Exhibit 10.1

February 9, 2010

MISCOR GROUP, LTD.
1125 S. Walnut
South Bend, Indiana  46619

Gentlemen:

MISCOR Group, Ltd., an Indiana corporation (“MISCOR”), Magnetech Industrial
Services, Inc., an Indiana corporation (“MIS”), Martell Electric, LLC, an
Indiana limited liability company (“Martell”), HK Engine Components, LLC, an
Indiana limited liability company (“HK”), Ideal Consolidated, Inc., an Indiana
corporation (“Ideal”), and American Motive Power, Inc., a Nevada corporation
(“AMP” and together with MISCOR, MIS, Martell, HK and Ideal, collectively, the
“Borrowers”), and Wells Fargo Bank, National Association (the “Lender”), have
entered into that certain Credit and Security Agreement dated as of January 14,
2008, as amended (the “Credit Agreement”).  Capitalized terms used herein shall
have the meaning assigned to such terms in the Credit Agreement.

Pursuant to the terms of the Sixth Amendment to the Credit Agreement, the Lender
consented to the sale of the Construction and Engineering Services segment of
the Borrowers’ business through a sale of the capital stock of Ideal and the
membership units of Martell.  Certain terms of the sale have changed and
accordingly the terms of the Lender’s consent have been revised.

The Lender hereby agrees that the Credit Agreement shall be further amended by
restating Paragraphs 4 and 5 of the Sixth Amendment as follows:

4.           Consent to CES Sale.  The Borrowers have advised the Lender that
they intend to sell the Construction and Engineering Services segment of their
business through a sale of the capital stock of Ideal and the membership units
of Martell, substantially in accordance with the terms of that certain Letter of
Intent dated December 7, 2009, by John A. Martell and Bonnie M. Martell (the
“LOI”), and subsequent negotiations among the parties.  Subject to the
satisfaction of the following conditions in a manner satisfactory to the Lender
in its sole discretion, the Lender consents to the CES Sale and agrees to
release its liens on the assets of Ideal and Martell, as well as the capital
stock of Ideal and the membership units of Martell, upon consummation of the CES
Sale:

(a)           The cash portion of the purchase price payable to MISCOR shall be
sufficient to repay and eliminate the portion of the revolving credit facility
based upon Eligible Progress Accounts of each of Ideal and Martell, and in no

 
 

--------------------------------------------------------------------------------

 

MISCOR Group, Ltd.
February 9, 2010
Page 2

event shall the cash portion of the purchase price be less than Seven Hundred
Fifty Thousand Dollars ($750,000).

(b)           The Definitive Acquisition Agreement (as defined in the LOI) shall
be in form and substance acceptable to the Lender in its discretion.

5.           Payments to Subordinated Creditor.  Notwithstanding anything to the
contrary in the Credit Agreement or any Subordination Agreement, in connection
with the CES Sale and as partial consideration for the purchase price payable in
the CES Sale, the Lender hereby agrees that not more than Two Million Seven
Hundred Fifty Thousand Dollars ($2,750,000) of currently outstanding
subordinated debt of the Borrowers owing to John A. Martell may be forgiven and
a new note shall be issued to Mr. Martell (“New Martell Note”) for the remaining
subordinated debt, which Note may also include any other indebtedness due Mr.
Martell by Borrowers, and which Note may be secured by a blanket security
interest (“Martell Security Interest”).

The New Martell Note and Martell Security Interest shall be subordinated to the
Indebtedness pursuant to a Subordination Agreement in form and substance
acceptable to the Lender dated as of the date of the New Martell Note.   So long
as any Indebtedness remains outstanding or the Lender has any obligation to make
any Advance, no payment or reduction of any kind may be made on the New Martell
Note without the prior written consent of the Lender, which consent may be
provided in the sole discretion of the Lender.

In addition to the foregoing and notwithstanding anything to the contrary
contained in the Sixth Amendment or otherwise, the Lender has agreed to extend
the date by which the Borrowers must raise at least One Million Dollars
($1,000,000) of additional capital, whether in the form of additional
Subordinated Debt, proceeds of further asset sales approved by the Lender and/or
cash equity contributions, to February 19, 2010.

Neither this letter, nor any other communication between the Lender and the
Borrowers, shall be deemed to be a waiver, modification, or release of any
Default or Event of Default (as defined in the Credit Agreement) or, except as
expressly provided herein, consent to any violation of the terms of the Credit
Agreement.  Except as provided herein, the Credit Agreement shall remain in full
force and effect.

 
 

--------------------------------------------------------------------------------

 

MISCOR Group, Ltd.
February 9, 2010
Page 3

Please acknowledge your agreement to the terms of this letter by executing a
copy of the same where indicated below and returning it to the
undersigned.  This letter may be executed in counterparts.

Sincerely,

WELLS FARGO BANK, NATIONAL ASSOCIATION

/s/ Daniel J. Manella

Daniel J. Manella
Vice President

Acknowledged and Agreed to
this 9th day of February, 2010.

MISCOR GROUP, LTD., on behalf of itself
and the other Borrowers

By:
/s/ John A. Martell  
Name:
John A. Martell  
Title:
President and Chief Executive Officer