	 	 	
                  84,583

                	 
	
                  Elizabeth
                    Kuhn

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Paul
                    Remensberger

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  20,000.00

                	 	 	
                  21,146

                	 
	
                  Heinz
                    Wattenhofer

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  26,432

                	 
	
                  Rolph
                    R. Berg-Jaquet

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  10,000.00

                	 	 	
                  10,573

                	 
	
                  Marie
                    Luise Fuchs

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  10,000.00

                	 	 	
                  10,573

                	 
	
                  Josefine
                    Hausammann

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  10,000.00

                	 	 	
                  10,573

                	 
	
                  Hans
                    Hausammann

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  15,000.00

                	 	 	
                  15,859

                	 
	
                  Roger
                    Buerki

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  10,000.00

                	 	 	
                  10,573

                	 
	
                  Hans
                    Nef-Maag

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  60,000.00

                	 	 	
                  63,437

                	 
	
                  James
                    Ladner

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Max
                    Gertsch

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  15,000.00

                	 	 	
                  15,859

                	 
	
                  Roland
                    Bertschy

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  5,000.00

                	 	 	
                  5,286

                	 
	
                  Christian
                    Baumberger

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  10,000.00

                	 	 	
                  10,573

                	 
	
                  Fred
                    Kin

                	 	 	
                  3/4/2005

                	 	
                  $

                	
                  20,000.00

                	 	 	
                  21,146

                	 
	
                  Robert
                    C. Ingram, III

                	 	 	
                  3/8/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Kilmare
                    Worldwide Inc.

                	 	 	
                  3/8/2005

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  26,432

                	 
	
                  StarInvest
                    Group, Inc.

                	 	 	
                  3/8/2005

                	 	
                  $

                	
                  400,000.00

                	 	 	
                  422,916

                	 
	
                  Joseph
                    Quattrocchi

                	 	 	
                  3/8/2005

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  26,432

                	 
	
                  Nasrollah
                    Jahdi

                	 	 	
                  4/15/2005

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  26,432

                	 
	
                  Highgate
                    House Funds, Ltd.

                	 	 	
                  4/15/2005

                	 	
                  $

                	
                  500,000.00

                	 	 	
                  528,645

                	 
	
                  Pershing
                    LLC as Custodian, IRA fbo Richard J. Mullin

                	 	 	
                  5/9/2005

                	 	
                  $

                	
                  100,000.00

                	 	 	
                  105,729

                	 
	
                  SwissFinanz
                    Partner AG

                	 	 	
                  5/9/2005

                	 	
                  $

                	
                  60,000.00

                	 	 	
                  63,437

                	 
	
                  Daniel
                    Stahl

                	 	 	
                  5/9/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  Paul
                    Remensberger

                	 	 	
                  5/9/2005

                	 	
                  $

                	
                  20,000.00

                	 	 	
                  21,146

                	 
	
                  Hans
                    Hausammann

                	 	 	
                  5/9/2005

                	 	
                  $

                	
                  20,000.00

                	 	 	
                  21,146

                	 
	
                  Hans-Peter
                    Knecht

                	 	 	
                  5/9/2005

                	 	
                  $

                	
                  20,000.00

                	 	 	
                  21,146

                	 
	
                  Henry
                    Fortier, III

                	 	 	
                  5/9/2005

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  26,432

                	 
	
                  Frederick
                    P. Epstein

                	 	 	
                  5/9/2005

                	 	
                  $

                	
                  50,000.00

                	 	 	
                  52,865

                	 
	
                  William
                    Sybesma

                	 	 	
                  5/9/2005

                	 	
                  $

                	
                  75,000.00

                	 	 	
                  79,297

                	 
	
                  Gary
                    M. Glasscock

                	 	 	
                  5/9/2005

                	 	
                  $

                	
                  40,000.00

                	 	 	
                  42,292

                	 
	
                  Joseph
                    Gazzola & Josephine Gazzola JTWROS

                	 	 	
                  5/9/2005

                	 	
                  $

                	
                  25,000.00

                	 	 	
                  26,432

                	 
	 	 	 	 	 	 	 	 	 	 	 
	
                  TOTALS

                	 	 	 	 	
                  $

                	
                  4,025,000.00

                	 	 	
                  4,255,601

                	 

        

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      

        

        Schedule
          3.1(a)

         

        Subsidiaries

         

        

         

        Magnetech
          Industrial Services, Inc.

         

        Martell
          Electric LLC

         

        HK
          Engine
          Components, LLC

         

        HK
          Machined Parts, LLC, HK Weston Properties, LLC and HK Cast Products, LLC
          are
          subsidiaries of HK Engine Components, 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. The Company has
          issued
          and outstanding 97,030,006 shares of common stock.

         

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

         

        Assuming
          full subscription of the Debentures, Strasbourger for its services as placement
          agent, will receive ten year warrants to purchase 6,182,992 shares of the
          common
          stock and 50,000 shares of the common stock.

         

        The
          Company signed a Letter of Intent to acquire certain assets of Hatch & Kirk,
          Inc. and other related transactions for cash and 679,800 shares of common
          stock.
          In conjunction with this pending acquisition, the Company has agreed to
          issue up
          to 250,000 shares of its common stock as a finder’s fee.

         

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Schedule
          3.1(d)

        

        Issuance
          of Securities

         

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

         

        Three
          Million Dollar ($3,000,000) line of credit, as evidenced by a promissory
          note
          executed in favor of the bank dated November 1, 2004. The note is payable
          on
          demand and is secured by the assets of the Company. In addition, John &
          Bonnie Martell have guaranteed the loan. On April 29, 2005 the Company
          signed a
          commitment letter from the Bank to increase the line of credit to $5,500,000
          under substantially the same terms and conditions of the existing loan.
          This new
          line of credit is in excess of the $3,000,000 line of credit referenced
          in the
          Debenture.

         

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

         

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

         

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

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Schedule
          3.1(f)

        

        Consents
          and Approvals

         

        None

         

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Schedule
          3.1(g)

         

        Litigation

         

        None

         

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Schedule
          3.1 (h)

         

        Defaults
          and Violations

         

        The
          line
          of credit with the Bank requires that the Company maintains a maximum debt
          to
          tangible net worth ratio of 1:1. As of December 31, 2004, the ratio is
          1.17:1.
          The Company received a waiver for the covenant violation from the
          Bank.

         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      
        EXHIBIT
          A

         

        MAGNETECH
          INTEGRATED SERVICES CORP.

         

        SUBORDINATED
          SECURED CONVERTIBLE DEBENTURE

         

        NEITHER
          THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS DEBENTURE NOR
          THE
          SECURITIES INTO WHICH THIS DEBENTURE ARE CONVERTIBLE HAVE BEEN REGISTERED
          UNDER
          THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
          LAWS.

         

        THE
          SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I)
          IN THE
          ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
          THE
          SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A
          GENERALLY
          ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)
          UNLESS
          SOLD PURSUANT TO RULE 144 UNDER SAID ACT. THE HOLDER OF THIS DEBENTURE
          WILL, AND
          EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS DEBENTURE
          OF
          THE RESALE RESTRICTIONS REFERRED TO IN THE FOREGOING SENTENCE.

        

        

        
          	
                  $______________

                	
                  _________,
                    2005

                

        

        

        FOR
          VALUE
          RECEIVED, MAGNETECH
          INTEGRATED SERVICES CORP.,
          an
          Indiana corporation ("Company"), with its principal office at 1125 South
          Walnut
          Street, South Bend, Indiana 46619, promises to pay to the order of
          ______________________________________________ ("Holder"), the principal
          amount
          of ________________________________________ Dollars ($_________) on February
          28,
          2007 (the “Maturity Date”), in such coin or currency of the United States of
          America as at the time of payment shall be legal tender for the payment
          of
          public or private debts. Interest shall accrue daily and shall be payable
          on the
          unpaid balance of said principal amount from time to time outstanding at
          the
          rate of six percent (6%) per annum; provided, however, that for the period
          from
          and including the date of the occurrence of any Event of Default as set
          forth in
          Section 3, to but not including the date such Event of Default is cured
          or
          waived, the interest rate shall be increased to fifteen percent (15%) per
          annum.

        

        This
          Debenture is issued pursuant to a subordinated convertible debenture purchase
          agreement between the Company and the Holder ("Purchase Agreement") and
          is
          secured by a second lien on certain collateral more specifically described
          in
          that certain Security Agreement entered into by the Company for the benefit
          of
          the Holder and Strasbourger Pearson Tulcin Wolff, Inc., as agent for holders
          (the “Agent”), among others ("Security Agreement"), both of which are available
          for inspection at the Company's principal office. Reference herein to the
          Purchase Agreement and the Security Agreement shall in no way impair the
          absolute and unconditional obligation of the Company to pay both principal
          and
          interest hereon as provided herein, subject to the subordination provided
          below.

        
          
            
            

          

          
            
              

            

          

          
            
            

          

        

        1) Subordination.
          Notwithstanding anything herein to the contrary, the obligations of the
          Company
          created by this Debenture are subordinate in right of payment to any amounts
          owing by the Company pursuant to that certain Commercial Security Agreement
          dated November 1, 2004 by and between Magnetech Industrial Services Inc.,
          a
          wholly owned subsidiary of the Company (“Industrial”), and MFB Financial
          creating a $3 million credit facility (the “Credit Facility”). So long as the
          Credit Facility is not in default and there is no condition, event or act
          which,
          with the giving of notice, passage of time or both, would constitute a
          default,
          the Company may make interest payments; provided however no principal payments
          may be made without the prior consent of the lender of the Credit Facility.
          The
          Company reserves the right to refinance the obligations under the Credit
          Facility with new lenders in amounts not to exceed the maximum amount permitted
          under the existing Credit Facility. The Debentures without further action
          on the
          part of the holders or the Company will be subordinate to such new credit
          facility.

        

        2) Prepayment.
          Notwithstanding anything herein to the contrary, this Debenture may be
          prepaid
          or called by the Company at any time in whole, or in part, without penalty
          or
          premium, subject to the subordination in favor of the lender of the Credit
          Facility. Any notice to redeem ("Redemption Notice") must be given to all
          Registered Holders no less than thirty (30) days nor more than forty-five
          (45)
          days prior to the date set forth for redemption ("Redemption Date"). The
          Registered Holder shall receive all of the principal and accrued interest
          in
          cash unless the Registered Holder elects to receive all of such principal
          and
          accrued interest in the number of shares of Common Stock as is equal to
          the
          Conversion Formula (as defined below) by sending written notice of such
          election
          to the Company at the address set forth in Section 9.4 no less than ten
          (10)
          days prior to the Redemption Date. This Debenture shall be paid (and prepaid,
          if
          applicable) only pro rata with certain additional debentures of like tenor
          being
          issued contemporaneously herewith, subject to each Holder’s conversion rights.
          The date designated for repayment in the Redemption Notice shall be the
          “Prepayment Date”.

        

        3) Events
          of Default.

        

        i) Upon
          the
          occurrence of any of the following events (herein called "Events of
          Default"):

        

        (1) The
          Company shall fail to pay the principal of or interest on this Debenture
          when
          due;

        

        (2) An
          Event
          of Default shall occur under the Credit Facility giving effect to any applicable
          notice provisions or cure periods set forth in the documents;

        

        (3) (A)
          The
          Company or any of its subsidiaries shall commence any proceeding or other
          action
          relating to it in bankruptcy or seek reorganization, arrangement, readjustment
          of its debts, receivership, dissolution, liquidation, winding-up, composition
          or
          any other relief under any bankruptcy law, or under any other insolvency,
          reorganization, liquidation, dissolution, arrangement, composition, readjustment
          of debt or any other similar act or law, of any jurisdiction, domestic
          or
          foreign, now or hereafter existing; or (B) the Company or any of its

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

        subsidiaries
          shall admit the material allegations of any petition or pleading in connection
          with any such proceeding; or (C) the Company or any of its subsidiaries
          shall
          apply for, or consent or acquiesce to, the appointment of a receiver,
          conservator, trustee or similar officer for it or for all or a substantial
          part
          of its property; or (D) the Company or any of its subsidiaries shall make
          a
          general assignment for the benefit of creditors;

        

        (4) (A)
          The
          commencement of any proceedings or the taking of any other action against
          the
          Company or any of its subsidiaries in bankruptcy or seeking reorganization,
          arrangement, readjustment of its debts, liquidation, dissolution, arrangement,
          composition, or any other relief under any bankruptcy law or any other
          similar
          act or law of any jurisdiction, domestic or foreign, now or hereafter existing
          and the continuance of any of such events for sixty (60) days undismissed,
          unbonded or undischarged; or (B) the appointment of a receiver, conservator,
          trustee or similar officer for the Company or any of its subsidiaries for
          any of
          its property and the continuance of any of such events for sixty (60) days
          undismissed, unbonded or undischarged;

        

        

        
          
            
              

            

            
            

          

          
            3

            
              

            

          

          
            
            

            
            

          

        

        (5) An
          "Event
          of Default" (as defined in the Security Agreement) shall have occurred
          under the
          Security Agreement, after giving effect to any applicable notice provisions
          and
          cure periods set forth in the Security Agreement;

        

        (6) The
          Company or Industrial shall fail to perform any obligation of the Company
          contained in the Purchase Agreement if such failure continues for ten (10)
          consecutive days; provided, however, that if such failure is capable of
          being
          cured, such failure is not cured within ten (10) days after the Company's
          and/or
          Industrial’s receipt of written notice of same;

        

        (7) The
          Company shall fail to comply with any of its obligations under this Debenture,
          other than payment if such failure continues for ten (10) consecutive days;
          provided, such failure is not remedied within thirty (30) days after the
          Company's receipt of written notice of same;

        

        (8) The
          Company or any of its subsidiaries shall default with respect to any
          indebtedness for borrowed money (other than under this Debenture) in a
          principal
          amount in excess of $200,000 if either (a) the effect of such default is
          to
          allow the creditor to accelerate the maturity of such indebtedness (giving
          effect to any applicable grace periods) or (b) the holder of such indebtedness
          declares the Company or any of its subsidiaries to be in default (giving
          effect
          to any applicable grace periods); 

        

        (9) Any
          judgment or judgments against the Company or any of its subsidiaries or
          any
          attachment, levy or execution against any of its properties for any amount
          in
          excess of $50,000 in the aggregate shall remain unpaid, or shall not be
          released, discharged, dismissed, stayed or fully bonded for a period of
          forty-five (45) days or more after its entry, issue or levy, as the case
          may
          be;

        

        (x) Any
          representation or warranty made by the Company or Industrial in the Purchase
          Agreement shall have been incorrect in any material way; or

        

        
          
            
            

          

          
            4

            
              

            

          

          
            
            

          

        

        (xi) The
          Company shall fail to comply with any of its obligations under the Registration
          Rights Agreement, dated the date hereof, between the Company and the Holder
          if
          such failure continues for ten (10) days, provided, however, that if such
          failure is capable of being cured, such failure is not cured within ten
          (10)
          days after Company’s receipt of written notice of same;

        

        then,
          and
          in any such event, the Holder, at its option and without any written notice
          to
          the Company, may declare the entire principal amount of this Debenture
          then
          outstanding together with accrued unpaid interest thereon immediately due
          and
          payable, and the same shall forthwith become immediately due and payable
          without
          presentment, demand, protest, or other notice of any kind, all of which
          are
          expressly waived. The Events of Default listed herein are solely for the
          purpose
          of protecting the interests of the Holder of this Debenture. If the Debenture
          is
          not paid in full upon acceleration, as required above, interest shall accrue
          on
          the outstanding principal of and interest on this Debenture from and including
          the date of the Event of Default to but not including the date of payment
          at a
          rate equal to the lesser of fifteen percent (15%) per annum or the maximum
          interest rate permitted by applicable law.

        

        ii) Non-Waiver
          and Other Remedies.
          No
          course of dealing or delay on the part of the Holder of this Debenture
          in
          exercising any right hereunder shall operate as a waiver or otherwise prejudice
          the right of the Holder of this Debenture. No remedy conferred hereby shall
          be
          exclusive of any other remedy referred to herein or now or hereafter available
          at law, in equity, by statute or otherwise.

        

        iii) Collection
          Costs; Attorney's Fees.
          In the
          event this Debenture is turned over to an attorney for collection or Holder
          otherwise seeks advice of an attorney in connection with the exercise of
          its
          rights hereunder upon the occurrence of an Event of Default, the Company
          agrees
          to pay all reasonable costs of collection, including reasonable attorney's
          fees
          and expenses and all out of pocket expenses incurred in connection with
          such
          collection efforts, which amounts may, at the Holders option, be added
          to the
          principal hereof.

        

        4) Obligation
          to Pay Principal and Interest: Covenants.
          No
          provision of this Debenture shall alter or impair the obligation of the
          Company,
          which is absolute and unconditional, to pay the principal of and interest
          on
          this Debenture at the place, at the respective times, at the rates, and
          in the
          currency herein prescribed.

        

        a) Affirmative
          Covenants.
          The
          Company covenants and agrees that, while this Debenture is outstanding,
          it
          shall:

        

        i) Ensure
          that Industrial pay all senior obligations accruing under the Credit
          Facility;

        

        ii) Pay
          and
          discharge all taxes, assessments and governmental charges or levies imposed
          upon
          it or its subsidiaries, or upon its or its subsidiaries’ income and

        
          
            
            

          

          
            5

            
              

            

          

          
            
            

          

        

        profits,
          or upon any properties belonging to it or its subsidiaries before the same
          shall
          be in default; provided, however, that the Company and its subsidiaries
          shall
          not be required to pay any such tax, assessment, charge or levy that is
          being
          contested in good faith by proper proceedings and adequate reserves for
          the
          accrual of same are maintained if required by generally accepted accounting
          principles;

        

        iii) Preserve
          its and its subsidiaries’ corporate existence and continue to engage in business
          of the same general type as conducted as of the date hereof; and

        

        iv) Comply
          in
          all respects with all statutes, laws, ordinances, orders, judgments, decrees,
          injunctions, rules, regulations, permits, licenses, authorizations and
          requirements ("Requirement(s)") of all governmental bodies, departments,
          commissions, boards, companies or associations insuring the premises, courts,
          authorities, officials, or officers, that are applicable to the Company;
          except
          where the failure to comply would not have a material adverse effect on
          the
          Company; provided that nothing contained herein shall prevent the Company
          from
          contesting the validity or the application of any Requirements.

        

        b) Negative
          Covenants.
          The
          Company covenants and agrees that while this Debenture is outstanding it
          will
          not directly or indirectly:

        

        i) Make
          or
          forgive any loans to any Insiders or guarantee or otherwise in any way
          become or
          be responsible for indebtedness for borrowed money, or for obligations,
          in
          either case of any of the Insiders, contingently or otherwise, other than
          such
          guaranties existing as of the date hereof and advancement of expenses in
          the
          ordinary course of business. For purposes of this Debenture, “Insiders shall
          mean any officer, director or 5% or greater shareholder of the Company
          or
          Industrial;

        

        ii) Declare
          or pay any cash dividends or make any interest payments in cash to the
          holders
          of any of its or its subsidiaries’ outstanding equity or debt
          securities;

        

        iii) Sell,
          transfer or dispose of any of its or its subsidiaries’ assets other than in the
          ordinary course of its business and for fair value; 

        

        iv) Purchase,
          redeem, retire or otherwise acquire for value any of its or its subsidiaries’
          capital stock now or hereafter outstanding;

        

        v) Increase
          the salary or other compensation or benefits paid or provided to any officer
          or
          director of the Company or Industrial except to the extent that such increase
          (a) is commercially reasonable and in accordance with industry standards
          and (b)
          is approved by a majority of the non-employee members of the Board of Directors
          of such Borrower;

        

        (f) Directly
          or indirectly incur or guarantee, assume or suffer any indebtedness, other
          than
          (i) the indebtedness evidenced by this Debenture and the other Debentures
          and
          (ii) the Credit Facility; 

        
          
            
            

          

          
            6

            
              

            

          

          
            
            

          

        

        (g)
           Directly
          or indirectly issue any equity securities, or securities convertible into,
          or
          exchangeable or exercisable for any such equity securities; or

        

        (h) Directly
          or indirectly allow or suffer to exist any mortgage, lien, pledge, charge,
          security interest or other encumbrance upon or in any property or assets
          (including accounts and contract rights) owned by the Company or any of
          its
          subsidiaries other than any encumbrances of the Company or any of its
          subsidiaries as of the date hereof.

        

        5) Conversion.

        

        a) Right
          to Convert.
          Each
          Holder may at any time and from time to time, commencing thirty (30) days
          after
          the original issuance of the Debenture, convert all or any amount of the
          principal amount and accrued interest of the Debentures then owned by such
          Holder into such number of shares of Common Stock of the Company as is
          equal to
          the then-outstanding principal balance of this Debenture, divided by 0.3404926
          (the “Conversion Formula”). 

        

        

        
          
            
              

            

            
            

          

          
            7

            
              

            

          

          
            
            

            
            

          

        

        b) Mechanics
          and Effect of Conversion.
          In
          order to convert the unpaid principal amount hereof and accrued interest
          thereon
          into shares of Common Stock, the Holder shall surrender this Debenture,
          with the
          form of Notice of Conversion annexed to this Debenture completed and executed,
          to the Company at its principal executive office. The Company shall, as
          soon as
          practicable, but not later than five (5) business days after the date of
          receipt
          of this Debenture, issue and deliver to a location in the United States
          designated by the Holder a certificate for the number of shares of Common
          Stock
          to which the Holder shall be entitled as aforesaid. Such conversion shall
          be
          deemed to have been made immediately prior to the close of business on
          the date
          on which the written notice is received by the Company in accordance herewith
          ("Conversion Date"), and the Holder shall be treated for all purposes as
          the
          record holder of such shares of Common Stock as of such Conversion
          Date.

        

        c) Issuance
          of Common Stock.
          All
          Common Stock which may be issued upon conversion of the Debenture will,
          upon
          issuance, be duly issued, fully paid and non-assessable and free from all
          taxes,
          liens, and charges with respect to the issue thereof. At all times that
          any
          Debentures are outstanding, the Company shall have authorized and shall
          have
          reserved for the purpose of issuance upon such conversion into Common Stock
          of
          all Debentures, a sufficient number of shares of Common Stock to provide
          for the
          conversion of all outstanding Debentures into the number of shares of Common
          Stock equal to the then effective Conversion Formula. Without limiting
          the
          generality of the foregoing, if, at any time, the Conversion Formula is
          decreased or increased, the number of shares of Common Stock authorized
          and
          reserved for issuance by the Company upon the conversion of the Debentures
          shall
          be proportionately increased or decreased, as the case may be.

        

        d) Adjustments.

        

        i) If
          the
          outstanding shares of the Company's Common Stock shall be subdivided or
          split
          into a greater number of shares, or a dividend in Common Stock shall be
          paid

        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        

        in
          respect of Common Stock, the denominator of the Conversion Formula in effect
          immediately prior to such subdivision or at the record date of such dividend
          shall, simultaneously with the effectiveness of such subdivision or split
          or
          immediately after the record date of such dividend, be proportionately
          adjusted.
          If the outstanding shares of Common Stock shall be combined or reverse-split
          into a smaller number of shares, the denominator of the Conversion Formula
          in
          effect immediately prior to such combination or reverse-split shall,
          simultaneously with the effectiveness of such combination or reverse-split,
          be
          proportionately adjusted. When any adjustment is required to be made in
          the
          denominator of the Conversion Formula, the number of shares of Common Stock
          purchasable upon the conversion of this Debenture shall be changed to the
          number
          determined by dividing (i) an amount equal to the number of shares issuable
          upon
          the conversion of this Debenture immediately prior to such adjustment,
          multiplied by the denominator of the Conversion Formula in effect immediately
          prior to such adjustment, by (ii) the denominator of the Conversion Formula
          in
          effect immediately after such adjustment.

        

        ii) If
          there
          shall occur any capital reorganization or reclassification of the Company's
          Common Stock (other than a change in par value or a subdivision or combination
          as provided for in subsection (a) above), or the payment of a liquidating
          distribution, then, as part of any such reorganization, reclassification
          or
          liquidating distribution, lawful provision shall be made so that the Holder
          of
          this Debenture shall have the right thereafter to receive upon the conversion
          hereof (to the extent, if any, still convertible) the kind and amount of
          shares
          of stock or other securities or property which such Holder would have been
          entitled to receive if, immediately prior to any such reorganization,
          reclassification or liquidating distribution, as the case may be, such
          Holder
          had held the number of shares of Common Stock which were then purchasable
          upon
          the conversion of this Debenture. In any such case, appropriate adjustment
          (as
          reasonably determined by the Board of Directors of the Company) shall be
          made in
          the application of the provisions set forth herein with respect to the
          fights
          and interests thereafter of the Holder of this Debenture such that the
          provisions set forth in this Section 5.4 (including provisions with respect
          to
          adjustment of the denominator of the Conversion Formula) shall thereafter
          be
          applicable, as nearly as practicable, in relation to any shares of stock
          or
          other securities or property thereafter deliverable upon the conversion
          of this
          Debenture.

        

        (c) No
          adjustment in the Conversion Formula shall be required unless such adjustment
          would require an increase or decrease in the denominator of the Conversion
          Formula of at least .00001; provided, however, that any adjustments which
          by
          reason of this paragraph are not required to be made shall be carried forward
          and taken into account in any subsequent adjustment. All calculations under
          this
          Section 5.4 shall be made to the nearest share. 

        

        (d) Upon
          the
          happening of any event requiring an adjustment of the Conversion Formula
          hereunder, the Company shall forthwith give written notice thereto to the
          Holder
          of this Debenture stating the adjusted Conversion Formula and the adjusted
          number of shares purchasable upon the conversion hereof resulting from
          such
          event and setting forth in reasonable detail the method of calculation
          and the
          facts upon which such calculation is based.

        

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

        e) Fractional
          Shares.
          The
          Company shall not be required to issue fractions of shares of Common Stock
          upon
          conversion. If any fractions of a share would, but for this Section 5.5,
          be
          issuable upon any conversion, in lieu of such fractional share the Company
          shall
          round up or down to the nearest whole number of shares, with a fraction
          of 1⁄2
          being rounded up.

        

        6.  Noncircumvention.
          The
          Company hereby covenants and agrees that the Company and its subsidiaries
          will
          not, by amendment of its Certificate of Incorporation, Bylaws or through
          any
          reorganization, transfer of assets, consolidation, merger, scheme of
          arrangement, dissolution, issue or sale of securities, or any other voluntary
          action, avoid or seek to avoid the observance or performance of any of
          the terms
          of this Debenture, and will at all times in good faith carry out all of
          the
          provisions of this Debenture and take all action as may be required to
          protect
          the rights of the Holder of this Debenture.

        

        7.
          Voting
          Rights.
          The
          Holder shall have no voting rights as the holder of this Debenture, except
          as
          required by law, including but not limited to the Indiana Business Corporation
          Law, and as expressly provided in this Debenture.

        

        8. Issue
          of Debentures.
          This
          Debenture is one of a duly authorized issue of debentures of the Company,
          designated the Subordinated Secured Convertible Debentures is limited in
          aggregate principal amount of $4,000,000. The Debentures have been offered
          and
          sold pursuant to the Company’s Private Placement Memorandum dated January 25,
          2005. The obligations under this Debenture shall rank equally with all
          other
          Debentures of the same designation.

        

        9. Required
          Consent.
          The
          Company may not modify any of the terms of this Debenture except in accordance
          with the provisions of Section 9.

        

        9.1 The
          Agent, on behalf of the Holders, may modify, amend or supplement the terms
          of
          the Debentures in any way, and the Agent, on behalf of the Holders of the
          Debentures, may make, take or give any request, demand, authorization,
          direction, notice, consent, waiver or other action provided by the terms
          of the
          Debentures to be made, given or taken by Holders of Debentures.

        

        Any
          instrument given by the Agent on behalf of the Holders of the Debentures
          in
          connection with any consent to any such modification, amendment, supplement,
          request, demand, authorization, direction, notice, consent, waiver or other
          action will be irrevocable once given and will be conclusive and binding
          on all
          subsequent Holders of such Debenture or any Debenture issued directly or
          indirectly in exchange or substitution therefor or in lieu thereof. Any
          such
          modification, amendment, supplement, request, demand, authorization, direction,
          notice, consent, waiver or other action will be conclusive and binding
          on all
          Holders of Debentures, whether or not they have given such consent, and
          whether
          or not notation of such modification, amendment, supplement, request, demand,
          authorization, direction, notice, consent, waiver or other action is made
          upon
          the Debentures. Notice of any modification or amendment of, supplement
          to, or
          request, demand, authorization, direction, notice, consent, waiver or other
          action with respect to the Debentures shall be given to each registered
          Holder
          of Debentures affected thereby, in all cases as provided herein.

        

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

        Debentures
          executed and delivered after the effectiveness of any such modification,
          amendment, supplement, request, demand, authorization, direction, notice,
          consent, waiver or other action shall bear a notation in the form reasonably
          approved by the Company as to any matter provided for in such modification,
          amendment, supplement, request, demand, authorization, direction, notice,
          consent, waiver or other action. New Debentures modified to conform to
          any such
          modification, amendment, supplement, request, demand, authorization, direction,
          notice, consent, waiver or other action may be prepared by the Company
          and
          executed and delivered in exchange for outstanding Debentures.

        

        9.2 Lost
          Documents.
          Upon
          receipt by the Company of evidence satisfactory to it of the loss, theft,
          destruction or mutilation of this Debenture or any Debenture exchanged
          for it,
          and (in the case of loss, theft or destruction) of indemnity satisfactory
          to it,
          and upon reimbursement to the Company of all reasonable expenses incidental
          thereto, and upon surrender and cancellation of such Debenture, if mutilated,
          the Company will make and deliver in lieu of such Debenture a new Debenture
          of
          like tenor and unpaid principal amount and dated as of the original date
          of the
          Debenture.

        9.3 Benefit.
          This
          Debenture shall be binding upon and inure to the benefit of the parties
          hereto
          and their legal representatives, successors and assigns.

        

        9.4 Notices
          and Addresses.
          All
          notices, offers, acceptances and any other acts under this Debenture (except
          payment) shall be in writing, and shall be sufficiently given if delivered
          to
          the addressee in person, by overnight courier service or similar receipted
          delivery, or, if mailed, postage prepaid, by certified mail, return receipt
          requested, as follows:

        

        
          	 	
                  To
                    Holder:

                	
                  To
                    Holder's address listed on the Purchase Agreement

                
	 	 	 
	 	
                  To
                    the Company:

                	
                  Magnetech
                    Integrated Services Corp.

                
	 	 	
                  1125
                    South Walnut Street 

                
	 	 	
                  South
                    Bend, Indiana 46619

                
	 	 	
                  Tel:
                    (574) 234-8131

                
	 	 	
                  Fax:
                    (574) 232-7648

                
	 	 	
                  Attn:
                    John A. Martell, President

                

        

        

        or
          to
          such other address as any of them, by notice to the others may designate
          from
          time to time. Time shall be counted to, or from, as the case may be, the
          date of
          delivery in person, one (1) business day if delivered by overnight courier
          or
          three (3) business days after mailing.

        

        9.5 Governing
          Law.
          This
          Debenture shall be construed and enforced in accordance with, and all questions
          concerning the construction, validity, interpretation and performance of
          this
          Debenture shall be governed by, the internal laws of the State of New York,
          without giving effect to any choice of law or conflict of law provision
          or rule
          (whether of the State of 

        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        

        New
          York
          or any other jurisdictions) that would cause the application of the laws
          of any
          jurisdictions other than the State of New York.

        

        9.6 Section
          Headings.
          Section
          headings herein have been inserted for reference only and shall not be
          deemed to
          limit or otherwise affect, in any matter, or be deemed to interpret in
          whole or
          in part any of the terms or provisions of this Debenture.

        

        9.7 Survival
          of Agreements.
          The
          agreements contained herein shall survive the delivery of this
          Debenture.

        

        
          
            
            

          

          
            12

            
              

            

          

          
            
            

          

        

        IN
          WITNESS WHEREOF, this Debenture has been executed and delivered on the
          date
          specified above by the duly authorized representative of the
          Company.

        

        
          	 	
                  MAGNETECH
                    INTEGRATED SERVICES CORP.

                
	 	 	 
	 	 	 
	 	
                  By:

                	 /s/
                  John A. Martell
	 	 	
                  John
                    A. Martell

                
	 	 	
                  President
                    and Chief Executive Officer

                

        

        

        

        
          
            
            

          

          
            13

            
              

            

          

          
            
            

          

        

        NOTICE
          OF CONVERSION

        

        (To
          Be
          Completed and Signed Only Upon Conversion of Debenture)

        

        

        
          	 	
                  TO:

                	
                  MAGNETECH
                    INTEGRATED SERVICES CORP.

                
	 	 	
                  1125
                    South Walnut Street 

                
	 	 	
                  South
                    Bend, Indiana 46619

                
	 	 	
                  Attn:
                    John A. Martell, President

                

        

        

        The
          undersigned, the Holder of the attached Debenture, hereby surrenders such
          Debenture for conversion of $_________ in principal amount thereof for
          the
          number of shares of Common Stock of MAGNETECH INTEGRATED SERVICES CORP.
          equal to
          the Conversion Formula in effect upon your receipt of the foregoing Debenture
          and requests that a certificate for such shares be issued to the undersigned
          Holder at the address indicated below. 

        

        The
          undersigned hereby confirms to Magnetech Integrated Services Corp. the
          truth and
          accuracy of the representations and warranties made by the undersigned
          in the
          Purchase Agreement and accepted by the Company, as if such representations
          and
          warranties were made on the date hereof.

        

        
          	
                  Dated:

                	 	 	 
	 	 	 	
                  Name
                    of Entity, if any

                
	 	 	 	 
	 	 	 	 
	 	 	 	
                  Signature*

                
	 	 	 	 
	 	 	 	 
	 	 	 	
                  Title,
                    if applicable

                
	 	 	 	 
	 	 	 	 
	 	 	 	
                  Print
                    Name

                
	 	 	 	 
	 	 	 	 
	 	 	 	
                  Address

                
	 	 	 	 
	 	 	 	 

        

        _________________

        *  Must
          conform in all respects to name of Holder as specified on the face of the
          Debenture.

        
          
            
            

          

          
            14

            
              

            

          

          
            
            

          

        

        ASSIGNMENT

        

        (To
          be
          executed by the Holder to Effect a Transfer of the Attached
          Debenture)

        

        

        FOR
          VALUE
          RECEIVED, the undersigned does hereby sell, assign and transfer unto
          ________________________________________________, with an address of
          ___________________

        ______________________________________________________________________,
          all right, title and interest of the undersigned in the attached Debenture
          of
          Magnetech Integrated Services Corp. ("Company") and does hereby authorize
          the
          Company to transfer such right on the books of the Company.

        

        

        
          	
                  Dated:

                	 	 	 
	 	 	 	
                  Name
                    of Entity, if any

                
	 	 	 	 
	 	 	 	 
	 	 	 	
                  Signature*

                
	 	 	 	 
	 	 	 	 
	 	 	 	
                  Title,
                    if applicable

                
	 	 	 	 
	 	 	 	 
	 	 	 	
                  Print
                    Name

                

        

        

        

        

        _____________

        

        
          	·  	
                  Must
                    conform in all respects to name of Holder as specified on the
                    face of the
                    Debenture.

                

        

        

        

        

        

        13

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          

             

            Exhibit
              B

             

             

            Warrant
              Certificate No. _____

             

             

            NEITHER
              THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES ISSUABLE
              UPON
              THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES
              ACT OF
              1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH
              SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
              ASSIGNED OR
              OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT
              THERETO
              IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
              OR (2) THE
              COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES,
              WHICH
              COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES
              MAY BE
              OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
              WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE
              STATE
              SECURITIES LAWS.

             

            THE
              SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE
              UPON THE
              EXERCISE OF THIS WARRANT ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
              AND
              RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER
              THE ACT
              AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
              OR EXEMPTION
              THEREFROM. INVESTOR SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR
              THE
              FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
              TIME.

             

            
              	
                       

                      Dated:
                        [________,
                        2005]

                       

                    	
                       

                      Void
                        After: [________],
                        2010

                       

                    

            

             

             

             

            MAGNETECH
              INTEGRATED SERVICES CORP.

             

            WARRANT
              TO PURCHASE COMMON STOCK

             

             

            Magnetech
              Integrated Services Corp., an Indiana corporation (the “Company”),
              for
              value received, hereby issues to ____________________ (the “Holder”)
              this
              Warrant (the “Warrant”)
              to
              purchase _______ shares (each such share being a “Warrant
              Share”
              and all
              such shares being the “Warrant
              Shares”)
              of the
              Company’s Common Stock (as defined below), at the Exercise Price (as defined
              below), as adjusted from time to time as provided herein, on or before
              [________],
              2010
              (the
“Expiration
              Date”),
              all
              subject to the following terms and conditions. This Warrant is issued
              in
              connection with the Company’s issuance of a Subordinated Secured Convertible
              Debenture (the 

             

            
              
                
                

              

              
                
                  

                

              

              
                
                

              

            

             

            “Debenture”)
              to the
              initial Holder (the “Initial
              Holder”)
              pursuant to the terms of a Subordinated Convertible Debenture Purchase
              Agreement
              dated ________________,
              2005
              between the Initial Holder of this Warrant and the Company (the “Purchase
              Agreement”).
              

             

            As
              used
              in this Warrant, (i) “Common
              Stock”
              means
              the common stock of the Company, no par value per share, and such other
              securities as such class of common stock may be converted from time
              to time in
              the future; and (ii) “Exercise
              Price”
              means
              $.001, subject to adjustment as provided herein. Any other terms used
              but not
              otherwise defined in this Warrant shall have the meanings provided
              in the
              Purchase Agreement.

             

             

            1. DURATION
              AND EXERCISE OF WARRANTS

             

            (a) The
              Holder may exercise this Warrant on any business day on or before 5:00
              P.M., New
              York Time, on [________], 2010 (the “Expiration
              Date”),
              at
              which time this Warrant shall become void and of no value.

             

            (b) While
              this Warrant remains outstanding and exercisable in accordance with
Section
              1(a),
              the
              Holder may exercise this Warrant in whole or in part by:

             

            (i) surrender
              of this Warrant, with a duly executed copy of the Notice of Exercise
              attached as
Exhibit
              A,
              to the
              Secretary of the Company at its principal offices or at such other
              office or
              agency as the Company may specify in writing to the Holder; and

             

            (ii) either
              (A) payment of the Exercise Price per share multiplied by the number
              of Warrant
              Shares being purchased upon exercise of the Warrant in lawful money
              of the
              United States of America or (B) notice by the Holder of its election
              to exercise
              this Warrant on a cashless basis in the manner described in Section
              1(c).

             

            Upon
              the
              exercise of this Warrant in compliance with the provisions of this
              Section 1(b)
              the Company shall promptly issue and cause to be delivered to the Holder
              a
              certificate for the Warrant Shares purchased by the Holder. Each exercise
              of
              this Warrant shall be effected immediately prior to the close of business
              on the
              date (the “Date
              of Exercise”)
              which
              the conditions set forth in Section 1(b)(i) and (ii) have been
              satisfied.

             

            (c) In
              lieu
              of paying the Exercise Price upon exercise of this Warrant, the Holder
              may elect
              to exercise this Warrant on a cashless basis in which case the number
              of Warrant
              Shares issued to the Holder upon exercise of the Warrant shall be reduced
              by the
              number of Warrant Shares with an aggregate Market Price as of the Date
              of
              Exercise equal to the aggregate Exercise Price for the total number
              of Warrant
              Shares which the Holder has elected to exercise pursuant to this Warrant,
              as
              specified in the Notice of Exercise. The “Market
              Price”
              shall
              be equal to the market price of the common stock issuable upon conversion
              of the
              Warrant Shares issuable upon the exercise of this Warrant as determined
              in good
              faith by the board of directors of the Company. If the Holder objects
              to such
              determination by notice to the Company within twenty (20) days of receipt
              of the
              Company's determination, then the Market Price shall be equal to the
              fair value
              of Common Stock issuable upon conversion of the Warrant Shares deter-mined
              by a
              recognized independent investment banking or 

             

            
              
                
                

              

              
                -2-

                
                  

                

              

              
                
                

              

            

             

            accounting
              firm (selected by the Company and reason-ably acceptable to the Holder)
              as of a
              date which is within thirty (30) days of the date as of which the determination
              is to be made (the fees and expenses of such independent firm to be
              paid by the
              Holder unless such firm determines a Market Price for the Warrant Shares
              is at
              least 5% higher than the price determined by the directors
              determination).

             

            (d) This
              Warrant shall be exercisable, either as an entirety or, from time to
              time, for
              part only of the number of Warrant Shares referenced by this Warrant.
              If this
              Warrant is exercised in part, the Company shall issue, at its expense,
              a new
              Warrant, in substantially the form of this Warrant, referencing such
              reduced
              number of Warrant Shares which remain subject to this Warrant.

             

             

            2. ISSUANCE
              OF WARRANT SHARES

             

            (a) The
              Company covenants that all Warrant Shares will, upon issuance in accordance
              with
              the terms of this Warrant, be (i) duly authorized, fully paid and
              non-assessable, and (ii) free from all liens, charges and security
              interests.

             

            (b) The
              Company shall register this Warrant upon records to be maintained by
              the Company
              for that purpose in the name of the record holder of such Warrant from
              time to
              time. The Com-pany may deem and treat the registered Holder of this
              Warrant as
              the absolute owner thereof for the purpose of any exercise thereof,
              any
              distribution to the Holder thereof and for all other purposes.

             

            (c) The
              Company will not, by amendment of its certificate of incorporation,
              by-laws or
              through any reorganization, transfer of assets, consolidation, merger,
              dissolution, issue or sale of securities or any other voluntary action,
              avoid or
              seek to avoid the observance or performance of any of the terms to
              be observed
              or performed hereunder by the Company, but will at all times in good
              faith
              assist in the carrying out of all the provisions of this Warrant and
              in the
              taking of all the action as may be necessary or appropriate in order
              to protect
              the rights of the Holder to exercise this Warrant. 

             

             

            3. ADJUSTMENTS
              OF EXERCISE PRICE, NUMBER AND TYPE OF WARRANT SHARES

             

            (a) The
              Exercise Price and the number of shares purchasable upon the exercise
              of this
              Warrant shall be subject to adjustment from time to time upon the occurrence
              of
              certain events described in this Section 3(a). 

             

            (i) Subdivision
              or Combination of Stock.
              In case
              the Company shall at any time subdivide its outstanding shares of Common
              Stock
              into a greater number of shares, the Exercise Price in effect immediately
              prior
              to such subdivision shall be proportionately reduced, and conversely,
              in case
              the outstanding shares of Common Stock of the Company shall be combined
              into a
              smaller number of shares, the Exercise Price in effect immediately
              prior to such
              combination shall be proportionately increased. 

             

            
              
                
                

              

              
                -3-

                
                  

                

              

              
                
                

              

            

             

            (ii) Dividends
              in Stock, Property, Reclassification.
              If at
              any time or from time to time the Holders of Common Stock (or any shares
              of
              stock or other securities at the time receivable upon the exercise
              of this
              Warrant) shall have received or become entitled to receive, without
              payment
              therefore:

             

            (A) any
              shares of stock or other securities which are at any time directly
              or indirectly
              convertible into or exchangeable for Common Stock, or any rights or
              options to
              subscribe for, purchase or otherwise acquire any of the foregoing by
              way of
              dividend or other distribution, or

             

            (B) additional
              stock or other securities or property (including cash) by way of spin-off,
              split-up, reclassification, combination of shares or similar corporate
              rearrangement, (other than shares of Common Stock issued as a stock
              split or
              adjustments in respect of which shall be covered by the terms of Section
              3(a)(i)
              above),

             

            then
              and
              in each such case, the Holder hereof shall, upon the exercise of this
              Warrant,
              be entitled to receive, in addition to the number of shares of Common
              Stock
              receivable thereupon, and without payment of any additional consideration
              therefor, the amount of stock and other securities and property (including
              cash
              in the cases referred to in clause (ii) above) which such Holder would
              hold on
              the date of such exercise had he been the holder of record of such
              Common Stock
              as of the date on which holders of Common Stock received or became
              entitled to
              receive such shares or all other additional stock and other securities
              and
              property.

             

            (iii) Reorganization,
              Reclassification, Consolidation, Merger or Sale.
              If any
              recapitalization, reclassification or reorganization of the capital
              stock of the
              Company, or any consolidation or merger of the Company with another
              corporation,
              or the sale of all or substantially all of its assets or other transaction
              shall
              be effected in such a way that holders of Common Stock shall be entitled
              to
              receive stock, securities, or other assets or property (an “Organic
              Change”),
              then,
              as a condition of such Organic Change, lawful and adequate provisions
              shall be
              made by the Company whereby the Holder hereof shall thereafter have
              the right to
              purchase and receive (in lieu of the shares of the Common Stock of
              the Company
              immediately theretofore purchasable and receivable upon the exercise
              of the
              rights represented by this Warrant) such shares of stock, securities
              or other
              assets or property as may be issued or payable with respect to or in
              exchange
              for a number of outstanding shares of such Common Stock equal to the
              number of
              shares of such stock immediately theretofore purchasable and receivable
              assuming
              the full exercise of the rights represented by this Warrant. In the
              event of any
              Organic Change, appropriate provision shall be made by the Company
              with respect
              to the rights and interests of the Holder of this Warrant to the end
              that the
              provisions hereof (including, without limitation, provisions for adjustments
              of
              the Exercise Price and of the number of shares purchasable and receivable
              upon
              the exercise of this Warrant) shall thereafter be applicable, in relation
              to any
              shares of stock, securities or assets thereafter deliverable upon the
              exercise
              hereof. The Company will not effect any such consolidation, merger
              or sale
              unless, prior to the consummation thereof, the successor corporation
              (if other
              than the Company) resulting from such consolidation or the corporation
              purchasing such assets shall assume by written instrument reasonably
              satisfactory in form and substance to the Holders executed and mailed
              or
              delivered to the registered Holder hereof at the last address of such
              Holder
              appearing on the books of 

             

            
              
                
                

              

              
                -4-

                
                  

                

              

              
                
                

              

            

             

            the
              Company, the obligation to deliver to such Holder such shares of stock,
              securities or assets as, in accordance with the foregoing provisions,
              such
              Holder may be entitled to purchase.

             

            (b) Certificate
              as to Adjustments.
              Upon
              the occurrence of each adjustment or readjustment pursuant to this
              Section 3, the Company at its expense shall promptly compute
              such
              adjustment or readjustment in accordance with the terms hereof and
              furnish to
              each holder of this Warrant a certificate setting forth such adjustment
              or
              readjustment and showing in detail the facts upon which such adjustment
              or
              readjustment is based. The Company shall, upon the written request,
              at any time,
              of any such holder, furnish or cause to be furnished to such holder
              a like
              certificate setting forth: (i) such adjustments and readjustments;
              and
              (ii) the number of shares and the amount, if any, of other property
              which
              at the time would be received upon the exercise of the Warrant.

             

            (c) Notice
              of Record Date.
              In the
              event of any taking by the Company of a record of its stockholders
              for the
              purpose of determining stockholders who are entitled to receive payment
              of any
              dividend or other distribution, any right to subscribe for, purchase
              or
              otherwise acquire any share of any class or any other securities or
              property, or
              to receive any other right, or for the purpose of determining stockholders
              who
              are entitled to vote in connection with any proposed merger or consolidation
              of
              the Company with or into any other corporation, or any proposed sale,
              lease or
              conveyance of all or substantially all of the assets of the Company,
              or any
              proposed liquidation, dissolution or winding up of the Company, the
              Company
              shall deliver a written notice to Holder, at the same time such notice
              is
              delivered to other stockholders, specifying the date on which any such
              record is
              to be taken for the purpose of such dividend, distribution, right or
              other
              event, and the amount and character of such dividend, distribution,
              right or
              other event.

             

            (d) Certain
              Events.
              If any
              event occurs as to which, in the opinion of the Company, the other
              provisions of
              this Section
              3
              are not
              strictly applicable but the lack of any adjustment would not in the
              opinion of
              the Company fairly protect the purchase rights of the Holder under
              this Warrant
              in accordance with the basic intent and principles of such provisions,
              or if
              strictly applicable would not fairly protect the purchase rights of
              the Holder
              under this Warrant in accordance with the basic intent and principles
              of such
              provisions, then the Company shall make the any adjustments which the
              board of
              directors described therein.

             

             

            4. TRANSFERS
              AND EXCHANGES OF WARRANT AND WARRANT SHARES

             

            (a) Registration
              of Transfers and Exchanges.
              Upon
              the Holder’s surrender of this Warrant, with a duly executed copy of the
              Assignment Notice attached as Exhibit
              B,
              to the
              Secretary of the Company at its principal offices or at such other
              office or
              agency as the Company may specify in writing to the Holder, the Com-pany
              shall
              register the transfer of all or any portion of this Warrant. Upon such
              registration of trans-fer the Company shall issue a new Warrant, in
              substantially the form of this Warrant, evidencing the acquisition
              rights
              transferred to the transferee and a new Warrant, in similar form, evidencing
              the
              remaining acquisition rights not transferred, to the Holder requesting
              the
              transfer.

             

            (b) Warrant
              Exchangeable for Different Denominations.
              The
              Holder may exchange this Warrant for a new Warrant or Warrants, in
              sub-stantially the form of this Warrant, evidencing in the 

             

            
              
                
                

              

              
                -5-

                
                  

                

              

              
                
                

              

            

             

            aggregate
              the right to purchase the number of Warrant Shares which may then be
              purchased
              hereunder, each of such new Warrants to be dated the date of such exchange
              and
              to represent the right to purchase such number of Warrant Shares as
              shall be
              desig-nated by the Holder. The Holder shall surrender this Warrant
              with duly
              executed instructions regarding such re-certification of this Warrant
              to the
              Secretary of the Company at its principal offices or at such other
              office or
              agency as the Company may specify in writing to the Holder.

             

            (c) Restrictions
              on Transfers.
              This
              Warrant may not be transferred at any time without (i) registration
              under the
              Act or (ii) a written opinion of legal counsel addressed to the Company
              that the
              proposed transfer of the Warrant may be effected without registration
              under the
              Act, which opinion will be in form and from counsel reasonably satisfactory
              to
              the Company. 

             

             

            5. MUTILATED
              OR MISSING WARRANT CERTIFICATE

             

            If
              this
              Warrant is mutilated, lost, stolen or destroyed, upon request by the
              Holder, the
              Company will issue, in exchange for and upon cancellation of the mutilated
              Warrant, or in substitution for the lost, stolen or destroyed Warrant,
              a new
              Warrant, in substantially the form of this Warrant, representing the
              right to
              acquire the equivalent number of Warrant Shares, provided however,
              as a
              prerequisite to the issuance of a substitute Warrant, the Company may
              require
              satisfactory evidence of loss, theft or destruction as well as an indemnity
              from
              the Holder of a lost, stolen or destroyed Warrant.

             

             

            6. PAYMENT
              OF TAXES

             

            The
              Company will pay all transfer and stock issuance taxes attributable
              to the
              preparation, issuance and delivery of this Warrant and the Warrant
              Shares
              including, without limitation, all documentary and stamp taxes; provided,
              however,
              that
              the Company shall not be required to pay any tax in respect of the
              transfer of
              this Warrant, or the issuance or delivery of certificates for Warrant
              Shares or
              other securities in respect of the Warrant Shares to any person or
              entity other
              than the Holder or a Permitted Transferee of the Holder.

             

             

            7. FRACTIONAL
              WARRANT SHARES

             

            No
              fractional Warrant Shares shall be issued upon exercise of this Warrant.
              The
              Company shall, in lieu of issuing any fractional Warrant Share, shall
              round up
              the number of Warrant Shares issuable to nearest whole share.

             

             

            8. NO
              STOCK RIGHTS AND LEGEND

             

            No
              holder
              of this Warrant Certificate, as such, shall be entitled to vote or
              be deemed the
              holder of any other securities of the Company which may at any time
              be issuable
              on the exercise hereof, nor shall anything contained herein be construed
              to
              confer upon the holder of this Warrant Certificate, as such, the rights
              of a
              stockholder of the Company or the right to vote for the election of
              directors or
              upon any matter submitted to stockholders at any meeting thereof, or
              give or
              withhold 

             

            
              
                
                

              

              
                -6-

                
                  

                

              

              
                
                

              

            

             

            consent
              to any corporate action or to receive notice of meetings or other actions
              affecting stockholders (except as provided herein), or to receive dividends
              or
              subscription rights or otherwise (except as provide herein).

             

            Each
              certificate for Warrant Shares initially issued upon the exercise of
              this
              Warrant Certificate, and each certificate for Warrant Shares issued
              to any
              subsequent transferee of any such certificate, shall be stamped or
              otherwise
              imprinted with a legend in substantially the following form:

             

            “THE
              SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
              UNDER THE
              SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS,
              AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED,
              SOLD,
              PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
              STATEMENT
              WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE
              STATE
              SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL
              TO THE HOLDER
              OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY
              TO THE
              COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED
              OR
              TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION
              STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

             

            THE
              SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
              ON
              TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
              AS
              PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
              TO
              REGISTRATION OR EXEMPTION THEREFROM. INVESTOR SHOULD BE AWARE THAT
              THEY MAY BE
              REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
              PERIOD
              OF TIME.”

             

             

            9. NOTICES

             

            All
              notices, consents, waivers, and other communications under this Warrant
              must be
              in writing and will be deemed given to a party when (a) delivered to
              the
              appropriate address by hand or by nationally recognized overnight courier
              service (costs prepaid); (b) sent by facsimile or e-mail with confirmation
              of
              transmission by the transmitting equipment; (c) received or rejected
              by the
              addressee, if sent by certified mail, return receipt requested; if
              to the
              registered Holder hereof or (d) seven days after the placement of the
              notice
              into the mails (first class postage prepaid), to the Holder at the
              address or
              facsimile or e-mail address furnished by the registered Holder to the
              Company in
              accordance with the Purchase Agreement, or if to the Company, to it
              at 1125
              South Walnut Street, South Bend, Indiana 46619 Attention: John A. Martell,
              telecopy number: (574) 232-7648, e-mail address: jamartell@magnetech.com
              (or to
              such other address, facsimile number, e-mail address as the 

             

            
              
                
                

              

              
                -7-

                
                  

                

              

              
                
                

              

            

             

            Holder
              or
              the Company as a party may designate by notice the other party).

             

             

            10. SEVERABILITY

             

            If
              a
              court of competent jurisdiction holds any provision of this Warrant
              invalid or
              unenforceable, the other provisions of this Warrant will remain in
              full force
              and effect. Any provision of this Warrant held invalid or unenforceable
              only in
              part or degree will remain in full force and effect to the extent not
              held
              invalid or unenforceable.

             

             

            11. 
              BINDING EFFECT

             

            This
              Warrant shall be binding upon and inure to the sole and exclusive benefit
              of the
              Com-pany, its successors and assigns, the registered Holder or Holders
              from time
              to time of this Warrant and the Warrant Shares.

             

             

            12. SURVIVAL
              OF RIGHTS AND DUTIES

             

            This
              Warrant Certificate shall terminate and be of no further force and
              effect on the
              earlier of 5:00 P.M., New York Time, on the Expiration Date or the
              date on which
              this Warrant has been exercised.

             

             

            13. GOVERNING
              LAW

             

            This
              Warrant will be governed by and construed under the laws of New York
              without
              regard to conflicts of laws principles that would require the application
              of any
              other law.

             

            IN
              WITNESS WHEREOF, the Company has caused this Warrant to be executed
              by its
              officer thereunto duly authorized as of the date hereof.

             

             

            

             

            
              	 	
                       

                      MAGNETECH
                        INTEGRATED SERVICES CORP.

                       

                    
	 	 	 
	 	
                      By:

                    	 
	 	 	
                      John
                        A. Martell

                    
	 	 	
                      President

                    

            

            
              
                
                

              

              
                -8-

                
                  

                

              

              
                
                

              

            

            EXHIBIT
              A

             

            NOTICE
              OF EXERCISE

             

            (To
              be executed by the Holder of Warrant if such Holder desires to exercise
              Warrant)

             

             

            To
              Magnetech Integrated Services Corp.:

             

            The
              undersigned hereby irrevocably elects to exercise this Warrant and
              to:

             

             

            (Select
              one and complete)

             

            
              	 	
                       

                      ___

                       

                    	
                       

                      purchase
                        thereunder, ___________________ full shares of _____________________
                        issuable upon exercise of the Warrant and delivery of $_________
                        (in cash
                        as provided for in the foregoing Warrant) and any applicable
                        taxes payable
                        by the undersigned pursuant to such Warrant. 

                       

                    
	 	
                       

                      ___

                       

                    	
                       

                      receive,
                        in accordance with Section
                        1(c)
                        that number of full shares of ______________________ issuable
                        upon the
                        cashless exercise of the rights to acquire ______________
                        Warrant
                        Shares.

                       

                    

            

             

             

             

            The
              undersigned requests that certificates for such shares be issued in
              the name
              of:

             

             

            __________________________________________________________________________

             

             

            (Please
              print name, address and social security or federal employer identification
              number (if applicable)

             

             

            __________________________________________________________________________

             

             

            __________________________________________________________________________

             

             

            

             

            
              
                
                

              

              
                10

                
                  

                

              

              
                
                

              

            

             

            If
              the
              shares issuable upon this exercise of the Warrant are not all of the
              Warrant
              Shares which the Holder is entitled to acquire upon the exercise of
              the Warrant,
              the undersigned requests that a new Warrant evidencing the rights not
              so
              exercised be issued in the name of and delivered to:

             

             

            __________________________________________________________________________

             

             

            (Please
              print name, address and social security or federal employer identification
              number (if applicable)

             

             

            __________________________________________________________________________

             

             

            __________________________________________________________________________

             

             

            

             

            
              	
                       

                      Name
                        of Holder (print):

                    	 
	
                       

                      (Signature):

                    	 
	
                       

                      (By:)

                    	 
	
                       

                      (Title:)

                    	 

            

             

            

             

             

            Dated: ______________,
              ____

             

            
              
                
                

              

              
                11

                
                  

                

              

              
                
                

              

            

             

            EXHIBIT
              B

             

             

            FORM
              OF ASSIGNMENT

             

             

            FOR
              VALUE
              RECEIVED, ___________________________________ hereby sells, assigns
              and
              transfers to each assignee set forth below all of the rights of the
              undersigned
              under the Warrant (as defined in an evidenced by the attached Warrant)
              to
              acquire the number of Warrant Shares set opposite the name of such
              assignee
              below and in and to the foregoing Warrant with respect to said acquisition
              rights and the shares of _____________________ issuable upon exercise
              of the
              Warrant:

            

             

            
              	
                       

                      Name
                        of Assignee

                       

                    	 	
                       

                      Address

                       

                    	 	
                       

                      Number
                        of Warrant Shares

                       

                    
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

            

             

             

            If
              the
              total of the Warrant Shares are not all of the Warrant Shares evidenced
              by the
              foregoing Warrant, the undersigned requests that a new Warrant evidencing
              the
              right to acquire the Warrant Shares not so assigned be issued in the
              name of and
              delivered to the undersigned.

             

            
              	
                       

                      Name
                        of Holder (print): 

                    	 
	
                       

                      (Signature): 

                    	 
	
                       

                      (By:) 

                    	 
	
                       

                      (Title:) 

                    	 
	
                       

                      Dated: 

                    	 

            

             

             

          

        

        
          
            
            

          

          
            12

            
              

            

          

          
            
            

          

        

      

    

     

     

    
      

        Exhibit
          C

        

        REGISTRATION
          RIGHTS AGREEMENT

        

        This
          Registration Rights Agreement, dated as of ________________, 2005 is entered
          into between Magnetech Integrated Services Corp., an Indiana corporation
          (the
“Company”), and the Purchasers listed on Schedule 1 hereto (each a
“Holder”).

        

        On
          or
          prior to the date hereof, (i) the Company issued certain Subordinated Secured
          Convertible Debenture (the “Debenture”)
          to the
          Holders on the date hereof that may be converted to common stock, no par
          value
          per share (the “Common
          Stock”)
          of the
          Company (the “Underlying
          Shares”)
          and
          (ii) the Company has issued Common Stock Warrants (the “Warrants”)
          that
          are exercisable into Common Stock (the “Warrant
          Shares”),
          all
          as more particularly provided therein.

        

        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
          mean that certain placement agency agreement amoung Strasbourger Pearson
          Tulcin
          Wolff Inc and Magnetech Industrial Services, Inc. and Magnetech Integrated
          Services Corp. dated   ,
          2005.

        

        (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 

         

        
          
            
            

          

          
            1

            
              

            

          

          
            
            

          

        

        the
          Act,
          and the declaration or ordering of effectiveness of such registration statement
          or document.

         

        (h) The
          term
“Registrable
          Securities”
          means
          the Underlying Shares, the Warrant Shares and any other shares of Common
          Stock
          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 Debentures, the Warrants,
          Underlying Shares or the Warrant Shares, excluding in all cases, however,
          any
          Registrable Securities sold by a Person in a transaction in which the seller’s
          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.

         

        1.2 Piggyback
          Registration.

         

        (a) The
          Company and the Holder agree that the Registrable Securities will be included
          in
          the Company’s Form S-1 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 April 30, 2005 and to cause to be declared
          effective not later than 135 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 S-1 Registration Statement that includes the
          Registrable Securities by April 30, 2005, for each thirty (30) days that
          such
          Form S-1 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. In addition, the Holder acknowledges that the
          Company
          has granted registration rights to the purchasers (the “Prior Purchasers”) of
          its securities in certain prior private offerings. The Holder’s Registrable
          Securities may be included in any registration filed pursuant to this Section
          1.2 only to the extent that the inclusion of its securities will not reduce
          the
          amount of the 

         

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

        Registrable
          Securities of the Prior Purchasers which is included in such registration
          statement. Moreover, the Holder may not seek to cause the Company 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) of the Registration Rights Agreement between the Company
          and
          the Prior Purchasers (the “Prior Registration Agreement”) or within one hundred
          twenty (120) days of the effective date of any registration effected pursuant
          to
          Section 1.2 of the Prior Registration Agreement.

         

        1.3 Demand
          Registration

         

        (a) In
          the
          event that the S-1 Registration Statement is not filed by the Company by
          April
          30, 2005 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 S-1 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 

         

        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

        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.

         

        (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.

        
          
            
            

          

          
            4

            
              

            

          

          
            
            

          

        

         

        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 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) 

         

        
          
            
            

          

          
            5

            
              

            

          

          
            
            

          

        

        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.

         

        

        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
          

         

        
          
            
            

          

          
            6

            
              

            

          

          
            
            

          

        

        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
          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 

         

        
          
            
            

          

          
            7

            
              

            

          

          
            
            

          

        

        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.

         

        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.

        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        

         

        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 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.

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

         

        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
          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:  John
                    A. Martell

                
	 	
                  Title:  President
                    and Chief Executive Officer

                
	 	 	 
	 	 	 
	 	 	 
	 	
                  Purchaser

                
	 	 	 
	 	 	 
	 	
                  By:

                	 
	 	
                  Name:

                

        

         

        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        
Schedule 1

        

        Purchaser(s)

        

        
          
            MAGNETECH
              INTEGRATED SERVICES CORP.

            
              Private
                Placement of Subordinated Secured Convertible
                Debentures

            

            
              	
                      Purchaser

                    	 	
                      Closing
                        Date

                    	 	
                      Principal
                        Amount 

                      of
                        Debentures

                    	 	
                      Warrants

                    	 
	 	 	 	 	 	 	 	 
	
                      David
                        L. Cohen

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      100,000.00

                    	 	 	
                      105,729

                    	 
	
                      Michael
                        Poujol & Angela Poujol JTWROS

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      250,000.00

                    	 	 	
                      264,323

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

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Pershing
                        as Cust., IRA FBO Thomas D'Avanzo

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Dr.
                        Frank Lake, III

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      30,000.00

                    	 	 	
                      31,719

                    	 
	
                      Dr.
                        Leo Mazzocchi & Nancy T. Mazzocchi JTWROS

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      25,000.00

                    	 	 	
                      26,432

                    	 
	
                      William
                        Sybesma & Martina Jane Sybesma JTWROS

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      75,000.00

                    	 	 	
                      79,297

                    	 
	
                      Gary
                        M. Glasscock

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      100,000.00

                    	 	 	
                      105,729

                    	 
	
                      Dr.
                        Domenic Strazzulla

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      RS
                        & VS Ltd., SJDE LLC Gen. Partner

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      25,000.00

                    	 	 	
                      26,432

                    	 
	
                      Stephen
                        T. Skoly, Jr.

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Thomas
                        J. Keeney

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      25,000.00

                    	 	 	
                      26,432

                    	 
	
                      Paul
                        Quattrocchi & Danielle Quattrocchi JTWROS

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      25,000.00

                    	 	 	
                      26,432

                    	 
	
                      Dr.
                        Barry G. Landry

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Robert
                        L. Thompson MD TR ISERP Profit Sharing Plan FBO Robert L.
                        Thompson
                        MD

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      25,000.00

                    	 	 	
                      26,432

                    	 
	
                      Dr.
                        Michael O. Bernstein

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Steven
                        A. Lamb

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Norman
                        Dudey TR The Norman Dudey Trust U A Dated 6/10/1991 FBO Norman
                        Dudey

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Frank
                        R. Cserpes Jr. & Sharon M. Cserpes TRS Frank R. Cserpes Jr. Trust DTD
                        4/12/02 AMD DTD 1/22/03

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Edward
                        Lagomarsino

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      250,000.00

                    	 	 	
                      264,323

                    	 
	
                      Pershing
                        as Cust., SEP FBO Rodney Schorlemmer

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Mollie
                        Ann Peters

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      20,000.00

                    	 	 	
                      21,146

                    	 
	
                      Paul
                        V. Nugent Jr. & Jeanne Mentus Nugent JTWROS

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      25,000.00

                    	 	 	
                      26,432

                    	 
	
                      Albert
                        Jim Barboni

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      30,000.00

                    	 	 	
                      31,719

                    	 
	
                      StarInvest
                        Group, Inc.

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      400,000.00

                    	 	 	
                      422,917

                    	 
	
                      SwissFinanz
                        Partner AG

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      130,000.00

                    	 	 	
                      137,448

                    	 
	
                      Marcel
                        Riedel

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      20,000.00

                    	 	 	
                      21,146

                    	 
	
                      Alfred
                        Schneider

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      20,000.00

                    	 	 	
                      21,146

                    	 
	
                      Maya
                        Salzmann

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Daniel
                        Stahl

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      80,000.00

                    	 	 	
                      84,583

                    	 
	
                      Elizabeth
                        Kuhn

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Paul
                        Remensberger

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      20,000.00

                    	 	 	
                      21,146

                    	 
	
                      Heinz
                        Wattenhofer

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      25,000.00

                    	 	 	
                      26,432

                    	 
	
                      Rolph
                        R. Berg-Jaquet

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      10,000.00

                    	 	 	
                      10,573

                    	 
	
                      Marie
                        Luise Fuchs

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      10,000.00

                    	 	 	
                      10,573

                    	 
	
                      Josefine
                        Hausammann

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      10,000.00

                    	 	 	
                      10,573

                    	 
	
                      Hans
                        Hausammann

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      15,000.00

                    	 	 	
                      15,859

                    	 
	
                      Roger
                        Buerki

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      10,000.00

                    	 	 	
                      10,573

                    	 
	
                      Hans
                        Nef-Maag

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      60,000.00

                    	 	 	
                      63,437

                    	 
	
                      James
                        Ladner

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Max
                        Gertsch

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      15,000.00

                    	 	 	
                      15,859

                    	 
	
                      Roland
                        Bertschy

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      5,000.00

                    	 	 	
                      5,286

                    	 
	
                      Christian
                        Baumberger

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      10,000.00

                    	 	 	
                      10,573

                    	 
	
                      Fred
                        Kin

                    	 	 	
                      3/4/2005

                    	 	
                      $

                    	
                      20,000.00

                    	 	 	
                      21,146

                    	 
	
                      Robert
                        C. Ingram, III

                    	 	 	
                      3/8/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Kilmare
                        Worldwide Inc.

                    	 	 	
                      3/8/2005

                    	 	
                      $

                    	
                      25,000.00

                    	 	 	
                      26,432

                    	 
	
                      StarInvest
                        Group, Inc.

                    	 	 	
                      3/8/2005

                    	 	
                      $

                    	
                      400,000.00

                    	 	 	
                      422,916

                    	 
	
                      Joseph
                        Quattrocchi

                    	 	 	
                      3/8/2005

                    	 	
                      $

                    	
                      25,000.00

                    	 	 	
                      26,432

                    	 
	
                      Nasrollah
                        Jahdi

                    	 	 	
                      4/15/2005

                    	 	
                      $

                    	
                      25,000.00

                    	 	 	
                      26,432

                    	 
	
                      Highgate
                        House Funds, Ltd.

                    	 	 	
                      4/15/2005

                    	 	
                      $

                    	
                      500,000.00

                    	 	 	
                      528,645

                    	 
	
                      Pershing
                        LLC as Custodian, IRA fbo Richard J. Mullin

                    	 	 	
                      5/9/2005

                    	 	
                      $

                    	
                      100,000.00

                    	 	 	
                      105,729

                    	 
	
                      SwissFinanz
                        Partner AG

                    	 	 	
                      5/9/2005

                    	 	
                      $

                    	
                      60,000.00

                    	 	 	
                      63,437

                    	 
	
                      Daniel
                        Stahl

                    	 	 	
                      5/9/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      Paul
                        Remensberger

                    	 	 	
                      5/9/2005

                    	 	
                      $

                    	
                      20,000.00

                    	 	 	
                      21,146

                    	 
	
                      Hans
                        Hausammann

                    	 	 	
                      5/9/2005

                    	 	
                      $

                    	
                      20,000.00

                    	 	 	
                      21,146

                    	 
	
                      Hans-Peter
                        Knecht

                    	 	 	
                      5/9/2005

                    	 	
                      $

                    	
                      20,000.00

                    	 	 	
                      21,146

                    	 
	
                      Henry
                        Fortier, III

                    	 	 	
                      5/9/2005

                    	 	
                      $

                    	
                      25,000.00

                    	 	 	
                      26,432

                    	 
	
                      Frederick
                        P. Epstein

                    	 	 	
                      5/9/2005

                    	 	
                      $

                    	
                      50,000.00

                    	 	 	
                      52,865

                    	 
	
                      William
                        Sybesma

                    	 	 	
                      5/9/2005

                    	 	
                      $

                    	
                      75,000.00

                    	 	 	
                      79,297

                    	 
	
                      Gary
                        M. Glasscock

                    	 	 	
                      5/9/2005

                    	 	
                      $

                    	
                      40,000.00

                    	 	 	
                      42,292

                    	 
	
                      Joseph
                        Gazzola & Josephine Gazzola JTWROS

                    	 	 	
                      5/9/2005

                    	 	
                      $

                    	
                      25,000.00

                    	 	 	
                      26,432

                    	 
	 	 	 	 	 	 	 	 	 	 	 
	
                      TOTALS

                    	 	 	 	 	
                      $

                    	
                      4,025,000.00

                    	 	 	
                      4,255,601

                    	 

            

          

        

        12

         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

      Exhibit
        D

      

      

      SECURITY
        AGREEMENT

      

      THIS
        SECURITY AGREEMENT made the as of the 3rd day of March, 2005 by and
        among
MAGNETECH
        INTEGRATED SERVICES CORP., an
        Indiana corporation (the “Company”),
        MAGNETECH
        INDUSTRIAL SERVICES, INC., an
        Indiana corporation (“MIS”;
        together, with the Company, the “Debtors”),
        and
        Strasbourger Pearson Tulcin Wolff, Inc., as agent for the Debenture holders
        (the
        "Agent").

      

      W
        I T N E S S E T H:

      

      A. The
        Company has issued an aggregate of $4,000,000 in 6% Subordinated Secured
        Convertible Promissory Debentures (the “Debentures”)
        to the
        parties identified in Schedule “A” attached hereto (the “Lenders”)
        pursuant to a Private Placement Memorandum dated January 25, 2005.

      

      B. The
        Lenders have appointed the Agent to represent them and take all action under
        the
        Security Agreement for their benefit.

      

      NOW
        THEREFORE, for good and valuable consideration, the parties agree as
        follow:

      

      1) Grant
        of Security Interest.
        In
        order to secure the payment of indebtedness to the Lenders evidenced by the
        Debentures, and any other obligation or liability of the Debtors to any Lender
        under, pursuant to, or in connection with the Debentures, direct or indirect,
        absolute or contingent, due or to become due, now existing or hereafter arising
        (hereinafter collectively called the "Obligations"),
        the
        Debtors hereby grant and convey to the Agent for the benefit of the Lenders
        a
        continuing security interest in and to the following property and assets
        of the
        Debtors, whether now existing or hereafter acquired, produced or created,
        including, without limitation: a)
        accounts
        receivable, chattel paper, instruments, notes, drafts, acceptances and other
        forms of instruments or obligations, now or hereafter owing to the Debtors,
        whether arising from the sale of goods or rendition of services by the Debtors,
        all of the Debtors rights in, to and under all purchase orders, now or hereafter
        received by the Debtors for goods or services, and monies due or to become
        due
        to the Debtors under all contracts for the sale of goods or the performance
        of
        services by the Debtors (whether or not yet earned by performance), or in
        connection with any other transaction (including, without limitation, the
        right
        to receive the Proceeds of said purchase orders and contracts), and collateral
        security and guarantees of any kind given by any obligor with respect to
        any of
        the foregoing; b)
        equipment and fixtures; c)
        all
        motor vehicles; d)
        all
        general intangibles; e)
        documents; f)
        all of
        the Debtors’ inventory (within the meaning of the Uniform Commercial Code as,
        from time to time, in effect in the State of Indiana; hereinafter, the
        "Uniform
        Commercial Code"),
        including, without limitation, goods, merchandise and other personal property,
        now or hereafter owned or acquired and wheresoever located, that are held
        for
        sale or lease or are furnished or to be furnished under a contract of service
        or
        are raw materials used or consumed or to be consumed in the Debtors' businesses,
        and all additions and accessions thereto, and all returns and refunds applicable
        thereto and the right to collect the same; g)
        all
        proceeds and products thereof, and all increases, substitutions, replacements,
        additions and accessions thereto (all of the foregoing, hereinafter referred
        to
        collectively as the "Collateral").
        

      

      The
        security interest granted herein to Agent on behalf of the Lenders is for
        the
        ratable benefit of all Lenders and each Lender may realize upon the Collateral,
        as set forth in Section 4 hereof, to the extent of its Debenture Percentage
        (as
        hereinafter defined), as computed from time to time. The amount of each Lender's
        "Debenture Percentage" shall be the percentage computed by dividing the
        Obligations owed to such Lender by the aggregate Obligations owed to all
        Lenders.

      

      
        
          
          

        

        
          
            

          

        

        
          
          

        

      

      2) Priority
        of Lien.
        The
        Debtors represent and warrant to the Agent for the benefit of the Lenders
        that
        (a) the lien granted by the Debtors to the Agent in the Collateral is a second
        priority security interest subject only to (i) the encumbrances listed on
        Schedule B hereto and (ii) the lien granted in favor of MFB Financial, pursuant
        to a Commercial Security Agreement dated November 1, 2004 between MIS and
        MFB
        Financial, as security for a $3 million credit facility provided by MFB
        Financial (the “Credit
        Facility”).
        The
        encumbrances listed on Schedule B, together with the security interest in
        favor
        of MFB Financial, are referred to herein as the “Permitted Encumbrances.” The
        lien granted herein shall also be subordinate to any refinancing of the Credit
        Facility with a new lender, such subordination shall be up to the maximum
        amount
        permitted under the existing Credit Facility.

      

      3) Covenants
        of Debtors.
        Subject
        to the subordination provisions granted in favor of MFB Financial under the
        Credit Facility (the “Subordination
        Agreement”),
        the
        Debtors covenant and agree as follows:

      

      a) To
        pay
        and perform all of the Obligations secured by this Agreement according to
        their
        terms.

      

      b) To
        pay
        and perform all of the obligations secured by the Permitted Encumbrances
        when
        due.

      

      c) To
        take
        all commercially reasonable actions necessary to defend the title to the
        Collateral against all persons and against all claims and demands
        whatsoever.

      

      d) On
        at
        least twenty (20) days notice in writing by the Agent, to do the following:
        furnish any further assurance of title reasonably requested by the Agent,
        execute any written agreement or do any other acts necessary to effectuate
        the
        purposes and provisions of this Agreement, execute any instrument or statement
        required by law or otherwise in order to perfect, continue or terminate the
        security interest of the Agent, on behalf of the Lenders, in the Collateral
        and
        pay all costs of filing in connection therewith.

      

      e) To
        keep
        the Collateral, at the Debtors expense, in good repair and condition (reasonable
        wear and tear excepted).

      

      f) To
        retain
        possession of the tangible Collateral during the existence of this Agreement
        at
        their respective operating locations and not to remove, sell, exchange, assign,
        loan, deliver, lease, license, further mortgage or otherwise dispose of any
        Collateral (other than inventory sold or receivables collected in the ordinary
        course of business) without the prior written consent of the Agent.

      

      g) To
        keep
        the Collateral free and clear of all encumbrances, other than the security
        interest granted hereby and the Permitted Encumbrances.

      

      h) To
        pay,
        when due, all taxes, assessments and license fees relating to the Collateral
        except as same may be contested by the Debtors in good faith by proper
        proceedings and providing adequate reserves for the accrual of same are
        maintained if required by generally accepted accounting principles.

      

      i) To
        keep
        the Collateral and records relating to the Collateral available for inspection
        by the Agent at all reasonable times during normal business hours.

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      j) To
        keep
        the Collateral insured against loss by fire, theft and other casualties,
        such
        insurance to be in amounts as are customary for similarly situated companies.
        The Debtors shall give prompt written notice to the Agent and to insurers
        of
        loss or damage to the Collateral and shall promptly file proofs of loss with
        insurers. The Debtor shall name the Agent as a loss payee under such insurance
        as its interest may appear. Concurrently with the execution of this Agreement,
        the Debtor is delivering to the Agent a certificate or other document from
        the
        insurer evidencing Agent’s loss payee status and the commitment to give the
        Agent thirty (30) days notice prior to cancellation of the policy.

      

      k) To
        comply
        with the material terms and conditions of any leases covering the premises
        wherein the Collateral is located and any material orders, ordinances, laws
        or
        statutes of any city, state or governmental department having jurisdiction
        with
        respect to such premises or the conduct of business thereon, except if the
        failure to comply therewith would not result in the termination of any such
        lease or the inability of the Debtors to operate its business
        thereon.

      

      l) To
        promptly advise the Agent in writing prior to any change in the location
        of
        Debtors' place of business and chief executive office in order to permit
        the
        Agent to take such actions as it may deem necessary or advisable to protect
        and
        preserve the security interests of the Lender.

      

      4) Financing
        Statements

      

      a) Concurrently
        with the execution of this Agreement, Debtors are filing such documents as
        may
        be necessary to perfect the security interest granted hereby, including Form
        UCC-1 Financing Statements and all other documents necessary to perfect the
        security interest in the Collateral granted herein.

      

      b) The
        Agent, for itself and on behalf of each of the Lenders, is hereby authorized
        by
        the Debtors to sign on behalf of the Debtors and file such other Form UCC-1
        Financing Statements and all other documents necessary to perfect the security
        interest in the Collateral granted herein, and to file Form UCC-3 Amendments,
        Releases and Termination Statements and all other documents
        necessary.

      

      (c) Debtors
        agree to pay or reimburse the Agent for any and all filing costs reasonably
        incurred by Agent.

      

      5) Events
        of Default and Remedies.

      

      a) The
        following shall constitute an "Event of Default” by the Debtors
        hereunder:

      

      (1) An
        Event
        of Default (as defined therein) shall occur under any of the Debentures after
        giving effect to any applicable notice provision and cure period provided
        for
        therein;

      

      (2) Failure
        by the Debtors to comply with or perform any obligation secured by the Permitted
        Encumbrances after giving effect to any applicable notice provision and cure
        period provided therein;

      

      (3) Failure
        by the Debtors to comply with or perform any provision of this Agreement,
        and
        such failure is not remedied within thirty (30) days after the Debtors’ receipt
        of written notice of same;

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      (4) Any
        representation of the Debtors set forth herein shall have been false or
        misleading in any material respect when made; or

      

      (5) Subjection
        of any of the Collateral with an aggregate value in excess of $50,000 to
        levy of
        execution or other judicial process,

      

      b) Upon
        any
        default by the Debtors hereunder, the Agent, on behalf of the Lenders, subject
        to the terms of the Subordination Agreement, shall have all the rights, remedies
        and privileges with respect to repossession, retention and sale of any or
        all of
        the Collateral of the Debtors and disposition of the proceeds as are accorded
        by
        the applicable sections of the Uniform Commercial Code.

      

      c) Upon
        any
        default by the Debtors hereunder and upon demand of the Agent, the Debtors
        shall
        assemble the Collateral and make it available to the Agent at the place and
        at
        the time designated in the demand.

      

      d) If
        the
        Debtors shall default in the performance of any of the provisions of this
        Agreement on the Debtors part to be performed, the Agent may perform same
        for
        the Debtors’ account. Any monies expended in so doing and the reasonable
        attorneys' fees and the legal and other expenses for pursuing, searching
        for,
        receiving, taking, keeping, storing, advertising for the sale of and selling
        the
        Collateral incurred by the Agent, shall be chargeable with interest to the
        Debtors and added to the Obligations owed to the Lenders that are secured
        hereby, ratably according to their respective Loan Percentage.

      

      6) The
        Agent

      

      a) Authorization.

      

      (1) Each
        Lender has irrevocably authorized the Agent, as agent hereunder, to take
        such
        action on its behalf and as its agent under this Agreement, the Debenture
        executed in favor of such Lender and all other documents executed in connection
        therewith (collectively, the "Loan Documents"), and to exercise such powers
        as
        are specifically delegated to it hereunder and thereunder, including, without
        limitation, powers with respect to the enforcement and collection of the
        Obligations, and to exercise such other powers as are reasonably incidental
        thereto; provided, however, that the Agent shall not, without the express
        authorization of the Required Lenders, be authorized to waive any payment
        default under the Debentures.

      

      (2) Except
        as
        set forth in subparagraph (1) hereinabove, the Agent shall not be required
        to
        but may, in its sole discretion, exercise any discretion or take any action,
        but
        shall be required to act or to refrain from acting (and shall be fully protected
        in so acting or refraining from acting) upon the instructions of the Required
        Lenders, and such instructions shall be binding upon all Lenders; provided,
        however, that the Agent shall not be required to take any action that exposes
        the Agent to personal liability or which is contrary to this Agreement or
        applicable law.

      

      b) Notices.

      

      (1) The
        Agent
        shall transmit promptly to each Lender each notice received by it from the
        Debtors hereunder that the Debtors is not required to furnish to the Lenders
        and
        each of the Lenders shall transmit promptly to the Agent each notice received
        by
        it from the Debtors that is not otherwise required to be delivered to the
        Agent
        by the terms hereof. The Agent shall be under no obligation toward any Lender
        to
        ascertain or inquire as to the performance or observance of any of the terms,
        covenants or conditions 

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      hereof
        to
        be performed or observed by the Debtors, but the Agent and each Lender shall
        promptly notify one another of any Event of Default of which it has actual
        notice.

      

      (2) Each
        Lender expressly authorizes the Agent to collect all sums due such Lender
        under
        the Loan Documents. The Agent shall promptly disburse to the Lenders (to
        the
        extent of their ratable interest therein according to the outstanding Loan
        Percentage of each Lender) available funds received by it for the benefit
        of the
        Lenders.

      

      c) Exculpation.
        In
        exercising its duties and powers hereunder, the Agent shall exercise the
        same
        care that it would exercise in dealing with loans for its own account, but
        neither the Agent nor any of its directors, officers, employees or attorneys
        shall be responsible for the truth or accuracy of any representations or
        warranties given or made herein or for the validity, effectiveness, sufficiency
        or enforceability of this Agreement, or any other Loan Documents, and the
        Agent
        or any of its directors, officers, employees or attorneys shall not be liable
        to
        any of the Lenders for any action taken or omitted to be taken by it or any
        of
        them under the Loan Documents, except in the case of its or their wilful
        misconduct or gross negligence. Each of the Lenders represents and warrants
        to
        the Agent that it has made its own independent judgment with respect to entering
        into this Agreement and the other Loan Documents and undertaking its obligations
        hereunder and thereunder. Each Lender also acknowledges that it will,
        independently and without reliance upon the Agent or any other Lender and
        based
        on such documents and information as it shall deem appropriate at the time,
        continue to make its own credit decisions in taking or not taking action
        under
        this Agreement and the Loan Documents. The powers conferred by this Agreement
        on
        the Agent hereunder are solely to protect the Lenders' interest in the
        Collateral and shall not impose any duty upon the Agent to exercise any such
        powers. Except for the safe custody of any Collateral in its possession and
        the
        accounting for monies actually received by it hereunder, the Agent shall
        have no
        duty as to any Collateral or as to the taking of any necessary steps to preserve
        rights against prior parties or any other rights pertaining to the Collateral.
        Neither the Agent nor any of its directors, officers, employees (excluding
        any
        independent contractors employed by the Agent) or attorneys shall have any
        responsibility (1) to the Debtors on account of the failure or delay in
        performance or breach of any Lender of any of its obligations hereunder,
        or (2)
        to any Lender on account of the failure of or delay in performance or breach
        by
        any other Lender or the Debtors of any of their obligations
        hereunder.

      

      d) Reliance.
        The
        Agent, as Agent hereunder: 

      

      (1) shall
        be
        entitled to rely on any communication, instrument or document believed by
        it to
        be genuine or correct and to have been signed or sent by a person or persons
        believed by it to be the proper person or persons; 

      

      (2) shall
        be
        entitled to consult with legal counsel, independent public accountants and
        other
        professional advisers and experts selected by it, and shall not be liable
        for
        any action taken or omitted to be taken in good faith by Agent in accordance
        with the advice of such counsel, accountants or experts; 

      

      (3) makes
        no
        warranty or representation to any Lender and shall not be responsible to
        any
        Lender for any statements, warranties or representations made in or in
        connection with this Agreement; 

      

      (4) shall
        not
        have any duty to ascertain or to inquire as to the performance or observance
        of
        any of the terms, covenants or conditions of this Agreement on the part of
        the
        Debtors or to inspect the property (including the books and records) of the
        Debtors,

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      (5) shall
        not
        be responsible to any Lender for the due execution, legality, validity,
        enforceability, genuineness, sufficiency or venue of this Agreement or any
        other
        instrument or document furnished pursuant hereto; and 

      

      (6) shall
        incur no liability under or in respect of this Agreement by acting upon notice,
        consent, certificate or other instrument or writing (which may be by telegram,
        telecopier, cable or telex) believed by it to be genuine and signed or sent
        by
        the proper party or parties.

      

      e) Expenses
        and Indemnification.
        Each
        Lender agrees:

      

      (1) to
        reimburse the Agent, as agent hereunder, on demand, pro rata in accordance
        with
        its Debenture Percentage, for all reasonable expenses incurred by the Agent
        in
        connection with the preparation, execution, operation and enforcement of,
        or
        legal advice in respect of rights or responsibilities under, this Agreement
        and
        any document delivered in connection herewith, to the extent that such expenses
        are not timely reimbursed or reimbursable by the Debtors, and

      

      (2) to
        indemnify and hold harmless the Agent and any of its directors, officers
        or
        employees, on demand, pro rata in accordance with its Debenture Percentage,
        from
        and against all liabilities, obligations, losses, damages, penalties, actions,
        judgments, suits, costs, expenses or disbursements of any kind or nature
        whatsoever that may be imposed on, incurred by, or asserted against the Agent
        in
        any way relating to or arising out of the Loan Documents or any action taken
        or
        omitted by the Agent under the Loan Documents, to the extent that expenses
        and
        costs incurred by it in connection with such liability are not reimbursed
        by the
        Debtors, provided that no Lender shall be liable for any portion of such
        liabilities, obligations, losses, damages, penalties, actions, judgments,
        suits,
        costs, expenses or disbursements resulting from the Agent’s gross negligence or
        willful misconduct.

      

      f) Other
        Lenders.
        None of
        the Lenders shall be deemed to be agent of any other Lenders; none of such
        Lenders or any of their respective directors, officers or employees shall
        have
        any responsibility to the Debtors on account of the failure or delay in
        performance or breach of any other Lender of any of its obligations hereunder
        or
        to any other Lender on account of the failure of or delay in performance
        or
        breach by any other Lender or the Debtors of its obligations
        hereunder.

      

      (g) Removal
        or Resignation of Agent.
        The
        Agent may resign at any time by giving written notice thereof to the Lenders
        and
        the Debtors and shall not be removed and upon any such resignation the Required
        Lenders shall have the right to appoint a successor Agent. "Required Lenders"
        shall mean any Lender or Lenders holding Debentures evidencing, in the
        aggregate, an amount equal to not less than 66% of the aggregate principal
        amount of all Debentures then outstanding. If no successor Agent shall have
        been
        so appointed by the Required Lenders, and shall have accepted such appointment,
        within thirty (30) days after the retiring Agent's giving of notice of
        resignation or the Required Lenders' removal of the retiring Agent, then
        the
        retiring Agent may, on behalf of the Lenders, appoint a successor Agent.
        Upon
        the acceptance by a successor Agent of its appointment as Agent hereunder,
        such
        successor Agent shall thereupon succeed to and become vested with all the
        rights, powers, privileges and duties of the retiring Agent, and the retiring
        Agent shall be discharged from its duties and obligations under this Agreement.
        After any retiring Agent's resignation or removal hereunder as Agent, the
        provisions of this Section 6 shall inure to its benefit as to any actions
        taken
        or omitted to be taken by it while it was Agent under this
        Agreement.

      

      7) Liability
        for Deficiency.
        The
        Company shall remain liable for any deficiency resulting from a sale of the
        Collateral and shall pay any such deficiency forthwith on demand.

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      8) Waiver.
        Waiver
        of or acquiescence in any default by the Debtors, or failure of the Agent
        to
        insist upon strict performance by the Debtors of any warranties or covenants
        in
        this Agreement, shall not constitute a waiver of any subsequent or other
        default
        or failure.

      

      9) Notices.
        All
        notices to any party hereof shall be in writing and shall be sufficiently
        given
        at the time of delivery if delivered to such party in person by confirmed
        facsimile transmission, by Federal Express or similar receipted delivery,
        or on
        the fifth (5th) business day after mailing if mailed, postage prepaid, by
        certified mail, return receipt requested, addressed to such party at his
        address
        herein set forth or to such other address as he, by notice to the others,
        may
        designate from time to time.

      

      10) Captions.
        The
        captions are inserted only as a matter of convenience and for reference and
        in
        no way define, limit or describe the scope of this Agreement nor the intent
        of
        any provision thereof.

      

      11) Successors
        and Assigns.
        The
        terms, warranties and agreements herein contained shall bind and inure to
        the
        benefit of the respective parties hereto, and their respective legal
        representatives, successors and assigns.

      

      12) Gender
        and Number.
        The
        gender and number used in this Agreement are used as a reference term only
        and
        shall apply with the same effect whether the parties are of the masculine
        or
        feminine gender, corporate or other form, and the singular shall likewise
        include the plural.

      

      13) Modification
        of Agreement.
        This
        Agreement may be amended only by a writing signed by or on behalf of the
        parties
        hereto.

      

      14) Governing
        Law.
        The
        parties hereto acknowledge that the transactions contemplated by this Agreement
        and the exhibits hereto bear a reasonable relation to the State of New York.
        The
        parties hereto agree that the internal laws of the State of New York 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 shall be brought exclusively in the state and/or federal
        courts situated in the County and State of New York. Service of process in
        any
        action 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 other party at its principal address
        set
        forth in this Agreement.

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties have signed this agreement on the day and year
        first above written.

      

      
        	 	
                AGENT:

              
	 	 	 
	 	
                STRASBOURGER
                  PEARSON TULCIN WOLFF, INC.

              
	 	 	 
	 	 	 
	 	 	 
	 	
                By:

              	 /s/
                Michael J. Schumacher
	 	
                Name:

              	 Michael
                J. Schumacher
	 	
                Title:

              	 President
	 	 	 
	 	
                DEBTORS:

              
	 	 	 
	 	
                MAGNETECH
                  INTEGRATED SERVICES CORP.

              
	 	 	 
	 	 	 
	 	 	 
	 	
                By:

              	 /s/
                John A. Martell
	 	 	
                JOHN
                  A. MARTELL

              
	 	 	
                President/Chief
                  Executive Officer

              
	 	 	 
	 	
                MAGNETECH
                  INDUSTRIAL SERVICES, INC.

              
	 	 	 
	 	 	 
	 	 	 
	 	
                By:

              	 /s/
                John A. Martell
	 	 	
                JOHN
                  A. MARTELL

              
	 	 	
                President/Chief
                  Executive Officer

              

      

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      SCHEDULES

      

      
        	
                A.

              	
                Names
                  and Addresses of each Lender and the principal amount of indebtedness
                  owed
                  to each Lender as of the date of this
                  Agreement.

              

      

      

      
        	
                B.

              	
                Permitted
                  Encumbrances.

              

      

      

      

      
        
          
          

        

        
          9

        

        
          
          

        

      

      SCHEDULE
        A TO SECURITY AGREEMENT

      

      
        	
                Lenders

              	
                Amount

              

      

       

       

       

      
 

      
        
          
          

        

        
          10

        

        
          
          

        

      

      SCHEDULE
        B TO SECURITY AGREEMENT

      

      PERMITTED
        ENCUMBRANCES

      

      (1) First
        priority security interest in all of the Debtors’ assets in favor of MFB
        Financial, pursuant to that certain Loan Agreement dated as of November 1,
        2004,
        by and among MIS and such lender for a $3 million credit facility.

      

      (2) Liens
        incurred (other than in connection with borrowed funds) or pledges or deposits
        made in connection with workers' compensation, unemployment insurance, pension
        and social security laws, or to secure the performance of bids, tenders,
        contracts (other than for the repayment of borrowed money) or leases or to
        obtain, accommodate or secure statutory obligations or surety or appeal bonds,
        or to obtain, accommodate or secure indemnity, performance or other similar
        bonds in the ordinary course of business;

      

      (3) Liens
        for
        taxes or assessments and other similar governmental charges or claims, either
        (a) not delinquent or (b) being contested in good faith by appropriate
        proceedings and as to which there shall have been set aside adequate reserves
        as
        determined by the exercise of reasonable judgment; and

      

      (4) Other
        minor liens and encumbrances that do not in the aggregate materially detract
        from the value of the property subject thereto or materially impair the use
        of
        such property.

       

       

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

     

    
       

      EXHIBIT
        E

       

       

      SUBORDINATION
        AGREEMENT

       

      THIS
        AGREEMENT is made and entered into effective this 2nd day of March, 2005,
        by and
        between Magnetech Industrial Services, Inc. (an Indiana corporation hereinafter
        referred to as the “Borrower”), MFB Financial (hereinafter referred to as the
“Bank”) and the holder(s) of all or any portion of a subordinated secured
        convertible debenture (the “Debenture”) in an amount of up to $4,000,000.00
        (with such holder(s) being referred to herein as the “Subordinating Party”),
        acting by and through its/their duly authorized agent, Strasbourger Pearson
        Tulcin Wolff, Inc. (the “Agent”).

       

       

      W
        I T N E S S E T H:

       

      WHEREAS,
        Borrower is presently, or will hereafter become, indebted to Subordinating
        Party
        pursuant to the Debenture (a true and accurate copy of the Debenture is attached
        hereto as Exhibit “A”); and

       

      WHEREAS,
        Borrower and Subordinating Party have requested that Bank consent to the
        issuance of the Debenture, but Bank is willing to so consent if, and only
        if,
        all of the indebtedness owing or to become owing by Borrower to Subordinating
        Party, and all collateral for such indebtedness, are expressly subordinated
        to
        any and all indebtedness now or hereafter owing to Bank by Borrower and all
        collateral therefor.

       

      NOW,
        THEREFORE, in consideration of the mutual terms and provisions contained
        herein,
        and in order to induce Bank to consent to the Debenture, the parties agree
        to as
        follows:

       

      1. For
        purposes hereof, the following terms shall have the following
        meanings:

       

      
        	 	
                a.

              	
                “Bank”
                  shall mean and refer to MFB Financial, a banking institution with
                  its
                  principal place of business located in St. Joseph County, Indiana,
                  as well
                  as to all related and affiliated financial institutions and entities,
                  as
                  well as to all successors, assigns and participants of MFB
                  Financial.

              

      

       

      
        	 	
                b.

              	
                “Superior
                  Indebtedness” shall mean and refer to any and all indebtedness and
                  obligations now or hereafter owing by Borrower to Bank, including,
                  but not
                  limited to, future advances, and all obligations of Borrower to
                  Bank under
                  any and all promissory notes, mortgages, security agreements, assignments,
                  leases, guaranties, and all other agreements or documents heretofore
                  or
                  hereafter executed by Borrower to or in favor of Bank, including
                  any and
                  all interest, late charges, prepayment premiums, and all other
                  amounts
                  accruing or payable under any such documents, including principal
                  and
                  interest accruing before or after commencement of any voluntary
                  or
                  involuntary bankruptcy or reorganization, insolvency or similar
                  proceedings regarding Borrower, whether such indebtedness or obligations
                  be direct or indirect, absolute or contingent, or primary or secondary,
                  and all partial or full extensions, renewals or modifications thereof.
                  The
                  “Superior Indebtedness” shall specifically include, but not be limited to,
                  the indebtedness owing by Borrower to Bank represented by a certain
                  promissory note dated November 1, 2004, in the original principal
                  amount
                  of $3,000,000.00, together with all renewals, extensions and modifications
                  thereof, as well as all accrued and accruing interest and costs
                  as
                  provided in paragraph 3.

              

      

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      
        	 	
                c.

              	
                “Subordinated
                  Debt” shall mean any and all indebtedness and obligations now or hereafter
                  owing by Borrower to Subordinating Party, or any of them, including,
                  but
                  not limited to, future advances, and all obligations of Borrower
                  under any
                  and all notes, mortgages, security agreements, assignments, leases,
                  guaranties, and all other agreements or documents heretofore or
                  hereafter
                  executed by Borrower to or in favor of Subordinating Party, including
                  all
                  interest, late charges, prepayment premiums, and other amounts
                  set forth
                  in any such documents, and including principal and interest accruing
                  before or after commencement of any voluntary or involuntary bankruptcy
                  or
                  reorganization, insolvency or similar proceedings regarding Borrower,
                  whether such indebtedness or obligations be direct or indirect,
                  absolute
                  or contingent, or primary or secondary, and all partial or full
                  extensions, renewals or modifications thereof. The “Subordinated Debt”
                  shall specifically include, but not be limited to, the Debenture
                  and all
                  amounts owing thereunder, together with all renewals, extensions
                  and
                  modifications thereof.

              

      

       

      
        	 	
                d.

              	
                Notwithstanding
                  any other provision of this Agreement, including, but not limited
                  to,
                  subparagraph b of this paragraph, the amount of the Superior Indebtedness
                  which shall have priority pursuant hereto shall be limited to the
                  principal sum of $3,000,000.00, plus accrued and accruing interest
                  on said
                  principal sum and the costs described in paragraph 3 hereof unless
                  Agent,
                  on behalf of Subordinating Party, agrees in writing to a greater
                  amount.
                  Any indebtedness owing by Borrower to Bank in excess of said amount
                  ($3,000,000.00 plus interest and costs) shall not be included in
                  the term
                  “Superior Indebtedness” for purposes of this Agreement. The remainder of
                  this Agreement shall be interpreted with the limitation contained
                  In this
                  subparagraph in mind and the provisions of this subparagraph shall
                  take
                  precedence and priority over each and every conflicting provision
                  of this
                  Agreement.

              

      

       

      2. Subordinating
        Party hereby agrees that any and all of the Subordinated Debt shall be and
        hereby is absolutely and unconditionally subordinated in every manner and
        to
        every extent to the Superior Indebtedness and to the prior payment and
        satisfaction in full of the Superior Indebtedness. The Subordinating Party
        further agrees that each and every security interest, mortgage, lien, claim,
        right or title of Bank in, to or against any real or personal property or
        assets
        of Borrower shall be superior to each and every security interest, mortgage
        or
        lien which Subordinating Party has or may acquire in the same property or
        assets, each and every security interest, mortgage or lien held by or in
        favor
        of Subordinating Party in, to or against such property or assets is and shall
        remain absolutely and unconditionally subordinated, junior, inferior and
        postponed in priority, operation and effect to the priority, operation and
        effect of any security Interest, mortgage or lien held by or in favor of
        Bank,
        all with the same force and effect as though such security interest, mortgage
        or
        lien held by or in favor of Bank had attached and was perfected prior to
        the
        perfection of any such security interest, mortgage or lien of Subordinating
        Party. Subordinating Party agrees to execute such instruments and documents
        as
        Bank may request from time to time in order to evidence or accomplish the
        intent
        of this Agreement, and Subordinating Party and Borrower expressly consent
        to the
        delivery, filing and recording of any such instruments or documents with
        such
        persons and authorities as Bank shall deem appropriate. Bank makes no
        representation or warranty concerning any collateral or the validity, perfection
        or priority of any security interest, lien or mortgage. Bank shall have no
        duty
        to preserve, protect, care for, insure, take possession of, collect, dispose
        of
        or realize upon any property. Bank may in its discretion apply the proceeds
        of
        collateral to any indebtedness then owing by Borrower to Bank secured thereby
        in
        any order as Bank deems appropriate.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      3. Borrower
        agrees that any and all of the Superior Indebtedness must be fully paid and
        discharged, together with all interest thereon and all expenses of collecting
        the same or otherwise protecting and/or enforcing the rights and/or interests
        of
        Bank, including, but not limited to, attorneys’ and legal assistants’ fees and
        collection expenses, before any payment to Subordinating Party, byway of
        cash,
        setoff or otherwise, may be paid to Subordinating Party by
        Borrower.

       

      4. Borrower,
        and Agent on behalf of Subordinating Creditor, represent to Bank and agree
        that
        the amount of the Subordinated Debt is not and shall not hereafter be
        represented by any notes or other negotiable instruments, except the Debenture.
        Agent, on behalf of Subordinating Creditor, and Borrower will cause each
        instrument evidencing Subordinated Debt to be endorsed with the following
        legend:

       

      “The
        indebtedness evidenced by this instrument is subordinated to the prior payment
        in full of the Superior Indebtedness (as defined in the Subordination Agreement
        hereinafter referred to) pursuant to, and to the extend provided in, the
        Subordination Agreement dated effective as of March 2, 2005, by the maker
        hereof
        and payee named herein in favor of the Bank referred to in such Subordination
        Agreement.”

       

      Agent,
        Subordinating Creditor and Borrower also agree that each and every financing
        statement filed with any governmental office pertaining to the Subordinated
        Indebtedness and/or the security therefor shall contain the
        following:

       

      Notwithstanding
        the order of filing of financing statements concerning the Debtor, the security
        interests described herein are, and shall at all times remain, subordinate
        and
        inferior to any and all security interests now or hereafter held by or in
        favor
        of MFB Financial and its successors and assigns.

       

      Further,
        Subordinating Creditor, Agent and Borrower will mark their respective books
        of
        account in such a manner as shall be effective to give proper notice of the
        effect of this Subordination Agreement and will, in the case of any hereafter
        arising Subordinated Debt which is not evidenced by an instrument, upon Bank’s
        request, cause such Subordinated Debt to be evidenced by an appropriate
        instrument or instruments containing the language required above; provided
        however, that the foregoing shall not permit Borrower to incur or assume
        any
        indebtedness in violation of the terms governing the Superior Indebtedness.
        Agent, on behalf of Subordinating Creditor, and Borrower each will, at it’s own
        expense and at any time and from time to time, promptly execute and deliver
        all
        further instruments and documents, and take all further action, that may
        be
        necessary or desirable, or that Bank may reasonably request, in order to
        protect
        any right or interest granted or purported to be granted hereby or to enable
        Bank to exercise and enforce its rights and remedies hereunder.

       

      5. Borrower
        shall not make any payment, and Subordinating Party shall not receive or
        accept
        any payment, with respect to any of the Subordinated Debt in violation of
        this
        Agreement. In the event Subordinating Party receives any payment from Borrower
        that is not expressly permitted hereby, whether such payment be in cash,
        by
        setoff or otherwise, Subordinating Party shall be liable and accountable
        therefor to Bank. Subordinating Party shall be deemed to have received each
        and
        every such payment in trust for the use and benefit of Bank, and Subordinating
        Party shall not commingle the same with any other funds and shall pay over
        and
        deliver each such payment immediately to Bank, even if Bank does not make
        demand
        for such payment or delivery.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      6. This
        subordination shall survive and remain in full force and effect in the event
        of
        any administration of the property and/or affairs of Borrower arising from
        any
        assignment for the benefit of creditors, bankruptcy, receivership, liquidation
        or other like proceedings.

       

      7. This
        Agreement is a continuing subordination and shall continue in full force
        and
        effect, and Bank may make extensions of credit to Borrower in reliance upon
        this
        Agreement, at any time any Superior Indebtedness or costs described in Paragraph
        3 hereof remain unpaid. Subordinating Party agrees that Bank, at any time
        and
        from time to time, may enter into such agreements with Borrower as Bank may
        deem
        proper affecting any property which secures all or any portion of the Superior
        Indebtedness (the “Collateral”), and may sell, surrender or otherwise deal with
        any of the Collateral without notice to Subordinating Party and without in
        any
        way impairing or affecting this Agreement. The obligations of Subordinating
        Party, and the subordinations provided for herein, shall not be affected
        or
        impaired by any compromise, release, renewal, extension, forbearance,
        indulgence, alteration, change in, modification of, grant of participation
        in,
        or other disposition of any documents or instruments executed by Borrower
        in
        favor of Bank, any release of any guarantor of the obligations of Borrower
        to
        Bank or any other person, any failure of Bank to pursue its remedies against
        the
        Collateral or any one or more of the guarantors or any other person, any
        failure
        to collect any of the indebtedness owing by Borrower to Bank when due, any
        failure to give notice of acquisition or expected acquisition of a purchase
        money security interest, or any delay or omission by Bank in the exercise
        of any
        right or remedy against Borrower or any guarantor of the obligations of Borrower
        to Bank.

       

      8. In
        the
        event of the liquidation of Borrower or the Collateral, or distribution of
        Borrower’s assets, any obligation of Borrower to Bank shall be satisfied and
        discharged before Subordinating Creditor receives any distributive share
        or
        payment on account of its obligations against Borrower. Any dividends or
        other
        payments with respect to the Collateral, by virtue of any insolvency proceedings
        instituted by or against Borrower, shall also be distributed first to Bank,
        in
        an amount required to satisfy the full about of the Superior Indebtedness.
        In
        order to enable Bank to enforce its rights hereunder in any such action or
        proceeding, Bank is hereby irrevocably authorized and empowered, in its
        discretion, to make and present, for and on behalf of Subordinating Creditor
        such proofs of claims against Borrower or against any Bankruptcy trustee
        or
        debtor in possession on account of indebtedness hereby subordinated as Bank
        may
        deem expedient or proper, and to vote such proofs of claims in any such
        proceedings, and to receive and collect any and all dividends or other payments
        or disbursements made thereof in whatever form the same may be paid or issued,
        and to apply same on account of any indebtedness owing to Bank by Borrower
        which
        relate to the Superior Indebtedness; and Agent and Subordinating Creditor,
        further agree to execute and deliver to Bank such assignment(s), release(s)
        or
        other instruments as may be required by Bank in order to enable it to enforce
        any and all such claims and to collect any and all dividends or other payments
        or disbursements which may be made at any time (a) in connection with any
        such
        liquidation of Borrower or the Collateral or the distribution of Borrower’s
        assets and/or (b) on account of all or any of the indebtedness hereby
        subordinated.

       

      9. All
        persons executing the Agreement in a representative capacity warrant that
        they
        have authority to execute this Agreement and bind the entities they purport
        to
        represent. In particular, but not in limitation of the foregoing, the person
        signing this Agreement on behalf of the Agent for Subordinating Party
        represents, warrants and certifies that the execution and delivery of this
        Agreement by Agent on behalf of Subordinating Party (i) do not violate the
        provisions of the Debenture and the documents pertaining thereto (ii) are
        binding acts of Subordinating Party, and (iii) this Agreement will be an
        enforceable obligation of Subordinating Party according to the terms and
        provisions hereof.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      10. This
        Agreement constitutes the entire understanding of the parties hereto pertaining
        to the matters covered hereby and may only be modified or amended by a writing
        signed by all parties. This Agreement is binding on, and shall inure to,
        the
        parties hereto and their respective heirs, representatives, successors and
        assigns.

       

      11. Agent,
        on
        behalf of the Subordinating Party, and Borrower, each acknowledges and agrees
        that (i) it has been given the opportunity to consult with counsel and other
        advisors of its choice, and after having the opportunity to consult with
        such
        counsel and advisors, knowingly, voluntarily and without duress, coercion,
        unlawful restraint, intimidation or compulsion, enters into this Agreement,
        (ii)
        this Agreement has been entered into in exchange for good and valuable
        consideration, the receipt and sufficiency of which Borrower and the
        Subordinating Party each acknowledges, and (iii) it has carefully and completely
        read all of the terms and provisions of this Agreement and is not relying
        on the
        opinions or advice of Bank or its agents or representatives in entering into
        this Agreement.

       

      12. The
        parties agree that this Agreement is the product of their joint efforts,
        that it
        expresses their agreement, and that it should not be interpreted in favor
        of or
        against any party merely because of that party’s efforts in preparing
        it.

       

      13. This
        Agreement shall be enforceable in, and interpreted under, the laws of the
        State
        of Indiana. The parties hereto acknowledge that the transactions contemplated
        by
        this Subordination Agreement 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 Subordination Agreement and the exhibits hereto, including, but
        not
        limited to, all issues related to usury. Any action to enforce the terms
        of this
        Subordination Agreement or any of its exhibits shall be brought exclusively
        in
        the state and/or federal courts situated in St. Joseph County, Indiana. Service
        of process in any action to enforce the terms of this Subordination 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 other party
        at
        its principal address set forth in this Subordination Agreement.

       

      14. The
        subordinations and priorities specified in this Subordination Agreement are
        not
        conditioned upon the nonavoidability and perfection of the security interest
        to
        which another security interest is subordinated and, if the security interest
        to
        which another security interest is subordinated is not perfected or is
        avoidable, for any reason, then the subordinations and relative priority
        agreements provided herein shall continue to be effective as to the particular
        Collateral which is the subject of the unperfected or avoidable security
        interest. In no event shall Subordinating Party institute, or join as a party
        in
        the institution of any action, suit or proceeding or take any action of any
        kind
        whatsoever seeking a determination that a security interest held by Bank
        is
        unperfected or avoidable, or in any way make any assertions to that
        effect.

       

      15. The
        following miscellaneous provisions shall apply to this Agreement:

       

      
        	 	
                a.

              	
                Waiver.
                  The failure of any party hereto at any time or from time to time
                  to
                  require performance of another party’s obligations under this Agreement
                  shall in no manner affect the right to enforce any provision of
                  this
                  Agreement at a subsequent time, and the waiver of any rights arising
                  out
                  of any breach shall not be construed as a waiver of any rights
                  arising out
                  of any subsequent breach.

              

      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
        	 	
                b.

              	
                Severability.
                  If any one or more of the provisions of this Agreement shall be
                  held
                  invalid or unenforceable, the validity and enforceability of all
                  other
                  provisions of this Agreement shall not be
                  affected.

              

      

       

      
        	 	
                c.

              	
                Counterparts.
                  This Agreement may be executed in one or more counterparts, each
                  of which
                  shall be deemed an original but all of which together shall constitute
                  one
                  and the same instrument, and shall become effective when one or
                  more
                  counterparts have been signed by each of the
                  parties.

              

      

       

      
        	 	
                d.

              	
                Fees
                  and Expenses.
                  In the event any party breaches this Agreement, all costs and expenses,
                  including attorneys’ fees, incurred by a non-breaching party shall be
                  included in the damages which may be recovered as a result of such
                  breach
                  or default. In any litigation relating to this Agreement and the
                  transactions contemplated hereby, the prevailing party shall be
                  entitled
                  to recover its costs and reasonable attorneys’
                  fees.

              

      

       

      
        	 	
                e.

              	
                Limitations
                  on Rights of Third Parties.
                  Nothing expressed or implied in this Agreement is intended or shall
                  be
                  construed to confer upon or give any person or entity other than
                  the
                  parties hereto any rights or remedies under or by reason of this
                  Agreement
                  or the transactions contemplated
                  hereby.

              

      

       

      
        	 	
                f.

              	
                Contents
                  of Agreement.
                  Each person signing this Agreement (whether for herself or for
                  himself
                  Individually or on behalf of an entity or organization) acknowledges
                  that
                  this Agreement may reflect changes from previous drafts, if any,
                  and that
                  he or she has read and reviewed this Agreement carefully. Each
                  person
                  signing this Agreement also acknowledges that he or she has not
                  relied on
                  any other party to this Agreement, or on any officer, agent, partner,
                  employee or attorney of any other party to this Agreement, to explain
                  the
                  provisions of this Agreement to him or her, or to identify changes
                  that
                  have been made from prior drafts or versions of this Agreement,
                  if any.
                  Rather, each person signing this Agreement agrees to be solely
                  responsible
                  for being aware of the contents of this
                  Agreement.

              

      

       

      16. Borrower
        agrees to give Bank written notice, by registered or certified mail,
        postage-prepaid, of any action or inaction by Bank or any of its officers,
        directors, employees, agents or attorneys in connection with this Agreement,
        the
        Superior Indebtedness, the Collateral, or any related transactions, that
        may be
        actionable against Bank or any officer, director, employee, agent or attorney
        of
        Bank, or a defense to the enforcement hereof or payment of any loans or any
        promissory note, including, but not limited to, any commission of a tort
        or
        violation of any contractual duty or duties implied by law. Borrower agrees
        that
        unless such notice is given as promptly as possible (and in any event within
        ninety (90) days) after Borrower has knowledge, or with the exercise of
        reasonable diligence should have had knowledge, of any such action or inaction,
        Borrower shall not assert, and shall be deemed to have waived, any such claim
        or
        defense.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      All
        notices and other communications required or permitted to be given pursuant
        to
        the terms of this Subordination Agreement shall be in writing and mailed
        by
        registered or certified mail with return receipt requested, and delivered
        to the
        applicable party at the address indicated below:

       

      
        	 	
                If
                  to Agent and/or

              	 
	 	
                Subordinating
                  Party:

              	
                Strasbourger
                  Pearson Tulcin Wolff, Inc.

              
	 	 	
                33
                  Whitehall Street, 17th Floor 

              
	 	 	
                New
                  York, NY 10004

              
	 	 	 
	 	
                If
                  to the Borrower: 

              	
                Magnetech
                  Integrated Services, Inc. 

              
	 	 	
                1125
                  South Walnut Street 

              
	 	 	
                South
                  Bend, Indiana 46679 

              
	 	 	
                Attn:
                  President

              
	 	 	 
	 	
                If
                  to Bank:

              	
                MFB
                  Financial

              
	 	 	
                4100
                  Edison Lakes Parkway, Suite 300 

              
	 	 	
                Mishawaka,
                  Indiana 46545 

              
	 	 	
                Attn:
                  Bruce G. Piekarski,

              
	 	 	
                Vice
                  President - Director of Business Banking

              
	 	 	 
	 	
                With
                  a copy to:

              	
                Steven
                  L. Hostetler, Esq.

              
	 	 	
                P.O.
                  Box 1210

              
	 	 	
                Mishawaka,
                  Indiana 46546-1210

              

      

      

      17. WAIVER
        OF JURY TRIAL.
        THE PARTIES HERETO, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT
        WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY
        OF
        THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING
        OUT OF
        THIS AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS
        CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALINGS, STATEMENTS,
        WHETHER ORAL OR WRITTEN, OR ACTIONS OF ANY OF THEM. NONE OF THE PARTIES HERETO
        SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH
        A
        JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
        BE
        OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN
        MODIFIED IN ANY RESPECT OR RELINQUISHED BY ANY OF THE PARTIES EXCEPT BY A
        WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      

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

       

      

      
        	 	
                “BORROWER”

              
	 	
                Magnetech
                  Industrial Services, Inc., 

                an
                  Indiana corporation

              
	 	 	 
	 	 	 
	 	
                By:

              	 /s/
John
                A. Martell
	 	 	
                John
                  A. Martel, President and 

                Chief
                  Executive Officer

              
	 	 	 
	 	 	 
	 	
                “SUBORDINATING
                  PARTY” by its “AGENT”

              
	 	
                Strasbourger
                  Pearson Tulcin Wolff, Inc., 

                a
                  New York corporation

              
	 	 	 
	 	 	 
	 	
                By:

              	 /s/
                Michael J. Schumacher
	 	 	 
	 	 	
                Print
                  Name & Title

              
	 	 	 
	 	 	 
	 	
                “BANK”

              
	 	
                MFB
                  Financial

              
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Bruce
                  G. Piekarski, Vice President - Director of Business
                  Banking

              

      

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      

      
        	
                STATE
                  OF INDIANA

              	
                )

              
	 	
                )  SS:

              
	
                ST.
                  JOSEPH COUNTY

              	
                )

              

      

      

      Before
        me, the undersigned, a Notary Public in and for said County and State personally
        appeared John A. Martel, President and Chief Executive Officer, on behalf
        of
        Magnetech Industrial Services, Inc., an Indiana corporation and acknowledged
        of
        the execution of the foregoing Subordination Agreement this 3rd day
        of
        March, 2005.

       

      

       

      
        	 	 /s/
                Jennifer M. Martell
	 	
                Notary
                  Public

              
	 	
                Residing
                  in South Bend, Indiana

              

      

      

      My
        commission expires:

      January
        29,
        2012                         

       

      

      

      
        	
                STATE
                  OF NEW YORK

              	
                )

              
	 	
                )  SS:

              
	
                NEW
                  YORK COUNTY

              	
                )

              

      

      

      

      Before
        me, the undersigned, a Notary Public in and for said County and State personally
        appeared Michael J. Schumacher, on behalf of Strasbourger Pearson Tulcin
        Wolff,
        Inc., a New York corporation and acknowledged of the execution of the foregoing
        Subordination Agreement this 3rd day of March, 2005. 

       

      
        	 	 /s/
                Kenneth S. Goodwin
	 	
                Notary
                  Public

              
	 	
                Residing
                  in
                  ___________________,_______________

              

      

      

      My
        commission expires:

      February
        23,
        2006                               
        

       

      

      
        	
                STATE
                  OF INDIANA

              	
                )

              
	 	
                )  SS:

              
	
                ST.
                  JOSEPH COUNTY

              	
                )

              

      

      

      Before
        me, the undersigned, a Notary Public in and for said County and State personally
        appeared Bruce G. Piekarski, Vice President - Director of Business Banking,
        on
        behalf of MFB Financial and acknowledged of the execution of the foregoing
        Subordination Agreement this ________ day of March, 2005.

       

      

       

      
        	 	 
	 	
                Notary
                  Public

              
	 	
                Residing
                  in
                  ___________________,_______________

              

      

      

      My
        commission expires:

      _____________________________

       

    

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      Exhbit
        F

       

      

       

      ESCROW
        AGREEMENT

       

      ESCROW
        AGREEMENT dated as of this 4th day of March, 2005 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 (the “Offering”)
        through Strasbourger $4,000,000 principal amount of subordinated secured
        convertible debentures (“MISC
        Debentures”)
        at
        100% of the principal face amount thereof; and

       

      WHEREAS:

       

      (a) The
        Offering will commence immediately and will continue until the earlier to
        occur
        of (i) the sale of the maximum principal amount of MISC Debentures that comprise
        the Offering and (ii) April 29, 2005, 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 Debentures;

       

      (c) Tendered
        subscriptions for all MISC Debentures 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 Debentures shall be held in escrow
        by
        the Agent pending the Closing on the MISC Debentures, 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.

      
        
          
          

        

        
          -
            1
            -

          
            

          

        

        
          
          

        

      

       

      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 Debentures 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
        Debentures.

       

      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 in
        the
        aggregate amount of at least $1,000,000, 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 April 29, 2005 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:
                    Kenneth S. Goodwin

              	
                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

                

        

      

       

       

       

      -
        7 -

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    Exhibit
      G

     

    LEGAL
      OPINION

     

     

    

       

      __________,
        2005

       

      Strasbourger
        Pearson Tulcin Wolff Incorporated

      33
        Whitehall Street, 17th
        Floor

      New
        York,
        NY 10004

      The
        Purchaser (as defined below) set forth in 

      Schedule
        I hereto

      

      
        	 	
                RE:

              	
                Magnetech
                  Integrated Services Corp. (“MISC”) and Magnetech Industrial Services, Inc.
                  (“MIS”)

              

      

       

      Ladies
        and Gentlemen:

       

      We
        have
        acted as special Indiana counsel to Magnetech Integrated Services Corp.
        (“MISC”), an Indiana corporation, and Magnetech Industrial Services, Inc.
        (“MIS”), an Indiana corporation, for the limited purpose of rendering the legal
        opinion required in Section 2.2(iii) of that certain Subordinated Convertible
        Debenture Purchase Agreement (the “Purchase Agreement”) among Strasbourger
        Pearson Tulcin Wolff Incorporated (the ”Placement Agent”), MISC and the
        Purchaser listed on Schedule I thereto (the “Purchaser”) and in Section 3(b)(v)
        of that certain Placement Agency Agreement dated as of January 25, 2005 between
        MISC and the Placement Agent (the “Placement Agency Agreement”). Pursuant to the
        terms of the Purchase Agreement, MISC proposes to offer and sell to the
        Purchaser up to $2,515,000 in principal amount of its 6% Subordinated Secured
        Convertible Debentures, due February 28, 2007 (the “Debentures”) in a private
        offering. The Purchase Agreement and the agreements and instruments listed
        below
        in subclauses (a) through (g), inclusive, are sometimes hereinafter referred
        to
        as the “Transaction Documents”. Capitalized terms used herein and not otherwise
        defined herein shall have the respective meanings assigned to such terms
        in the
        Purchase Agreement.

       

      In
        connection with the opinions expressed herein, we have made such examination
        of
        law as we considered appropriate or advisable for purposes hereof. As to
        matters
        of fact material to the opinions expressed herein, we have relied, with your
        permission, upon the representations and warranties as to factual matters
        contained in the Transaction Documents, and upon certificates and statements
        of
        certain government officials and officers of MISC and MIS. We have also examined
        executed copies of the following documents which are dated as of March 3,
        2005,
        except for the Subordination Agreement which is dated March 2,
        2005:

       

      
        	 	
                (a)

              	
                the
                  Purchase Agreement;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Strasbourger
        Pearson Tulcin Wolff Incorporated

      The
        Purchaser

      ____________,
        2005

      Page
        2

      

       

      
        	 	
                (b)

              	
                the
                  Debenture;

              

      

       

      
        	 	
                (c)

              	
                the
                  Warrant;

              

      

       

      
        	 	
                (d)

              	
                the
                  Agent’s Warrant (as defined in the Placement Agency
                  Agreement);

              

      

       

      
        	 	
                (e)

              	
                the
                  Registration Rights Agreement;

              

      

       

      
        	 	
                (f)

              	
                the
                  Security Agreement; and

              

      

       

      
        	 	
                (g)

              	
                the
                  Subordination Agreement.

              

      

       

      In
        rendering this opinion, we have, with your permission, assumed: the authenticity
        of all documents submitted to us as originals; the conformity to the originals
        of all documents submitted to us as copies; the genuineness of all signatures;
        the legal capacity of natural persons; the truth, accuracy and completeness
        of
        the information, factual matters, representations and warranties contained
        in
        all such documents; the due authorization, execution and delivery of all
        such
        documents, and the legal, valid and binding effect thereof, on such parties
        other than MISC and MIS.

       

      We
        call
        your attention to the fact that we are counsel admitted to practice in the
        State
        of Indiana, and we do not express any opinion with respect to the applicable
        laws, or applicability of the laws, of any jurisdiction other than the internal
        laws of the State of Indiana (excluding any Blue Sky or securities laws).
        In
        particular, but without limitation, we do not express any opinion with regard
        to
        the federal securities laws of the United States of America, the Blue Sky
        or
        securities laws of any state or other jurisdiction or the security laws or
        other
        laws of any foreign country or jurisdiction outside the United States of
        America. To the extent that the governing law with respect to any of the
        documents or matters covered by this opinion is the law of any state other
        than
        the State of Indiana, we have assumed that the law of such other state is
        identical to the law of the State of Indiana.

       

      Based
        upon the foregoing, and subject to the qualifications and exceptions contained
        herein, we are of the opinion that:

       

      1. Both
        MISC
        and MIS are corporations duly organized and validly existing under the laws
        of
        the State of Indiana. Each of MISC and MIS have all requisite corporate power
        and authority to own and operate its respective properties and assets and
        to
        carry on its respective business as presently conducted.

       

      2. 
        MISC has
        all requisite corporate power and authority to execute and deliver the
        Transaction Documents, to issue the Underlying Shares (as hereafter defined)
        upon conversion of the Debenture and the Warrant Shares (as hereafter defined)
        upon exercise of the Warrant and to carry out the provisions of the Transaction
        Documents. MIS has all requisite corporate power 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Strasbourger
        Pearson Tulcin Wolff Incorporated

      The
        Purchaser

      ____________,
        2005

      Page
        3

      

       

      and
        authority to execute the Transaction Documents to which it is a party and
        to
        carry out the provisions of the Transaction Documents to which it is a
        party.

       

      3. The
        execution and delivery of each of the Transaction Documents to which MISC
        and
        MIS are a party, and the consummation by them of the transactions contemplated
        thereby, have been duly authorized by all necessary corporate action. Each
        of
        the Transaction Documents to which it is a party have been duly executed
        and
        delivered by MISC and MIS, constitutes a valid and binding obligation of
        MISC
        and MIS, and are enforceable against MISC and MIS in accordance with their
        respective terms.

       

      4. The
        Board
        of Directors of MISC has duly authorized and reserved for issuance such number
        of the common shares, no par value, of MISC (the “Common Shares”), as are
        issuable upon conversion of the Debenture (the “Underlying Shares”), the
        exercise of the Warrant (the “Warrant Shares”) and the exercise of the Agent’s
        Warrant, assuming conversion of the Debenture and exercise of the Warrant
        and
        the Agent’s Warrant in full on the date hereof. Upon the conversion of the
        Debenture in accordance with the terms of the Purchase Agreement and the
        exercise of the Warrant in accordance with the terms of the Warrant, the
        Underlying Shares and the Warrant Shares will be validly issued, fully paid
        and
        not subject to further assessment. Upon the exercise of the Agent’s Warrant in
        accordance with the terms of the Agent’s Warrant, the Common Shares issued
        pursuant thereto will be validly issued, fully paid and not subject to further
        assessment. Upon the issuance of up to an aggregate of 50,000 Common Shares
        as
        Agent’s Shares (as defined in the Placement Agency Agreement) pursuant to the
        terms of the Placement Agency Agreement, such Agent’s Shares will be validly
        issued, fully paid and not subject to further assessment.

       

      5. The
        execution and delivery of the Transaction Documents to which they are a party
        by
        MISC and MIS do not violate or constitute a default under the Articles of
        Incorporation or Code of Bylaws of MISC or MIS.

       

      6. No
        preemptive rights are provided to shareholders of MISC under the terms of
        the
        Articles of Incorporation of MISC or the Indiana Business Corporation
        Law.

       

      Our
        opinion is subject to the following qualifications and limitations:

       

      A. We
        express no opinion with respect to (i) the availability of specific performance
        or equitable remedies, (ii) any provisions purporting to waive constitutional
        or
        statutory rights or rights granted by the Indiana Rules of Trial Procedure
        or
        granting the right of “self-help,” (iii) any provisions purporting to be a
        selection of a judicial forum or an expression of judicial jurisdiction,
        (iv)
        the enforceability of the Transaction Documents, in general, to the extent
        the
        Purchaser or the Placement Agent fails to act in good faith or in a commercially
        reasonable manner, (v) any powers of attorney purportedly granted pursuant
        to
        any of the Transaction Documents or, (vi) the creation, perfection or priority
        of any lien purported to be granted pursuant to any of the Transaction
        Documents.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Strasbourger
        Pearson Tulcin Wolff Incorporated

      The
        Purchaser

      ____________,
        2005

      Page
        4

      

       

      B. The
        opinions regarding enforceability contained in paragraph 3 may be limited
        by
        bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium,
        receivership, or other similar laws affecting the enforcement of creditors’
        rights in general in the event of the subject bankruptcy, insolvency,
        reorganization, moratorium, receivership, or similar event, and may be further
        limited by the exercise of judicial discretion in applying principles of
        equity,
        including (but not limited to) the availability or effects of a preliminary
        injunction, a restraining order, or specific performance (regardless of whether
        such enforceability is considered in a proceeding in equity or at law); and,
        in
        addition, the enforcement of certain provisions respecting indemnification
        and
        contribution may be limited by applicable law or public policy.

       

      C. Certain
        remedial and waiver provisions of the Transaction Documents may be further
        limited or rendered unenforceable by other applicable laws or interpretations
        but, in our opinion, such laws and interpretations do not, subject to the
        other
        exceptions and limitations of this opinion letter, make the remedies generally
        afforded by the Transaction Documents or under other applicable law inadequate
        for the practical realization of the benefits purported to be provided thereby
        with respect to the ability of the Purchaser to realize upon the principal
        benefits intended to be provided by such documents, except for the economic
        consequences of procedural or other delay.

       

      D. Requirements
        set forth in any of the Transaction Documents to the effect that any provision
        thereof may be waived only in writing may not be valid, binding or enforceable
        to the extent that an oral agreement or an implied agreement by practice
        or
        course of conduct modifying such requirements has been or may be
        created.

       

      E. 
        We
        express no opinion as to the enforceability of any remedies provided for
        under
        any of the Transaction Documents to the extent such remedies would have the
        effect of compensating the party entitled to the benefit of such remedies
        in
        amounts in excess of the actual loss suffered by such party.

       

      F. With
        regard to the opinions contained in the last three sentences of opinion
        paragraph 4, we have assumed that MISC has sufficient authorized but unissued
        shares at the time of the conversion of the Debenture and the exercise of
        the
        Warrant and the Agent’s Warrant to permit the issuance of the Underlying Shares,
        the Warrant Shares and the Common Shares issuable upon exercise of the Agent’s
        Warrant.

       

      G. Whenever
        any statement in this opinion letter is qualified by the phrase “to our
        knowledge,”“of which we are aware,” or a phrase of similar import, such phrase
        is intended to mean the actual knowledge of information by the lawyers in
        our
        firm who have been principally involved in our work on the subject transaction,
        but does not include other information that might be revealed if there were
        to
        be undertaken a canvass of all lawyers in our firm, a general search of our
        files, or any other type of independent investigation. Moreover, we have
        not
        undertaken any independent investigation to determine the accuracy or
        completeness of such knowledge, and limited inquiries made by us should not
        be
        regarded as such an investigation. Any certificates or representations obtained
        by us from officers of MISC and MIS with respect to 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Strasbourger
        Pearson Tulcin Wolff Incorporated

      The
        Purchaser

      ____________,
        2005

      Page
        5

      

       

      this
        opinion have been relied upon by us as to factual matters, without independent
        verification, but nothing has come to our attention which would lead us to
        believe that it is unreasonable for us to rely on these
        certificates.

       

      H. Whenever
        we have stated we have assumed any matter, it is intended to indicate that
        we
        have assumed such matter without making any factual, legal or other inquiry
        or
        investigation, and without expressing any opinions or conclusions of any
        kind
        concerning such matter.

       

      I. The
        only
        opinions intended to be provided herein are those which are expressly stated
        herein and no opinions by implication are intended or given.

       

      J. The
        opinions herein are given as of the date hereof. We assume no obligation
        to
        update or supplement this opinion to reflect any facts or circumstances that
        may
        hereafter come to our attention or any changes in law that may hereafter
        occur.

       

      K. 
        In
        furnishing the opinion regarding the due incorporation and valid existence
        of
        MISC and MIS, we have relied solely upon the certificates of existence attached
        to this letter.

       

      L. We
        have
        not considered, and express no opinion with respect to, the effect, if any,
        of
        the failure of MISC to fulfill the covenant contained in the Placement Agency
        Agreement dated April 26, 2004 between MIS and the Agent regarding an increase
        in the size of the Board of Directors of MISC.

       

      This
        opinion has been delivered at your request for the purposes contemplated
        by the
        Agreement. Without our prior written consent, this opinion is not to be utilized
        or quoted for any other purpose, and may not be relied upon by any person
        or
        entity other than the named addressees.

       

      

      
        	 	
                Very
                  truly yours,

              
	 	 
	 	 
	 	
                BARNES
                  & THORNBURG LLP

                 

              

      

      

       

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      Exhibits
        H and I

       

      

       

      MAGNETECH
        INTEGRATED SERVICES CORP.

       

      OFFICER’S
        CERTIFICATE

       

      

      I,
        John
        A. Martell, being the Chief Executive Officer of Magnetech Integrated Services
        Corp., an Indiana corporation (the “Company”), pursuant to Section 2.2(a)(iv) of
        that certain Subordinated Convertible Debenture Purchase Agreement (the
“Purchase Agreement”), dated as of ____________,
        2005,
        by and between the Company and the Purchaser (as defined in the Purchase
        Agreement), do hereby certify on behalf of the Company as follows:

       

      1. Attached
        hereto is a copy of the resolutions duly adopted by the Board of Directors
        of
        the Company authorizing the Company to execute and deliver the Transaction
        Documents, as such term is defined in the Purchase Agreement and to enter
        into
        the transactions contemplated thereby; and

       

      2. The
        representations and warranties of the Company contained in Article III of
        the
        Purchase Agreement, as supplemented by the Schedules attached thereto, are
        true
        and correct in all material respects as at the date hereof. (except for
        representations and warranties that speak as of a specific date, which
        representations and warranties shall be true, correct and complete in all
        material respects as of such date). 

       

      IN
        WITNESS WHEREOF, I have executed this Officer’s Certificate on behalf of the
        Company this __ day of ___________,
        2005.

       

      

       

      
        	 	
                Magnetech
                  Integrated Services Corp.

              
	 	 	 
	 	
                By:

              	 
	 	 	
                John
                  A. Martell

              
	 	 	
                President
                  and Chief Executive Officer

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