Document:

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

    
      Exhibit
        10.2

       

      

       

      MAGNETECH
        INTEGRATED SERVICES CORP.

       

      PLACEMENT
        AGENCY AGREEMENT

       

      Strasbourger
        Pearson Tulcin Wolff Incorporated

      33
        Whitehall Street, 17th
        Floor

      New
        York,
        New York 10004

       

      January
        25, 2005

       

      Ladies
        and Gentlemen:

       

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

       

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

       

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

      
        
          
          

        

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

       

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

       

      1. Appointment
        of Placement Agent.

       

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

       

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

       

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

       

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

       

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

       

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

      
        
          
          

        

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

       

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

       

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

      
        
          
          

        

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

       

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

       

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

       

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

      
        
          
          

        

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

       

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

       

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

       

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

       

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

      
        
          
          

        

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

       

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

       

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

       

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

      
        
          
          

        

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

       

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

       

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

       

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

       

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

       

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

      
        
          
          

        

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

       

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

       

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

       

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

       

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

       

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

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      3. Closing;
        Placement and Fees.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

      (d) Placement
        Fee and Expenses.

       

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

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

      4. Covenants
        of the Company.
        

       

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

       

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

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

      6. Indemnification.

       

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

       

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

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

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

       

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

      
        
          
          

        

        
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      7. Contribution.

       

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

       

      8. Miscellaneous.

       

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

       

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

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

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

      
         

        

        
          	 	 	
                   

                  Very
                    truly yours,

                
	 	 	 	 
	 	
                  MAGNETECH
                    INTEGRATED SERVICES CORP.

                
	 	 	 	 
	 	 	 	 
	 	 	
                  By:

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

                
	 	 	 	
                  Title: 
                    President & CEO

                

        

        
Agreed:

      

       

      STRASBOURGER
        PEARSON TULCIN WOLFF INCORPORATED

      
        	
                 

                By:

              	
                 

                /s/ Michael J. Schumacher

              	 
	 	
                Name: 
                  Michael J. Schumacher

              	 
	 	
                Title: 
                  President

              	 

      

      

      

      18

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      Exhibit
        A

       

       

      

        
          	
                  IMPORTANT:

                	
                  Investor
                    Name: ____________________

                
	
                  Please
                    Complete

                	 

        

        

         

        INDIVIDUAL
          INVESTOR QUESTIONNAIRE

         

        _________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP

         

         __________________________

         

        Magnetech
          Integrated Services Corp

        1125
          South Walnut Street

        South
          Bend, Indiana 46679

         

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

        

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

         

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

          

        
          	 

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

                

        

          

        
          	 

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

                

        

         

        
          	
                  I.

                	
                  PLEASE
                    INDICATE DESIRED TYPE OF OWNERSHIP OF
                    SECURITIES:

                

        

         

        [  ] Individual

         

        [  ] Joint
          Tenants (rights of survivorship)

         

        [  ] Tenants
          in Common (no rights of survivorship)

        
          
            
            

          

          
            A-1

            
              

            

          

          
            
            

          

        

         

        
          	
                  II.

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

                

        

        
          	
                   

                  [  ]

                	
                   

                  1.

                	
                   

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

                
	
                   

                  [  ]

                	
                   

                  2.

                	
                   

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

                
	
                   

                  [  ]

                	
                   

                  3.

                	
                   

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

                
	
                   

                  [  ]

                	
                   

                  4.

                	
                   

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

                

        

         

        
          	
                  III.

                	
                  OTHER
                    CERTIFICATIONS

                

        

         

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

         

        
          	 	
                  (a)

                	
                  that
                    I am at least 21 years of age;

                

        

         

        
          	 	
                  (b)

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

                

        

         

        
          	 	
                  (c)

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

                

        

         

        
          	 	
                  (d)

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

                

        

         

        __________________

         

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

        
          
            
            

          

          
            A-2

            
              

            

          

          
            
            

          

        

         

        
          	 	
                  Purchaser

                	
                  Spouse,
                    if Co-Owner

                	 
	 	
                  [  ]

                	
                  [  ]

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

                
	 	 	 	 
	 	
                  [  ]

                	
                  [  ]

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

                

        

         

        
          	
                  IV.

                	
                  GENERAL
                    INFORMATION

                

        

         

        
          	 	
                  (a)

                	
                  PERSONAL
                    INFORMATION

                

        

        
          	
                   

                  Purchaser

                
	
                   

                  Name:

                	 
	
                   

                  Social
                    Security or Taxpayer Identification Number:

                	 
	
                   

                  Residence
                    Address:

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Residence
                    Telephone Number:

                	 
	 	 	
                  (Area
                    Code)

                	
                  (Number)

                
	
                   

                  Residence
                    Facsimile Number:

                	 
	 	 	
                  (Area
                    Code)

                	
                  (Number)

                
	
                   

                  Name
                    of Business:

                	 
	
                   

                  Business
                    Address:

                	 
	 	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Business
                    Telephone Number:

                	 
	 	 	
                  (Area
                    Code)

                	
                  (Number)

                
	
                   

                  Business
                    Facsimile Number:

                	 
	 	 	
                  (Area
                    Code)

                	
                  (Number)

                	 
	
                   

                  I
                    prefer to have correspondence sent to:

                	
                   

                  [  ]  Residence

                	
                   

                  [  ]  Business

                

        

         

        

        
          
            
            

          

          
            A-3

            
              

            

          

          
            
            

          

        

         

        
          	
                   

                  E-mail
                    Address:

                	 
	
                   

                  NASD
                    Affiliation or Association, if any:

                	 
	
                  If
                    none, check here  

                	
                  [  ]

                

        

         

        

        
          	
                   

                  Spouse,
                    if Co-Owner

                
	
                   

                  Name:

                	 
	
                   

                  Social
                    Security or Taxpayer Identification Number:

                	 
	
                   

                  Residence
                    Address (if different from Purchaser’s):

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

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

                	 
	 	 	
                  (Area
                    Code)

                	
                  (Number)

                
	
                   

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

                	 
	
                   

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

                	 
	 	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

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

                	 
	 	 	
                  (Area
                    Code)

                	
                  (Number)

                
	
                   

                  I
                    prefer to have correspondence sent to:

                	
                   

                  [  ]  Residence

                	
                   

                  [  ]  Business

                
	
                   

                  NASD
                    Affiliation or Association, if any:

                	 
	
                  If
                    none, check here  

                	
                  [  ]

                	 

        

         

        V. SIGNATURE

         

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

         

        
          
            
            

          

          
            A-4

            
              

            

          

          
            
            

          

        

         

        INDIVIDUAL
          SIGNATURE PAGE

        _____________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP

        
          _____________________________

        

         

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

         

         

        
          	 	 	 
	
                  Dollar
                    Amount of Securities Applied For

                	 	
                  Date

                
	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Name
                    (Please Type or Print)

                
	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Signature

                
	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Name
                    of Spouse if Co-Owner

                
	
                   

                	
                   

                	
                  (Please
                    Type or Print)

                
	
                   

                	
                   

                	
                   

                
	
                   

                	
                   

                	
                  Signature
                    of Spouse if Co-Owner

                
	
                   

                	
                   

                	
                   

                
	
                   

                   

                

        

         

        
           

          
            	 

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

                  

          

           

        

         

        
          	 

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

                

        

         

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

        
          
            
            

          

          
            A-5

            
              

            

          

          
            
            

          

        

         

        

        
          	
                  IMPORTANT:

                	
                  Investor
                    Name: ________________________

                
	
                  Please
                    Complete

                	 

        

         

        TRUST
          QUESTIONNAIRE

         

        __________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP.

         

        _________________________

         

        Magnetech
          Integrated Services Corp

        1125
          South Walnut Street

        South
          Bend, Indiana 46679

         

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

        

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

         

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

         

          

        
          	 

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

                

        

         

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

         

        
          	 	
                   

                  [  ]

                	
                   

                  1.

                	
                   

                  (a)

                	
                   

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

                
	 	 	 	
                   

                  (b)

                	
                   

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

                
	 	 	 	
                   

                  (c)

                	
                   

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

                

        

         

        

        
          
            
            

          

          
            B-1

            
              

            

          

          
            
            

          

        

         

        

        
          	 	
                   

                  [  ]

                	
                   

                  2.

                	
                   

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

                
	 	 	 	
                   

                  (a)

                	
                   

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

                
	 	 	 	
                   

                  (b)

                	
                   

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

                
	 	 	 	
                   

                  (c)

                	
                   

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

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

                

        

         

        
          	
                  II.

                	
                  OTHER
                    CERTIFICATIONS

                

        

         

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

        

        
          	 	
                   

                  (a)

                	
                   

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

                
	 	
                   

                  (b)

                	
                   

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

                
	 	
                   

                  (c)

                	
                   

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

                
	 	
                   

                  (d)

                	
                   

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

                
	 	
                   

                  (e)

                	
                   

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

                

        

         

        ________________________

         

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

        
          
            
            

          

          
            B-2

            
              

            

          

          
            
            

          

        

        

        
          	 	
                   

                  [  ]

                	
                   

                  (i)

                	
                   

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

                
	 	
                   

                  [  ]

                	
                   

                  (ii)

                	
                   

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

                

        

         

        
          	
                  III.

                	
                  GENERAL
                    INFORMATION

                

        

         

        
          	 	
                  (a)

                	
                  PROSPECTIVE
                    PURCHASER (THE TRUST)

                

        

        
          	
                   

                  Name:

                	 
	
                   

                  Address:

                	 
	 	
                   

                  (Number
                    and Street)

                
	 
	
                  (City)

                	
                  (State)

                	
                  (Zip
                    Code)

                
	
                  Address
                    for Correspondence (if different):

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Telephone
                    Number:

                	 
	 	
                  (Area
                    Code)

                	
                  (Number)

                
	
                   

                  State
                    in which Formed:

                	 
	
                   

                  Date
                    of Formation:

                	 
	
                   

                  Taxpayer
                    Identification Number:

                	 

        

         

        
          	 	
                  (b)

                	
                  TRUSTEES
                    WHO ARE EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE
                    TRUST

                

        

        
          	
                   

                  Name(s)
                    of Trustee(s):

                	 
	
                   

                  E-mail
                    Address: 

                	 
	
                   

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

                	 
	 	
                  If
                    none, check here  

                	
                  [  ]

                

        

        
          
            
            

          

          
            B-3

            
              

            

          

          
            
            

          

        

         

        
          	
                  IV.

                	
                  ADDITIONAL
                    INFORMATION

                

        

         

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

         

        
          	
                  V.

                	
                  SIGNATURE

                

        

         

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

         

         

         

        
          
            
            

          

          
            B-4

            
              

            

          

          
            
            

          

        

         

        TRUST
          SIGNATURE PAGE

         

        _______________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP.

         

        ________________________

         

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

         

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

        

        
          	
                  Dollar
                    Amount of Securities Applied For

                	
                  Date

                	 
	 	
                  Title
                    of Trust

                	
                   

                   

                
	 	 	
                  (Please
                    Type or Print)

                
	 	
                   

                  By:

                	 
	 	 	
                  Signature
                    of Trustee

                
	 	
                   

                  Name
                    of Trustee:

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	
                   

                  By:

                	 
	 	 	
                  Signature
                    of Co-Trustee

                
	 	
                   

                  Name
                    of Co-Trustee:

                	 
	 	 	
                  (Please
                    Type or Print)

                

        

         

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

        
          
            
            

          

          
            B-5

            
              

            

          

          
            
            

          

        

         

        
          	
                  IMPORTANT:

                	
                  Investor
                    Name:_________________

                
	
                  Please
                    Complete

                	 

        

         

        PARTNERSHIP
          QUESTIONNAIRE

         

        ________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP

         

        ________________________

         

        Magnetech
          Integrated Services Corp

        3300
          North A Street Building Two

        Suite
          100

        Midland, Texas
          79705

         

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

        

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

         

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

         

        
          	
                  I.

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

                

        

        
          	 	
                   

                  [  ]

                	
                   

                  1.

                	
                   

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

                
	 	 	
                   

                  (a)

                	
                   

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

                

        

         

        ________________________

         

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

         

        

        
          
            
            

          

          
            C-1

            
              

            

          

          
            
            

          

        

         

        
          	 	 

                  (b)

                	
                   

                   

                	
                   

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

                
	 	
                   

                  [  ]

                	
                   

                  2.

                	
                   

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

                
	 	
                   

                  [  ]

                	
                   

                  3.

                	
                   

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

                

        

         

        

        
          	 

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

                

        

         

        
          	
                  II.

                	
                  OTHER
                    CERTIFICATIONS

                

        

         

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

         

        
          	 	
                  (a)

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

                

        

         

        
          	 	
                  (b)

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

                

        

         

        
          	 	
                  (c)

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

                

        

         

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

         

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

         

         

        
          
            C-2

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	
                  III.

                	
                  GENERAL
                    INFORMATION

                

        

         

        
          	 	
                  (a)

                	
                  PROSPECTIVE
                    PURCHASER (THE PARTNERSHIP)

                

        

        
          	
                   

                  Name:

                	 
	
                   

                  Principal
                    Place of Business:

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	
                  (State)                 (Zip
                    Code)           

                

        

         

        
          	
                   

                  Address
                    for Correspondence (if different):

                	 
	 	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Telephone
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 
	
                   

                  Facsimile
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 
	
                   

                  State
                    in which Formed:

                	 
	
                   

                  Date
                    of Formation:

                	 
	
                   

                  Taxpayer
                    Identification Number:

                	 
	
                   

                  Number
                    of Partners:

                	 
	
                   

                  E-mail
                    Address: 

                	 
	
                   

                  NASD
                    Affiliation or Association of the PARTNERSHIP, if any:

                	 
	 	
                  If
                    none, check
                    here    [  ]

                

        

         

        
          	 	
                  (b)

                	
                  INDIVIDUAL
                    WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE
                    PARTNERSHIP

                

        

        
          	
                   

                  Name:

                	 
	
                   

                  Position
                    or Title:

                	 

        

         

        
          	
                  IV.

                	
                  SIGNATURE

                

        

         

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

         

         

        
          
            
            

          

          
            C-3

            
              

            

          

          
            
            

          

        

         

        PARTNERSHIP
          SIGNATURE PAGE

         

        ________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP

         

        ________________________

         

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

         

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

         

        
          	 	 	 
	
                  Dollar
                    Amount of Securities Applied For

                	 	
                  Date

                	 
	 	 	 
	 	 	
                  Name
                    of Partnership

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  By:

                	 
	 	 	
                  (Signature)

                
	 	 	
                   

                  Name:

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  Title:

                	 
	 	 	
                  (Please
                    Type or Print)

                

        

         

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

        
          
            
            

          

          
            C-4

            
              

            

          

          
            
            

          

        

         

        
          	
                   

                  IMPORTANT:

                	
                   

                  Investor
                    Name: ___________

                
	
                  Please
                    Complete

                	 

        

         

        CORPORATION
          QUESTIONNAIRE

         

        ______________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP.

        
          ______________________

           

        

          

        Magnetech
          Integrated Services Corp.

        1125
          South Walnut Street

        South
          Bend, Indiana 46679

         

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

        

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

         

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

         

        
          	
                  I.

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

                

        

        
          	 	
                   

                  [  ]

                	
                   

                  1.

                	
                   

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

                
	 	 	
                   

                  (a)

                	
                   

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

                

        

         

        ________________________

         

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

        
          
            
            

          

          
            D-1

            
              

            

          

          
            
            

          

        

         

        

        
          	 	 	
                   

                  (b)

                	
                   

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

                
	 	
                   

                  [  ]

                	
                   

                  2.

                	
                   

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

                
	 	
                   

                  [  ]

                	
                   

                  3.

                	
                   

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

                

        

         

          

        
          	 

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

                

        

         

         

        
          	
                  II.

                	
                  OTHER
                    CERTIFICATIONS

                

        

         

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

         

        
          	 	
                  (a)

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

                

        

         

        
          	 	
                  (b)

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

                

        

         

        
          	 	
                  (c)

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

                

        

         

         

        
          	 	
                   

                  [  ]

                	
                   

                  (i)

                	
                   

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

                
	 	
                   

                  [  ]

                	
                   

                  (ii)

                	
                   

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

                

        

         

        

        
          
            
            

          

          
            D-2

            
              

            

          

          
            
            

          

        

         

        

        
          	 	
                   

                  [  ]

                	
                   

                  (iii)

                	
                   

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

                

        

         

         

        
          	
                  III.

                	
                  GENERAL
                    INFORMATION

                

        

         

        
          	 	
                  (a)

                	
                  PROSPECTIVE
                    PURCHASER (THE CORPORATION)

                

        

        
          	
                   

                  Name:

                	 
	
                   

                  Principal
                    Place of Business:

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	
                  (State)                 (Zip
                    Code)            

                
	
                  Address
                    for Correspondence (if different):

                	 
	 	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Telephone
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 
	
                   

                  Facsimile
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 
	
                   

                  State
                    of Incorporation:

                	 
	
                   

                  Date
                    of Formation:

                	 
	
                   

                  Taxpayer
                    Identification Number:

                	 
	
                   

                  Number
                    of Shareholders:

                	 
	
                   

                  NASD
                    Affiliation or Association of the PARTNERSHIP, if any:

                	 
	 	
                  If
                    none, check
                    here    [  ]

                

        

         

        
          	 	
                  (b)

                	
                  INDIVIDUAL
                    WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE
                    CORPORATION

                

        

        
          	
                   

                  Name:

                	 
	
                   

                  Position
                    or Title:

                	 
	
                   

                  Email
                    Address:

                	 

        

         

         

        
          	
                  IV.

                	
                  SIGNATURE

                

        

         

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

         

         

         

        
          
            
            

          

          
            D-3

            
              

            

          

          
            
            

          

        

        CORPORATION
          SIGNATURE PAGE

         

        _________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP

         

        ________________________

         

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

         

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

         

        

        
          	 	 	 
	
                  Dollar
                    Amount of Securities Applied For

                	 	
                  Date

                	 
	 	 	 
	 	 	
                  Name
                    of Corporation

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  By:

                	 
	 	 	
                  (Signature)

                
	 	 	
                   

                  Name:

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  Title:

                	 
	 	 	
                  (Please
                    Type or Print)

                

        

         

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

        
          
            
            

          

          
            D-4

            
              

            

          

          
            
            

          

        

         

        
          	
                  IMPORTANT:

                	
                  Investor
                    Name: ___________________

                
	
                  Please
                    Complete

                	 

        

         

        RETIREMENT
          PLAN QUESTIONNAIRE

         

        ___________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP.

         

        __________________________

         

        Magnetech
          Integrated Services Corp.

        1125 South
          Walnut Street

        South
          Bend, Indiana 46679

         

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

        

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

         

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

         

         

        
          	
                  I.

                	
                  PLEASE
                    CHECK ANY OF THE FOLLOWING STATEMENTS, AS
                    APPLICABLE.

                

        

         

        
          	 	
                  [  ]
                    1.

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

                

        

         

        
          	 	
                  [  ]
                    (a)

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

                

        

         

        
          	 	
                  [  ]
                    (b)

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

                

        

         

         

         

        
          
            
            

          

          
            E-1

            
              

            

          

          
            
            

          

        

        
          	 	
                  [  ]
                    (c)

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

                

        

         

        
          	 	
                  [  ]

                	
                  (i)

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

                

        

         

        
          	 	
                  [  ]

                	
                  (ii)

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

                

        

         

        
          	 	
                  [  ]

                	
                  (iii)

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

                

        

         

        
          	 	
                  [  ]
                    2.

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

                

        

         

        
          	 	
                  [  ]
                    (a)

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

                

        

         

        
          	 	
                  [  ]
                    (b)

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

                

        

         

        
          	 	
                  [  ]
                    (c)

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

                

        

         

        
           

          ____________________

          

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

          

        

        
           

          
            
              
              

            

            
              E-2

              
                

              

            

            
              
              

            

          

        

         

         

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

          

        

         

        
          	
                  II.

                	
                  OTHER
                    CERTIFICATIONS

                

        

         

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

         

        
          	 	
                  (a)

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

                

        

         

        
          	 	
                  (b)

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

                

        

         

        
          	 	
                  (c)

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

                

        

         

        
          	 	
                  [  ]
                    (i)

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

                

        

         

        
          	 	
                  [  ]
                    (ii)

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

                

        

         

         

        
          	
                  III.

                	
                  GENERAL
                    INFORMATION

                

        

         

        
          	 	
                  (a)

                	
                  PROSPECTIVE
                    PURCHASER (THE RETIREMENT PLAN)

                

        

         

        

        
          	
                   

                  Name:

                	 
	
                   

                  Address:

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	
                  (State)                 (Zip
                    Code)            

                
	
                  Address
                    for Correspondence (if different):

                	 
	 	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Telephone
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 

        

         

         

        
          
            
            

          

          
            E-3

            
              

            

          

          
            
            

            
              	
                      Address
                        for Correspondence (if different):

                    	 
	 	 	
                      (Number
                        and Street)

                    
	 
	
                      (City)

                    	 	
                      (State)

                    	
                      (Zip
                        Code)

                    
	
                       

                      Telephone
                        Number:

                    	 
	 	 	
                      (Area
                        Code)

                    	 	
                      (Number)

                    	 

            

          

        

        
          	
                   

                  Telephone
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 

        

        
          
            	
                     

                    Facsimile
                      Number:

                  	 
	 	 	
                    (Area
                      Code)

                  	 	
                    (Number)

                  	 
	
                     

                    State
                      in which Formed:

                  	 
	
                     

                    Date
                      of Formation:

                  	 
	
                     

                    Taxpayer
                      Identification Number:

                  	 

          

        

         

        
          	 	
                  (b)

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

                

        

        
          	
                   

                  Name:

                	 
	
                   

                  Position
                    or Title:

                	 
	
                   

                  Email
                    Address:

                	 

        

         

        
          	
                  IV.

                	
                  ADDITIONAL
                    INFORMATION

                

        

         

         

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

        

         

         

        
          	
                  V.

                	
                  SIGNATURE

                

        

         

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

         

         

        
          
            
            

          

          
            E-4

            
              

            

          

          
            
            

          

        

         

        RETIREMENT
          PLAN SIGNATURE PAGE

         

         _________________________

         

         MAGNETECH
          INTEGRATED SERVICES CORP.

         

         ________________________

         

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

         

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

         

        

        
          	 	 	 
	
                  Dollar
                    Amount of Securities Applied For

                	 	
                  Date

                	 
	 	 	 
	 	 	
                  Name
                    of Retirement Plan

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  By:

                	 
	 	 	
                  (Signature)

                
	 	 	
                   

                  Name:

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  Title:

                	 
	 	 	
                  (Please
                    Type or Print)

                

        

         

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

        
          
            
            

          

          
            E-5

            
              

            

          

          
            
            

          

        

         

        

        
          	
                  IMPORTANT:

                	
                  Investor
                    Name: ___________________

                
	
                  Please
                    Complete

                	 

        

         

        LIMITED
          LIABILITY COMPANY QUESTIONNAIRE

         

        ______________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP.

         

        ______________________

         

        Magnetech
          Integrated Services Corp.

        1125
          South Walnut Street

        South
          Bend, Indiana 46679

         

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

        

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

         

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

         

        
          	
                  I.

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

                

        

         

        
          	 	
                  [  ]
                    1.

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

                

        

         

        
          	 	
                  (a)

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

                

        

         

        ____________________

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

         

         

        
          
            
            

          

          
            F-1

            
              

            

          

          
            
            

          

        

        
          	 	
                  (b)

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

                

        

         

        
          	 	
                  [  ]
                    2.

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

                

        

         

        
          	 	
                  [  ]
                    3.

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

                

        

         

        
          	 	
                  [  ]
                    4.

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

                

        

         

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

          

        

         

         

         

        
          	
                  II.

                	
                  OTHER
                    CERTIFICATIONS

                

        

         

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

         

        
          	 	
                  (a)

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

                

        

         

        
          	 	
                  (b)

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

                

        

         

        
          	 	
                  (c)

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

                

        

         

        
          	 	
                  [  ]
                    (i)

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

                

        

         

         

        
          
            
            

          

          
            F-2

            
              

            

          

          
            
            

          

        

         

        
          	 	
                  [  ]
                    (ii)

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

                

        

         

        
          	
                  III.

                	
                  GENERAL
                    INFORMATION

                

        

         

        
          	 	
                  (a)

                	
                  PROSPECTIVE
                    PURCHASER (THE LIMITED LIABILITY
                    COMPANY)

                

        

        
          	
                   

                  Name:

                	 
	
                   

                  Principal
                    Place of Business:

                	 
	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	
                  (State)                 (Zip
                    Code)            

                
	
                  Address
                    for Correspondence (if different):

                	 
	 	 	
                  (Number
                    and Street)

                
	 
	
                  (City)

                	 	
                  (State)

                	
                  (Zip
                    Code)

                
	
                   

                  Telephone
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 
	
                   

                  Facsimile
                    Number:

                	 
	 	 	
                  (Area
                    Code)

                	 	
                  (Number)

                	 
	
                   

                  E-mail
                    Address:

                	 
	
                   

                  State
                    of Formation:

                	 
	
                   

                  Date
                    of Formation:

                	 
	
                   

                  Taxpayer
                    Identification Number:

                	 
	
                   

                  Number
                    of Members:

                	 
	
                   

                  NASD
                    Affiliation or Association of the PARTNERSHIP, if any:

                	 
	 	
                  If
                    none, check
                    here    [  ]

                

        

         

        
          	 	
                  (b)

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

                

        

        
          	
                   

                  Name:

                	 
	
                   

                  Position
                    or Title:

                	 

        

         

        
          	
                  IV.

                	
                  SIGNATURE

                

        

         

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

         

         

         

        
          
            
            

          

          
            F-4

            
              

            

          

          
            
            

          

        

        LIMITED
          LIABILITY COMPANY SIGNATURE PAGE

         

        _________________________

         

        MAGNETECH
          INTEGRATED SERVICES CORP

         

        ________________________

         

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

         

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

         

        

        
          	 	 	 
	
                  Dollar
                    Amount of Securities Applied For

                	 	
                  Date

                	 
	 	 	 
	 	 	
                  Name
                    of LIMITED LIABILITY COMPANY

                
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  By:

                	 
	 	 	
                  (Signature)

                
	 	 	
                   

                  Name:

                	 
	 	 	
                  (Please
                    Type or Print)

                
	 	 	
                   

                  Title:

                	 
	 	 	
                  (Please
                    Type or Print)

                

        

         

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

         

         

        F-5

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    
      

        Schedule
          2(c)

        

        Capitalization

        

        

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

        

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

        

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

        

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

        

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

        

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

        

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

        

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

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Section
          2(d)

        

        Subsidiaries
          and Investments

        

        
          	1.  	
                  HK
                    Engine Components, LLC

                

        

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

                

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Schedule
          2(e)

        

        Financial
          Statements

        

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

        

        Magnetech
          Integrated Services Corp. and Subsidiaries

        Condensed
          Consolidated Balance Sheet

        DECEMBER
          31, 2004

        

        
          	 ASSETS	 	 	 
	 	 	
                  2004

                	 
	
                  CURRENT
                    ASSETS

                	 	 	 	 	 
	
                  Cash

                	 	 	 	 	
                  $

                	
                  629,039

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

                	 	 	 	 	 	
                  5,394,254
                    

                	 
	
                  Inventories

                	 	 	 	 	 	
                  4,240,838
                    

                	 
	
                  Prepaid
                    expenses 

                	 	 	 	 	 	
                  232,448
                    

                	 
	
                  Other
                    Current Assets

                	 	 	 	 	 	
                  316,814
                    

                	 
	
                  Total
                    current assets

                	 	 	 	 	 	
                  10,813,393
                    

                	 
	 	 	 	 	 	 	 	 
	
                  PROPERTY
                    AND EQUIPMENT, net

                	 	 	 	 	 	
                  2,340,785
                    

                	 
	 	 	 	 	 	 	 	 
	
                  OTHER
                    ASSETS

                	 	 	 	 	 	 	 
	
                  Deposits

                	 	 	 	 	 	
                  43,538
                    

                	 
	
                  Patents
                    and trademarks, net

                	 	 	 	 	 	
                  3,159
                    

                	 
	
                  Covenant
                    not-to-compete, net

                	 	 	 	 	 	
                  0
                    

                	 
	
                  Other
                    assets

                	 	 	 	 	 	
                  32,112
                    

                	 
	
                  Total
                    other assets

                	 	 	 	 	 	
                  78,809
                    

                	 
	 	 	 	 	 	 	 	 
	
                  Total
                    Assets

                	 	 	 	 	
                  $

                	
                  13,232,987

                	 
	 	 	 	 	 	 	 	 
	
                   LIABILITIES
                    AND STOCKHOLDER'S
                    EQUITY

                	 	 	 	 	 	 	 
	
                  CURRENT
                    LIABILITIES

                	 	 	 	 	 	 	 
	
                  Cash
                    overdraft

                	 	 	 	 	
                  $

                	
                  520,125

                	 
	
                  Notes
                    payable, bank

                	 	 	 	 	 	
                  2,509,334
                    

                	 
	
                  Current
                    portion of long term debt

                	 	 	 	 	 	
                  0
                    

                	 
	
                  Advances
                    from Stockholder

                	 	 	 	 	 	
                  121,500
                    

                	 
	
                  Accounts
                    payable

                	 	 	 	 	 	
                  3,208,589
                    

                	 
	
                  Accrued
                    expenses

                	 	 	 	 	 	
                  724,493
                    

                	 
	
                  Other
                    Current Liabilities

                	 	 	 	 	 	
                  166,613
                    

                	 
	
                  Total
                    current liabilities

                	 	 	 	 	 	
                  7,250,654
                    

                	 
	 	 	 	 	 	 	 	 
	
                  LONG
                    TERM LIABILITIES

                	 	 	 	 	 	 	 
	
                  Long
                    term debt, bank

                	 	 	 	 	 	
                  0
                    

                	 
	
                  Long
                    term debt, Stockholder

                	 	 	 	 	 	
                  3,000,000
                    

                	 
	
                  Total
                    long term liabilities

                	 	 	 	 	 	
                  3,000,000
                    

                	 
	 	 	 	 	 	 	 	 
	
                  Total
                    liabilities

                	 	 	 	 	 	
                  10,250,654
                    

                	 
	 	 	 	 	 	 	 	 
	
                  COMMITMENTS

                	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
                  STOCKHOLDER'S
                    EQUITY

                	 	 	 	 	 	 	 
	
                  Capital
                    stock (note 1)

                	 	 	 	 	 	
                  4,300,000
                    

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

                	 	 	 	 	 	 	 
	
                  20,000,000
                    preferred shares, nil par value

                	 	 	 	 	 	 	 
	
                  Issued
                    and outstanding at December 31, 2004:

                	 	 	 	 	 	 	 
	
                  97,000,000
                    common shares

                	 	 	 	 	 	 	 
	
                  Additional
                    paid in capital

                	 	 	 	 	 	
                  2,630,561
                    

                	 
	
                  Accumulated
                    deficit

                	 	 	 	 	 	
                  (3,948,228

                	
                  )

                
	
                  Total
                    Stockholder's equity

                	 	 	 	 	 	
                  2,982,333
                    

                	 
	 	 	 	 	 	 	 	 
	
                  Total
                    Liabilities and Stockholder's Equity

                	 	 	 	 	
                  $

                	
                  13,232,987

                	 

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Schedule
          2(e)

         

        Magnetech
          Integrated Services Corp. and Subsidiaries

        Condensed
          Consolidated Statements of Operations

        For
          the year ended December 31, 2004

        

        
          	
                  REVENUES

                	 	 	 
	
                  Product
                    sales

                	 	
                  $

                	
                  6,816,890

                	 
	
                  Service
                    revenue

                	 	 	
                  22,134,229
                    

                	 
	
                  Total
                    revenues

                	 	 	
                  28,951,119
                    

                	 
	 	 	 	 	 
	
                  COST
                    OF REVENUES

                	 	 	 	 
	
                  Product
                    sales

                	 	 	
                  4,787,498
                    

                	 
	
                  Service
                    revenue

                	 	 	
                  17,768,438
                    

                	 
	
                  Total
                    cost of revenues

                	 	 	
                  22,555,936
                    

                	 
	 	 	 	 	 
	
                  Gross
                    profit 

                	 	 	
                  6,395,183
                    

                	 
	 	 	 	 	 
	
                  Selling,
                    general and administrative expenses

                	 	 	
                  6,120,937
                    

                	 
	 	 	 	 	 
	
                  Income
                    (Loss) from operations

                	 	 	
                  274,246
                    

                	 
	 	 	 	 	 
	
                  Other
                    income (expense)

                	 	 	 	 
	
                  Interest
                    expense

                	 	 	
                  (182,793

                	
                  )

                
	
                  Other
                    income

                	 	 	
                  12,067
                    

                	 
	 	 	 	
                  (170,726

                	
                  )

                
	 	 	 	 	 
	
                  NET
                    INCOME (LOSS)

                	 	
                  $

                	
                  103,520

                	 

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

          Schedule
            2(e)

           

          Magnetech
            Integrated Services Corp. and Subsidiaries

          Condensed
            Consolidated Statements of Cash Flows

          Year
            Ended December 31, 2004

          

          
            	 	 	 2004	 
	
                    OPERATING
                      ACTIVITIES

                  	 	 	 
	
                    Net
                      income (loss)

                  	 	
                    $

                  	
                    103,520

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

                  	 	 	 	 
	
                    Depreciation
                      and amortization

                  	 	 	
                    463,910
                      

                  	 
	
                    Bad
                      debt

                  	 	 	
                    20,924
                      

                  	 
	
                    Loss
                      (gain) on sale of assets

                  	 	 	
                    (1,800

                  	
                    )

                  
	
                    Non-cash
                      interest/rent

                  	 	 	
                    0
                      

                  	 
	
                    Changes
                      in:

                  	 	 	 	 
	
                    Accounts
                      receivable

                  	 	 	
                    (2,251,698

                  	
                    )

                  
	
                    Inventories

                  	 	 	
                    (1,467,212

                  	
                    )

                  
	
                    Prepaid
                      expenses 

                  	 	 	
                    (83,815

                  	
                    )

                  
	
                    Deposits
                      and other current assets

                  	 	 	
                    (327,226

                  	
                    )

                  
	
                    Accounts
                      payable

                  	 	 	
                    1,240,463
                      

                  	 
	
                    Accrued
                      expenses

                  	 	 	
                    269,457
                      

                  	 
	 	 	 	 	 
	
                    Net
                      cash utilized by operating activities

                  	 	 	
                    (2,033,477

                  	
                    )

                  
	 	 	 	 	 
	
                    INVESTING
                      ACTIVITIES

                  	 	 	 	 
	
                    Acquisition
                      of property and equipment

                  	 	 	
                    (929,981

                  	
                    )

                  
	
                    Proceeds
                      from disposal of property and equipment

                  	 	 	
                    1,800
                      

                  	 
	 	 	 	 	 
	
                    Net
                      cash utilized by investing activities

                  	 	 	
                    (928,181

                  	
                    )

                  
	 	 	 	 	 
	
                    FINANCING
                      ACTIVITIES

                  	 	 	 	 
	 	 	 	 	 
	
                    Cash
                      overdraft

                  	 	 	
                    43,088
                      

                  	 
	
                    Short
                      term borrowings, net

                  	 	 	
                    963,019
                      

                  	 
	
                    Advances
                      from Stockholder

                  	 	 	
                    101,121
                      

                  	 
	
                    Repayment
                      of long term debt, bank

                  	 	 	
                    (200,000

                  	
                    )

                  
	
                    Issue
                      of Common Stock

                  	 	 	
                    2,676,606
                      

                  	 
	
                    Borrowings
                      from Stockholder, long term debt

                  	 	 	
                    0
                      

                  	 
	 	 	 	 	 
	
                    Net
                      cash provided by financing activities

                  	 	 	
                    3,583,834
                      

                  	 
	 	 	 	 	 
	
                    INCREASE
                      IN CASH

                  	 	 	
                    622,176
                      

                  	 
	 	 	 	 	 
	
                    Cash,
                      beginning of year

                  	 	 	
                    6,863
                      

                  	 
	 	 	 	 	 
	
                    Cash,
                      end of year

                  	 	
                    $

                  	
                    629,039

                  	 

          

          

        

        

        
          	
                  SUPPLEMENTAL
                    DISCLOSURES OF CASH FLOW INFORMATION:

                	 	 	 
	 	 	 	 
	
                  Cash
                    paid during the year for:

                	 	 	 
	 	 	 	 
	
                  Interest

                	 	
                  $

                	
                  119,845

                	 
	 	 	 	 	 
	
                  SUPPLEMENTAL
                    DISCLOSURES OF NON-CASH FINANCING ACTIVITIES:

                	 	 	 	 
	
                  Credits
                    to additional paid in capital for interest/rent

                	 	
                  $

                	
                  63,000

                	 
	 	 	 	 	 
	
                  Stockholder
                    loan converted to additional paid in capital

                	 	
                  $

                	
                  1,740,703

                	 

        

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Schedule
          2(f)

        

        Absence
          of Changes

        

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

                

        

        

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

                

        

        

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Schedule
          2(g)

        

        Title

        

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

        

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

        

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

        

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

        

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

        

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

        

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

        

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

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Schedule
          2(h)

        

        Proprietary
          Rights

        

        

        U.S.
          Patent No. 6,412,837 (U.S. Serial No. 09/749,366) is not in the name of
          the
          Company. The Company is attempting to obtain an assignment of the patent
          from
          its owners: Carlton G. Smith, Steven B. Begyn, David M. Futa, Lance E.
          Long and
          Jack Long. The Company is not currently using this patent, but may do so
          in the
          future.Form of Convertible Redeemable Preferred Stock Purchase Agreement between Magnetech
      Industrial Services, Inc. and the purchasers scheduled therein

     

    Exhibit
      10.3

    
      	
               

               

               

               

              CONVERTIBLE
                REDEEMABLE PREFERRED STOCK PURCHASE AGREEMENT

               

               

               

              Between

               

               

               

              MAGNETECH
                INDUSTRIAL SERVICES, INC.

               

               

              and

               

               

              THE
                PURCHASER(S) LISTED ON

               

               

              SCHEDULE
                1 HERETO

               

              February
                __, 2004

               

               

               

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    THIS
      CONVERTIBLE REDEEMABLE PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”)
      is
      made and entered into as of February __, 2004, between Magnetech Industrial
      Services, Inc, 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 Series A Convertible Redeemable Preferred Stock, (the
“Series A
      Preferred Stock”),
      with
      a Stated Value of one dollar ($1) per share, which is part of a sale of Series
      A
      Preferred Stock with an aggregate Stated Value of seven hundred and fifty
      thousand dollars ($750,000).

     

    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.

    “Articles
      of Amendment”
      means
      the Amendment of the Company’s Articles of Incorporation that authorizes the
      Series A Preferred Stock annexed as Exhibit
      A
      hereto.

    

    “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).

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    “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.

    

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

    

    “Conversion
      Date”
      shall
      have the meaning set forth in the Articles of Amendment.

    

    “Conversion
      Price”
      shall
      have the meaning set forth in the Articles of Amendment.

    “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
      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.

    

    “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).

    “NEWCO”
      shall
      mean the to-be-formed parent entity 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.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

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

    

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

    

    “Redemption
      Price”
      shall
      mean an amount equal to the Stated Value of the Shares outstanding that are
      subject to redemption.

    “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).

    

    “SEC”
      means
      the Securities and Exchange Commission.

    

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

    

    “Series A
      Preferred Stock”
      shall
      have the meaning set forth in the recital.

    

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

    

    “Stated
      Value”
      means
      the sum of One dollar ($1) per Share or seven hundred and fifty thousand dollars
      ($750,000) for all of the Shares.

    

    “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 CONVERTIBLE PREFERRED 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 the Company’s Series A
      Preferred Stock (the “Shares”). The Series A Preferred Stock shall have the
      respective rights, preferences and privileges as set forth in the Articles
      of
      Amendment to be filed by the Company with the Secretary of State of Indiana
      prior to the Closing Date.

     

    (b) The
      purchase price for each Share shall be One Dollar ($1) (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.”

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    2.2 Execution
      and Delivery of Documents; The Closing.

     

    (a) The
      Closing of the purchase and sale of the Shares (the “Closing”) shall take place
      simultaneously with the execution and delivery of this Agreement (the “Closing
      Date”). On the Closing Date,

     

    (i) the
      Company shall execute and deliver to the Purchaser the certificates representing
      the Shares, which Shares shall have the respective rights, preferences and
      privileges as set forth in the Articles of Amendment annexed as Exhibit A
      hereto;
      and 

     

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

     

     

    SECTION
      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 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, 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 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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    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 the Series A Preferred Stock have been issued as of the date
      hereof. 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 will cause NEWCO at the time of its
      incorporation to reserve out of its authorized and unissued common stock solely
      for the purpose of issuance upon conversion of Series A Preferred Stock
      as
      provided in the Articles of Amendment, free from preemptive rights or any other
      actual contingent purchase rights of persons other than the Holders of
      Series A Preferred Stock, such number of shares of NEWCO common stock
      as
      shall be issuable upon the conversion of the aggregate Stated Value of all
      outstanding Series A Preferred Stock. When issued in accordance with
      the
      terms hereof, the Shares will be duly authorized, validly issued, fully paid
      and
      non-assessable. The Company has no equity or equity equivalent security
      outstanding that is convertible into shares of common stock of
      NEWCO.

     

    (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),
      neither
      the Company nor any Subsidiary is required to obtain any consent, 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    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, except for the filing
      of
      the Articles of Amendment with respect to the Series A Preferred Stock,
      which filing will be made with the Secretary of State of the State of Indiana
      prior to the Closing Date (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 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 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 regu-lation of any governmental authority
      which could (individually or in the aggregate) (x) adversely affect the
      legality, validity or enforceability of this Agree-ment, (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
      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 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
      

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    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 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 pre-sent 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 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    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 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 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 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 the Company, Purchaser acknowledges
      that the Company has not 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

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    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
      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.

     

    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 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    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 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 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    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 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.

     

    4.8 Notice
      and Consultation Before Securities Issuances..
      Until
      such time as Purchaser shall have converted all of the Shares in a Private
      Placement Offering of NEWCO common stock in the aggregate amount of no less
      than
      three million dollars ($3,000,000), by NEWCO, the Company shall not offer or
      issue any equity, equity equivalent security or debt 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    with
      a
      floating conversion price, or any equity lines of credit (the “New Securities”),
      without first giving thirty (30) days notice thereof to the Purchaser and
      thereafter consulting in good faith with the Purchaser concerning such issuance.
      After such consultation between the Company and the Purchaser, the Company
      may
      offer or sell the New Securities on such terms and conditions as the Company
      deems appropriate.

     

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

     

    4.10 Redemption
      Restrictions.
      Notwithstanding any provision of this Agreement to the contrary, if any
      redemption of the Shares otherwise required under this Agreement or the Articles
      of Amendment, would be prohibited in the absence of consent from any lender
      to
      the Company or any of the Subsidiaries, or by the holders of any class of
      securities of the Company, 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 4.10 shall be construed as a waiver by the
      Purchaser of any rights they 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.

     

    4.11 Conversion
      Procedures.
      The
      Articles of Amendment sets forth the procedures, including the forms of Notice
      of Conversion to be provided upon conversion and such other information and
      instructions as may be reasonably necessary to enable the Purchaser or its
      permitted transferee(s) to exercise the right of conversion smoothly and
      expeditiously. 

     

     

    SECTION
      V 

     

    EVENT
      OF DEFAULT, LEGAL FEES AND DEFAULT INTEREST RATE

     

    (a) 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.

     

    (b) Whenever
      the Company is obligated to purchase or redeem the Purchaser’s Shares under any
      provision of this Agreement or the Articles of Amendment, and the Redemption
      Price is not paid to the Purchaser by the tenth (10th)
      day
      after the Redemption Price is due and payable to the Purchaser, the Company
      shall thereafter pay interest to the Purchaser on the unpaid portion of the
      Redemption Price at the rate of ten percent (10%) per annum, until the
      Redemption Price is paid in full.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (c) “Event
      of
      Default”, wherever used herein, means the occurrence of any one of the following
      events prior to the conversion of Purchaser’s Shares into shares of common stock
      of NEWCO:

     

    (i) the
      Company shall fail to observe or perform any material covenant, agreement or
      warranty contained in Articles of Amendment, 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;

     

    (ii) 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; 

     

    (iii) 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 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,

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    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
                Industrial Services, Inc 

            
	 	 	
              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.

     

    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 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.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    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
      representa-tions 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 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 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    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
                Industrial Services, Inc

            
	 	 	 
	 	
              By:

            	 /s/
              John A. Martell
	 	
              Name:

            	 John
              A. Martell
	 	
              Title:

            	 President
&
              CEO
	 	 	 
	 	 	 
	 	 	 
	 	
              Purchaser:

            
	 	 
	 	
              By:

            	 
	 	
              Name:

            	 
	 	
              Title:

            	 

    

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      

        Exhibit
          A

        

        

        ARTICLES
          OF AMENDMENT

        TO
          THE ARTICLES OF INCORPORATION

        OF

        MAGNETECH
          INDUSTRIAL SERVICES, INC.

        

        1. NAME.
          The
          name of the corporation is MAGNETECH INDUSTRIAL SERVICES, INC. (the
          "Corporation").

         

        2. TEXT
          OF AMENDMENT.
          Article
          VI of the Articles of Incorporation of the Corporation is hereby amended
          and
          restated in its entirety to read as follows:

         

        ARTICLE
          VI

        Authorized
          Shares of Stock

         

        Section
          1. Number
          of Shares.
          The
          Corporation is authorized to issue a total of 1,010,000 shares of stock,
          divided
          into the following classes: (a) 10,000 shares of Common Stock, with no
          par
          value; and (b) 1,000,000 shares of Preferred Stock.

         

        Section
          2. Terms
          of Common Stock.
          The
          Common Stock shall have the following rights, restrictions, limitations
          and
          preferences:

         

        (a). No
          Preference.
          None of
          the shares of Common Stock shall be entitled to any preference, and each
          share
          of Common Stock shall be equal to every other share of Common Stock in
          every
          respect.

         

        (b). Dividends.
          After
          payment or declaration of all dividends on any shares having a priority
          over the
          Common Stock as to dividends, dividends on the shares of Common Stock may
          be
          declared and paid, but only when and as determined by the Board of Directors.
          Shares of Common Stock shall share equally as to any dividends
          declared.

         

        (c). Rights
          on Liquidation.
          On any
          liquidation, dissolution or winding up of the Corporation, after there
          shall
          have paid to or set aside for the holders of any shares having priority
          over the
          Common Stock the full preferential amounts, if any, to which they are
          respectively entitled, the holders of the Common Stock shall be entitled
          to
          receive pro rata all the remaining assets of the Corporation available
          for
          distribution to holders of its capital stock in accordance with Section
          4(f)(ii).

         

        (d). Voting.
          Each
          shareholder of Common Stock shall have the right to one (1) vote for each
          share
          of Common Stock standing in his or her name on the books of the Corporation
          on
          each matter submitted to a vote at any meeting of the shareholders.

         

        Section
          3. Terms
          of Preferred Stock.
          The
          Preferred Stock authorized by these Articles of Incorporation (“Articles”) may
          be issued from time to time in one or more series. Seven Hundred Fifty
          Thousand
          (750,000) shares of the 

         

        
          
             

          

          
            1

            
              

            

          

          
             

          

        

        Preferred
          Stock shall be designated as Series A Convertible Redeemable Preferred
          Stock
          (the “Series A Preferred Stock”) and the stated value of the Series A
          Preferred Stock shall be U.S. $1 per share (the “Stated Value”). The rights,
          preferences, privileges and restrictions granted to and imposed on the
          Series A
          Preferred Stock are set forth in Section 4 of this Article VI. Subject
          to
          compliance with any applicable protective voting rights that have been
          or may be
          granted to the Preferred Stock or series thereof in these Articles, as
          the same
          may be amended from time to time (“Protective
          Provisions”),
          the
          Board of Directors is authorized to provide for the issuance of additional
          shares of Preferred Stock in series by filing an amendment to the Articles
          pursuant to the applicable law, to establish from time to time the number
          of
          shares to be included in each such series, and to fix the designation,
          powers,
          preferences and rights of the shares of each such series and the qualifications,
          limitations or restrictions thereof. 

         

        Section
          4. Terms
          of Series A Preferred Stock.
          The
          Series A Preferred Stock shall have the rights, restrictions, limitations
          and
          preferences set forth in this Section 4.

         

        (a). Certain
          Definitions.
          For
          purposes of this Section 4, the
          following terms have the meanings specified or referred to in this Section
          4(a):

         

        (i). “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 Common Stock f the Corporation.

         

        (ii). “NewCo
          Common Stock”
          means
          the common stock of NewCo.

         

        (iii). “Issuance
          Date”
          means
          the date of the Closing under the Convertible Preferred Stock Purchase
          Agreement
          with respect to the initial issuance of the Series A Preferred
          Stock.

         

        (iv). “NewCo”means
          an
          entity
          to be formed by the Corporation or the holders of the Common Stock of the
          Corporation to acquire all of the issued and outstanding Common Stock of
          the
          Corporation.

         

        (v). “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.

         

        (vi). “Purchase
          Agreement”
          means
          the Convertible Redeemable Preferred Stock Purchase Agreement dated February
          __,
          2004, by and between the Corporation and the purchasers set forth in
          Schedule 1 thereto (the “Purchaser”).

         

        
          
             

          

          
            2

            
              

            

          

          
             

          

        

        (b). Dividends.
          The
          holder or holders of the shares of Series A Preferred Stock as they
          appear
          on the stock records of the Corporation (“Holder” or “Holders”) shall not be
          entitled to receive any dividends.

         

        (c).  Conversion.

         

        (i). The
          entire amount of issued and outstanding shares of Series A Preferred
          Stock
          shall be convertible into shares of NewCo Common Stock upon the completion
          of a
          Private Placement Offering by NewCo of NewCo Common Stock in the aggregate
          amount of no less than three million dollars ($3,000,000) (the “PPO”). Any
          conversion under this Section 3(c)(i) shall entitle a Holder to
          receive
          6.333333
          shares
          of
          NewCo Common Stock for each share of Series A Preferred Stock (the
          “Conversion Price”). Upon the entire conversion of the Series A Preferred
          Stock, the Series A Preferred Stock shall be returned to the Corporation
          for cancellation. 

         

        (ii). The
          Conversion Date shall be the date of completion of the PPO, as advised
          to the
          Corporation by the placement agent. Within 10 business days of the Conversion
          Date, the Holders of Series A Preferred Stock agree to convert their shares
          of
          Series A Preferred Stock into shares of NewCo Common Stock. Each Holder
          shall
          surrender the certificate or certificates for the shares of Series A Preferred
          Stock owned by such Holder at the office of the Corporation’s transfer agent (or
          at the principal office of the Corporation if the Corporation serves as
          its own
          transfer agent), together with written acceptance that such Holder agrees
          to
          convert all of his or her shares of the Series A Preferred Stock represented
          by
          such certificate or certificates. The Holder shall effect conversion by
          sending
          the form of conversion notice attached hereto as Appendix
          I
          (the
“Notice of Conversion”). If required by the Corporation, certificates
          surrendered for conversion shall be endorsed or accompanied by a written
          instrument or instruments of transfer, in form satisfactory to the Corporation,
          duly executed by the registered holder or his, her, or its attorney duly
          authorized in writing. The Corporation, as soon as practicable after the
          Conversion Date, shall cause to be issued and delivered at such office
          to such
          Holder, a certificate or certificates for the number of shares of NewCo
          Common
          Stock to which such Holder shall be entitled. No fractional shares of NewCo
          Common Stock shall be issuable upon a conversion hereunder and the number
          of
          shares to be issued shall be rounded up to the nearest whole share. If
          a
          fractional share interest arises upon any conversion hereunder, the Corporation
          shall cause the elimination of such fractional share interest by causing
          to be
          issued to Holder an additional full share of NewCo Common Stock. 

         

        Not
          later
          than ten (10) business days after the Corporation’s receipt of the Notice of
          Conversion, the Corporation will cause NewCo to deliver to the Holder a
          certificate or certificates representing the number of shares of 

         

        
          
             

          

          
            3

            
              

            

          

          
             

          

        

        NewCo
          Common Stock being acquired upon the conversion of the Series A
          Preferred
          Stock provided,
          however,
          that
          the Corporation shall not be obligated to issue certificates evidencing
          the
          shares of NewCo Common Stock issuable upon conversion of any Series A
          Preferred Stock until the shares or the Series A Preferred Stock
          are either
          delivered for conversion to the Corporation or any transfer agent for the
          Series A Preferred Stock or NewCo Common Stock, or the Holder notifies
          the
          Corporation that such Series A Preferred Stock have been lost, stolen
          or
          destroyed and provides an agreement reasonably acceptable to the Corporation
          to
          indemnify the Corporation and NewCo from any loss incurred by it in connection
          therewith.

         

        (iii). In
          case
          of any reclassification of the Common Stock that would modify or invalidate
          the
          rights and preferences of the Series A Preferred Stock as provided in this
          Section 4, any consolidation or merger of the Corporation with or into
          another
          person, the sale or transfer of all or substantially all of the assets
          of the
          Corporation or any compulsory share exchange pursuant to which the Common
          Stock
          is converted into other securities, cash or property, all of the issued
          and
          outstanding shares of Series A Preferred Stock shall be converted
          into an
          amount of shares of Common Stock of the Corporation equal to four and
          three-fourths percent (4.75%) of the total issued and outstanding Common
          Stock
          of the Corporation after such conversion. The conversion of the Series
          A
          Preferred Stock shall be deemed to occur immediately prior to such
          reclassification, consolidation, merger, sale, transfer or share exchange.
          Upon
          the conversion of the Series A Preferred Stock, the Holders shall
          return
          all of the Series A Preferred Stock to the Corporation for
          cancellation.

         

        (iv). If
          at any
          time conditions shall arise by reason of action or inaction taken by the
          Corporation which in the opinion of the Board of Directors are not adequately
          covered by the other provisions hereof and which might materially and adversely
          affect the rights of the Holders of Series A Preferred Stock (different
          than or distinguished from the effect generally on rights of holders of
          any
          class of the Corporation’s capital stock), the Corporation shall, at least
          thirty (30) calendar days prior to the effective date of such action, mail
          a
          written notice to each Holder of Series A Preferred Stock briefly
          describing the action contemplated and the material adverse effects of
          such
          action on the rights of such Holders, and an appraiser selected by the
          Holders
          of majority of the outstanding Series A Preferred Stock shall give
          its
          opinion as to the adjustment, if any (not inconsistent with the standards
          established in this Article VI), of the Conversion Price (including, if
          necessary, any adjustment as to the securities into which Series A
          Preferred Stock may thereafter be convertible) and any distribution which
          is or
          would be required to preserve, without diluting, the rights of the Holders
          of
          Series A Preferred Stock; provided,
          however,
          that
          the Corporation, after receipt of the 

         

        
          
             

          

          
            4

            
              

            

          

          
             

          

        

        determination
          by such appraiser, shall have the right to select an additional appraiser,
          in
          which case the adjustment shall be equal to the average of the adjustments
          recommended by each such appraiser. The Board of Directors shall make the
          adjustment recommended forthwith upon the receipt of such opinion or opinions
          or
          the taking of any such action contemplated, as the case may be; provided,
          however,
          that no
          such adjustment of the Conversion Price shall be made which in the opinion
          of
          the appraiser(s) giving the aforesaid opinion or opinions would result
          in an
          increase of the Conversion Price.

         

        (v). The
          Corporation covenants that it will cause NewCo, at the time of its
          incorporation, to reserve and keep available out of the authorized and
          unissued
          NewCo Common Stock, solely for the purpose of issuance upon conversion
          of
          Series A Preferred Stock as herein provided, free from preemptive
          rights or
          any other actual contingent purchase rights of persons other than the Holders
          of
          Series A Preferred Stock, such number of shares of NewCo Common
          Stock as
          shall be issuable upon the conversion of the aggregate Stated Value of
          all
          outstanding Series A Preferred Stock.
          The
          Corporation covenants that all shares of NewCo Common Stock that shall
          be so
          issuable shall, upon issue, be duly and validly authorized, issued and
          fully
          paid and nonassessable.

         

        (vi). The
          issuance of certificates for shares of NewCo Common Stock on conversion
          of
          Series A Preferred Stock shall be made without charge to the Holder
          for any
          documentary stamp or similar taxes that may be payable in respect of the
          issue
          or delivery of such certificate, provided that neither the Corporation
          nor NewCo
          shall be required to pay any tax that may be payable in respect of any
          transfer
          involved in the issuance and delivery of any such certificate upon conversion
          in
          a name other than that of the Holder, and neither the Corporation nor NewCo
          shall be required to issue or deliver such certificates unless or until
          the
          Person or Persons requesting the issuance thereof shall have paid to the
          Corporation the amount of such tax or shall have established to the satisfaction
          of the Corporation that such tax has been paid.

         

        (d). Mandatory
          Redemption.

         

        (i). If
          the
          Corporation has not completed a PPO within one (1) year from the Issuance
          Date
          of the Series A Preferred Stock, the Corporation shall redeem all of the
          Series
          A Preferred Stock owned by each Holder at a price equal pay to the Stated
          Value
          per share for any and all shares of such Series A Preferred Stock, plus
          interest
          on such amount at an annual rate of five and three eighths percent (5.3/8%)
          from
          the Issuance Date to the date of the redemption of the such Series A Preferred
          Stock under this Section 4(d)(i), and (b) convert each Holder’s portion of the
          Series A Preferred Stock into NewCo Common Stock at a rate of 

         

        
          
             

          

          
            5

            
              

            

          

          
             

          

        

        1.333333
          shares of NewCo Common Stock for each share of Series A Preferred
          Stock
          (the “Redemption Price”). The balance of Series A Preferred Stock not
          converted into NewCo Common Stock under this Section 4(d)(i) shall be returned
          to the Corporation for cancellation by NewCo. The Corporation is not obligated
          to provide for redemption of the Series A Preferred Stock through
          a sinking
          fund.

         

        (ii). Shares
          of
          Series A Preferred Stock which have been redeemed or converted shall
          be
          deemed retired and shall thereafter resume the status of authorized and
          unissued
          shares of Preferred Stock, undesignated as to series, and may be redesignated
          and reissued as part of any new series of Preferred Stock other than
          Series A Preferred Stock.

         

        (iii). No
          redemption shall be made and no sum set aside for such redemption at any
          time
          that the terms or provisions of any indenture or agreement of the Corporation,
          including any agreement relating to indebtedness, specifically prohibits
          such
          redemption or setting aside or provides that such redemption or setting
          aside
          would constitute a breach or default thereunder (after notice or lapse
          of time
          or both), except with the written consent of the lender or other parties
          to said
          agreement as the case may be.

         

        (iv). If
          any
          redemption shall at any time be prohibited by any applicable law, the same
          shall
          be deferred until such time as the redemption can occur in full compliance
          with
          such law.

         

        (v). In
          the
          event the Corporation shall redeem shares of Series A Preferred
          Stock as
          provided herein, notice of such redemption shall be given by first class
          mail,
          postage prepaid, or by confirmed facsimile transmission, not less than
          thirty
          (30) business days prior to the date fixed by the Board for redemption
          to each
          holder of Series A Preferred Stock at the address that appears on
          the
          Corporation’s stock record books; provided,
          however,
          that no
          failure to provide such notice nor any defect therein shall affect the
          validity
          of the redemption proceeding except as to the Holder to whom the Corporation
          has
          failed to send such notice or whose notice was defective. Each notice shall
          state (i) the redemption date, (ii) the number of shares
          of
          Series A Preferred Stock to be redeemed; (iii) the Redemption
          Price;
          and (iv) the place or places where certificates for shares of Series A
          Preferred Stock are to be surrendered for payment. When notice has been
          provided
          as aforesaid then from and after the redemption date (unless default shall
          be
          made by the Corporation in providing money for the payment of the Redemption
          Price of the shares called for redemption) said shares shall no longer
          be deemed
          to be outstanding and all rights of the holders thereof shall cease (other
          than
          the right to receive the Redemption Price or NewCo Common Stock with respect
          to
          converted Series A Preferred Stock). Upon surrender of the certificates
          for
          Series A Preferred Stock accompanied by appropriate 

         

        
          
             

          

          
            6

            
              

            

          

          
             

          

        

        stock
          powers, the shares shall be redeemed by the Corporation at the Redemption
          Price.

         

        (vi). Whenever
          the Corporation is obligated to redeem a Holder’s Series A Preferred Stock, and
          the Redemption Price is not paid to the Holder by the tenth (10th)
          business day after the Redemption Price is due and payable to such Holder,
          the
          Corporation shall thereafter pay interest to such Holder on the unpaid
          portion
          of the Redemption Price at the rate of ten percent (10%) per annum, until
          the
          Redemption Price is paid in full.

         

        (vii). If
          any
          shares of Series A Preferred Stock are converted pursuant to this
          Article
          VI, the shares so converted shall be canceled, shall return to the status
          of
          authorized, but unissued preferred stock of no designated series, and shall
          not
          be issuable by the Corporation as Series A Preferred Stock.

         

        (viii). Upon
          receipt by the Corporation of (i) evidence of the loss, theft, destruction
          or mutilation of any Series A Preferred Stock certificate(s) and
          (ii) (y) in the case of loss, theft or destruction, of indemnity
          (without any bond or other security) reasonably satisfactory to the Corporation,
          or (z) in the case of mutilation, upon surrender and cancellation
          of the
          Series A Preferred Stock certificate(s), the Corporation shall execute
          and
          deliver new Series A Preferred Stock certificate(s) of like tenor and date.
          However, the Corporation shall not be obligated to reissue such lost or
          stolen
          Series A Preferred Stock certificate(s) if the Holder contemporaneously
          requests
          the Corporation to convert such Series A Preferred Stock.

         

        (ix). The
          remedies provided in this Section 4 shall be cumulative and in addition
          to all
          other remedies available under these Articles, at law or in equity (including
          a
          decree of specific performance and/or other injunctive relief), and nothing
          herein shall limit a Holder’s right to pursue actual damages for any failure by
          the Corporation to comply with the terms of this Section 4. The Corporation
          acknowledges that a breach by it of its obligations hereunder will cause
          irreparable harm to the Holders of Series A Preferred Stock and
          that the
          remedy at law for any such breach may be inadequate. The Corporation therefore
          agrees, in the event of any such breach or threatened breach, that the
          Holders
          of Series A Preferred Stock shall be entitled, in addition to all
          other
          available remedies, to an injunction restraining any breach, without the
          necessity of showing economic loss and without any bond or other security
          being
          required.

         

        (e). Rank.
          The
          Series A Preferred Stock shall, as to redemptions, and the distribution
          of
          assets upon liquidation, dissolution or winding up of the Corporation,
          rank
          (i) prior to the Corporation’s Common Stock; 

         

        
          
             

          

          
            7

            
              

            

          

          
             

          

        

        (ii) prior
          to any class or series of capital stock of the Corporation hereafter created
          that, by its terms, ranks junior to the Series A Preferred Stock
          (“Junior
          Securities”); (iii) junior to any class or series of capital stock of the
          Corporation hereafter created (with the consent of the holders of a majority
          of
          the outstanding Series A Preferred Stock) which by its terms ranks
          senior
          to the Series A Preferred Stock (“Senior Securities”); and (iv) pari
          passu with any other series of preferred stock of the Corporation hereafter
          created (with the consent of the holders of a majority of the outstanding
          Series A Preferred Stock) which by its terms ranks on a parity (“Pari Passu
          Securities”) with the Series A Preferred Stock.

         

        (f). Liquidation
          Preference.
          

         

        (i). In
          the
          event of any voluntary or involuntary liquidation, dissolution or winding
          up of
          the Corporation, the holders of shares of Series A Preferred Stock then
          outstanding shall be entitled to be paid out of the assets of the Corporation
          available for distribution to its shareholders, after and subject to the
          payment
          in full of all amounts required to be distributed to the holders of any
          class or
          series of stock of the Corporation ranking on liquidation prior and in
          preference to the Series A Preferred Stock, but before any payment shall
          be made
          to the holders of Common Stock or any other Junior Shares, an amount equal
          to $1
          per share of Series A Preferred Stock (subject to appropriate adjustment
          in the
          event of any stock dividend, stock split, combination or other similar
          recapitalization affecting such shares). If upon any such liquidation,
          dissolution or winding up of the Corporation, the remaining assets of the
          Corporation available for distribution to its shareholders shall be insufficient
          to pay the holders of shares of Series A Preferred Stock the full amount
          to
          which they shall be entitled, the holders of shares of Series A Preferred
          Stock
          and any other class or series of stock ranking on liquidation on a parity
          with
          the Series A Preferred Stock shall share ratably in any distribution of
          the
          remaining assets and funds of the Corporation in proportion to the respective
          amounts which would otherwise be payable in respect of the shares held
          by them
          upon such distribution if all amounts payable on or with respect to such
          shares
          were paid in full. The Common Stock shall constitute Junior Shares
          hereunder.

         

        (ii). After
          the
          payment of all preferential amounts required to be paid to the holders
          of any
          class or series of stock of the Corporation ranking on liquidation prior
          and in
          preference to the Series A Preferred Stock and any other class or series
          of
          stock of the Corporation ranking on liquidation on a parity with the Series
          A
          Preferred Stock, upon the dissolution, liquidation or winding up of the
          Corporation, the holders of shares of Common Stock or any other Junior
          Shares
          then outstanding shall be entitled to receive the remaining assets and
          funds of
          the Corporation available for distribution to its shareholders.

         

        
          
             

          

          
            8

            
              

            

          

          
             

          

        

        (g). Voting
          Rights.
          The
          Holders of the Series A Preferred Stock have no voting power whatsoever.
          To
          the extent that under Indiana law, the vote of the Holders of the Series A
          Preferred Stock, voting separately as a class or series, as applicable,
          is
          required to authorize a given action of the Corporation, the affirmative
          vote or
          consent of the Holders of at least a majority of the then outstanding shares
          of
          the Series A Preferred Stock represented at a duly held meeting
          at which a
          quorum is present or by written consent of the Holders of at least a majority
          of
          the then outstanding shares of Series A Preferred Stock (except
          as
          otherwise may be required under Indiana law) shall constitute the approval
          of
          such action by the class. Prompt notice of any such action without a meeting
          by
          less than unanimous written consent shall be given to those shareholder
          who did
          not consent in writing and who would have been entitled to notice of a
          meeting
          if the record date for the meeting was the date on which the first shareholder’s
          signed consent was delivered to the Corporation. Except to the extent required
          by Indiana law, no prior notice of a proposed action by less than unanimous
          written consent must be provided.

         

        3. BOARD
          ACTION.
          The
          Board of Directors of the Corporation unanimously approved these Articles
          of
          Amendment pursuant to unanimous written consent resolutions executed on
          February 18, 2004 and directed that the Articles of Amendment be
          submitted
          to a vote of the shareholders of the Corporation.

         

        4. SHAREHOLDER
          ACTION.
          On
          February 18, 2004, these Articles of Amendment were approved by
          the
          unanimous written consent of the sole shareholder of the
          Corporation.

         

        IN
          WITNESS WHEREOF, the undersigned executes these Articles of Amendment to
          the
          Articles of Incorporation of the Corporation and certifies to the truth
          of the
          facts herein stated this 18th
          day of
          February, 2004.

         

        

         

        
          	 	
                  MAGNETECH
                    INDUSTRIAL SERVICES, INC.

                
	 	 	 
	 	 	 
	 	 	 
	 	
                  By:

                	 
	 	 	
                  John
                    A. Martell, President

                

        

        

        

        
          
             

          

          
            9

            
              

            

          

          
             

          

        

        APPENDIX
          I

        

        NOTICE
          OF CONVERSION

        AT
          THE ELECTION OF THE HOLDER

        

        (To
          be
          Executed by the Registered Holder in order to Convert the Series A Preferred
          Stock of Magnetech Industrial Services, Inc.)

        

        The
          undersigned hereby irrevocably elects to convert the Series A Preferred
          Stock
          into shares of NewCo Common Stock, as of the date written below. If shares
          are
          to be issued in the name of a person other than undersigned, the undersigned
          will pay all transfer taxes payable with respect thereto and is delivering
          herewith such certificates and opinions as reasonably requested by the
          Company
          in accordance therewith.

        

        

        
          	
                  Conversion
                    calculations:

                	 
	 	
                  Date
                    to Effect Conversion

                
	 	
                   

                   

                
	 	
                  Number
                    of Series A Preferred shares to be Converted

                
	 	 
	 	 
	 	
                  Number
                    of NewCo Common Stock Shares to be Issued Upon
                    Conversion

                
	 	
                   

                   

                
	 	
                  Signature
                    

                
	 	
                   

                   

                
	 	
                  Name

                
	 	
                   

                   

                
	 	
                  Address

                

        

         

      

    

    
 

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Schedule
      1

    

    Purchaser(s)

     

    
      MAGNETECH
        INDUSTRIAL SERVICES, INC.

      
        Private
          Placement of Convertible Redeemable Preferred Stock

      

      
        	
                Name

              	
                Issue
                  Date

              	
                No.
                  of Shares

              
	 	
                 

              	 
	
                Dr.
                  Domenic Strazzulla

              	
                2/26/2004

              	
                50,000

              
	
                Jody
                  Nelson

              	
                2/26/2004

              	
                75,000

              
	
                David
                  L. Cohen

              	
                2/26/2004

              	
                100,000

              
	
                William
                  Sybesma

              	
                2/26/2004

              	
                50,000

              
	
                Dr.
                  Frank Lake, III

              	
                2/26/2004

              	
                50,000

              
	
                Jay
                  Shrager & Carole Shrager JTWROS

              	
                2/26/2004

              	
                50,000

              
	
                RS
                  & VS Ltd.

              	
                2/26/2004

              	
                100,000

              
	
                Michael
                  Goldfarb

              	
                2/26/2004

              	
                50,000

              
	
                Matthew
                  A. Dancy

              	
                2/26/2004

              	
                25,000

              
	
                David
                  Dercher

              	
                2/26/2004

              	
                50,000

              
	
                Greenfield
                  Plumbing & Heating

              	
                2/26/2004

              	
                25,000

              
	
                Robert
                  C. Ingram, III

              	
                2/26/2004

              	
                50,000

              
	
                Fredrick
                  B. Epstein

              	
                2/26/2004

              	
                50,000

              
	
                Roger
                  Stacey

              	
                2/26/2004

              	
                25,000

              
	 	 	 
	
                TOTAL

              	 	
                750,000

              

      

    

    

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    Schedule
      1.1

    

    Disclosure
      Documents

    

    None,
      other than this Agreement.

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    Schedule
      3.1(a)

    

    Subsidiaries

    

    

    Martell
      Electric LLC 

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    

    Schedule
      3.1(c)

     

    Capitalization
      and Registration Rights

    

    As
      of the
      date hereof, the Company is authorized to issues one thousand (1,000) shares
      of
      common stock with no par value. 

    

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    Schedule
      3.1(e)

    

    Conflicts

    

    

    

    None.

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    Schedule
      3.1(f)

    

    Consents
      and Approvals

    

    

    

    None.

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    Schedule
      3.1(g)

    

    Litigation

    

    

    

    None.

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    Schedule
      3.1(h)

    

    Defaults
      and Violations

    

    

    

    None.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}]]