Exhibit 10.1

 

Loan Agreement

  LOGO [g458840g41x37.gif]

 

THIS LOAN AGREEMENT (the “Agreement”), is entered into as of December     ,
2012, between MISCOR GROUP, LTD. (the “Borrower”), with an address at 800 Nave
Road, Southeast, Massillon, Ohio 44646, and PNC BANK, NATIONAL ASSOCIATION (the
“Bank”), with an address at 213 Market Avenue North, Suite 250, Canton, Ohio
44702.

The Borrower and the Bank, with the intent to be legally bound, agree as
follows:

1. Loan. The Bank has made or may make one or more loans (collectively, the
“Loan”) to the Borrower subject to the terms and conditions and in reliance upon
the representations and warranties of the Borrower set forth in this Agreement.
The Loan is or will be evidenced by a promissory note or notes of the Borrower
and all renewals, extensions, amendments and restatements thereof (if one or
more, collectively, the “Note”) acceptable to the Bank, which shall set forth
the interest rate, repayment and other provisions, the terms of which are
incorporated into this Agreement by reference. The Loan shall include but not be
limited to the following:

1.1. Line of Credit. A committed revolving line of credit under which the
Borrower may request and the Bank, subject to the terms and conditions of this
letter, will make advances to the Borrower from time to time until the
Expiration Date, in an amount in the aggregate at any time outstanding not to
exceed $6,500,000.00 (the “Line of Credit”). The “Expiration Date” means
December     , 2014, or such later date as may be designated by the Bank by
written notice to the Borrower. Advances under the Line of Credit will be used
for working capital or other general business purposes of the Borrower.

1.1.1 Letters of Credit. The Borrower may request that the Bank, in lieu of cash
advances, issue trade and/ or standby letters of credit (individually, a “Letter
of Credit” and collectively the “Letters of Credit”) under the Loan in face
amount in the aggregate at any time outstanding not to exceed $1,500,000.00;
provided, however, that after giving effect to the face amount of such Letter of
Credit, the sum of the aggregate outstanding advances under the Loan and the
aggregate face amount of all Letters of Credit issued and outstanding shall not
exceed the Loan. The availability of advances under the Loan shall be reduced by
the face amount of each Letter of Credit issued and outstanding (whether or not
drawn). For purposes of this Agreement, the “face amount” of any Letter of
Credit shall include any automatic increases in face amount under the terms of
such Letter of Credit, whether or not any such increase in face amount has
become effective. Unless otherwise consented to by the Bank in writing, each
Letter of Credit shall have an expiry date which is not later than twelve
(12) months following the Expiration Date (the “Final LC Expiration Date”). Each
payment by the Bank under a Letter of Credit shall constitute an advance of
principal under the Loan and shall be evidenced by the Note. The Letters of
Credit shall be governed by the terms of this letter and by one or more
reimbursement agreements, in form and content satisfactory to the Bank, executed
by the Borrower in favor of the Bank (collectively, the “Reimbursement
Agreement”). Each request for the issuance of a Letter of Credit must be
accompanied by the Borrower’s execution of an application on the Bank’s standard
forms (each, an “Application”), together with all supporting documentation. Each
Letter of Credit will be issued in the Bank’s sole discretion and in a form
acceptable to the Bank. This Agreement is not a pre-advice for the issuance of a
letter of credit and is not irrevocable.

The Borrower shall pay the Bank’s standard issuance fee on the face amount of
each Letter of Credit upon issuance, together with such other customary fees and
expenses therefore as shall be required by the Bank. In addition, the Borrower
shall pay to the Bank a fee (the “Letter of Credit Commission”), calculated
daily (on the basis of a year of 360 days), on the amount available to be drawn
at such time under all Letters of Credit issued and outstanding under the Line
of Credit (including any amounts drawn thereunder and not reimbursed, regardless

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

of the existence or satisfaction of any conditions or limitations on drawing)
each day by the applicable LIBOR Margin, as defined in the Note. The Letter of
Credit Commission shall be payable quarterly in arrears beginning on
                     , 2013, and continuing on the first day of each fiscal
quarter thereafter and on the Final LC Expiration Date. Notwithstanding the
foregoing, after the occurrence and during the continuance of an Event of
Default, the Letter of Credit Commission, as calculated above, shall be
increased by          percent (        %) per annum.

1.1.2. Borrowing Base. The availability of advances under the Loan will be
subject to a borrowing base formula and other provisions as set forth in a
Borrowing Base Rider dated December     , 2012 between the Borrower and the
Bank, the terms of which are incorporated herein by reference (the “Borrowing
Base Rider”). At no time shall the sum of outstanding advances under the Loan
plus the face amount of any outstanding Letters of Credit (whether or not drawn)
exceed the Borrowing Base (as defined in the Borrowing Base Rider). Pursuant to
the Borrowing Base Rider, the Borrower will be required to deliver periodic
Borrowing Base Certificates, reporting on its accounts and inventory in
accordance with defined eligibility standards, as a condition to advances under
this Agreement.

1.1.3. Commitment Fee. Beginning on March 1, 2013, and continuing on the first
day of each fiscal quarter thereafter and on the Expiration Date of the Line of
Credit, the Borrower shall pay a commitment fee (the “Commitment Fee”) to the
Bank, in arrears, at the rate of twenty (20) basis points (0.20%) per annum on
the average daily balance of the Line of Credit which is undisbursed and
uncancelled during the preceding quarter. The Commitment Fee shall be computed
on the basis of a year of 360 days and paid on the actual number of days
elapsed.

1.2. Term Loan. A term loan in the amount of $2,500,000.00 (the “Term Loan”).
The proceeds of the Term Loan will be used for the refinance of existing term
and subordinated debt.

2. Security. The security for repayment of the Loan shall include but not be
limited to the collateral, guaranties and other documents heretofore,
contemporaneously or hereafter executed and delivered to the Bank (the “Security
Documents”), which shall secure repayment of the Loan, the Note and all other
loans, advances, debts, liabilities, obligations, covenants and duties owing by
the Borrower to the Bank or to any other direct or indirect subsidiary of The
PNC Financial Services Group, Inc., of any kind or nature, present or future
(including any interest accruing thereon after maturity, or after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect (including those acquired by assignment or
participation), absolute or contingent, joint or several, due or to become due,
now existing or hereafter arising, whether or not (i) evidenced by any note,
guaranty or other instrument, (ii) arising under any agreement, instrument or
document, (iii) for the payment of money, (iv) arising by reason of an extension
of credit, opening of a letter of credit, loan, equipment lease or guarantee,
(v) under any interest or currency swap, future, option or other interest rate
protection or similar agreement, (vi) under or by reason of any foreign currency
transaction, forward, option or other similar transaction providing for the
purchase of one currency in exchange for the sale of another currency, or in any
other manner, or (vii) arising out of overdrafts on deposit or other accounts or
out of electronic funds transfers (whether by wire transfer or through automated
clearing houses or otherwise) or out of the return unpaid of, or other failure
of the Bank to receive final payment for, any check, item, instrument, payment
order or other deposit or credit to a deposit or other account, or out of the
Bank’s non-receipt of or inability to collect funds or otherwise not being made
whole in connection with depository or other similar arrangements; and any
amendments, extensions, renewals and increases of or to any of the foregoing,
and all costs and expenses of the Bank incurred in the documentation,
negotiation, modification, enforcement, collection and otherwise in connection
with any of the foregoing, including reasonable attorneys’ fees and expenses
(hereinafter referred to collectively as the “Obligations”). Unless expressly
provided to the contrary in documentation for any other loan or loans, it is the
express intent of the Bank and the Borrower that all Obligations including those
included in the Loan be cross-collateralized and cross-defaulted, such that
collateral securing any of the Obligations shall secure repayment of all
Obligations and a default under any Obligation shall be a default under all
Obligations.

 

- 2 -

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

This Agreement, the Note, the Security Documents and all other agreements and
documents executed and/or delivered pursuant hereto, as each may be amended,
modified, extended or renewed from time to time, are collectively referred to as
the “Loan Documents.” Capitalized terms not defined herein shall have the
meanings ascribed to them in the Loan Documents.

3. Representations and Warranties. The Borrower hereby makes the following
representations and warranties, which shall be continuing in nature and remain
in full force and effect until the Obligations are paid in full, and which shall
be true and correct except as otherwise set forth on the Addendum attached
hereto and incorporated herein by reference (the “Addendum”):

3.1. Existence, Power and Authority. If not a natural person, the Borrower is
duly organized, validly existing and in good standing under the laws of the
State of its incorporation or organization and has the power and authority to
own and operate its assets and to conduct its business as now or proposed to be
carried on, and is duly qualified, licensed and in good standing to do business
in all jurisdictions where its ownership of property or the nature of its
business requires such qualification or licensing. The Borrower is duly
authorized to execute and deliver the Loan Documents, all necessary action to
authorize the execution and delivery of the Loan Documents has been properly
taken, and the Borrower is and will continue to be duly authorized to borrow
under this Agreement and to perform all of the other terms and provisions of the
Loan Documents.

3.2. Financial Statements. If the Borrower is not a natural person, it has
delivered or caused to be delivered to the Bank its most recent balance sheet,
income statement and statement of cash flows, or if the Borrower is a natural
person, its personal financial statement and tax returns (as applicable, the
“Historical Financial Statements”). The Historical Financial Statements are
true, complete and accurate in all material respects and fairly present the
financial condition, assets and liabilities, whether accrued, absolute,
contingent or otherwise and the results of the Borrower’s operations for the
period specified therein. The Historical Financial Statements have been prepared
in accordance with generally accepted accounting principles (“GAAP”)
consistently applied from period to period, subject in the case of interim
statements to normal year-end adjustments and to any comments and notes
acceptable to the Bank in its sole discretion.

3.3. No Material Adverse Change. Since the date of the most recent Financial
Statements (as hereinafter defined), the Borrower has not suffered any damage,
destruction or loss, and no event or condition has occurred or exists, which has
resulted or could result in a material adverse change in its business, assets,
operations, condition (financial or otherwise) or results of operation.

3.4. Binding Obligations. The Borrower has full power and authority to enter
into the transactions provided for in this Agreement and has been duly
authorized to do so by appropriate action of its Board of Directors if the
Borrower is a corporation, all its general partners if the Borrower is a
partnership or otherwise as may be required by law, charter, other
organizational documents or agreements; and the Loan Documents, when executed
and delivered by the Borrower, will constitute the legal, valid and binding
obligations of the Borrower enforceable in accordance with their terms.

3.5. No Defaults or Violations. There does not exist any Event of Default under
this Agreement or any default or violation by the Borrower of or under any of
the terms, conditions or obligations of: (i) its partnership agreement if the
Borrower is a partnership, its articles or certificate of incorporation,
regulations or bylaws if the Borrower is a corporation or its other
organizational documents as applicable; (ii) any indenture, mortgage, deed of
trust, franchise, permit, contract, agreement, or other instrument to which it
is a party or by which it is bound; or (iii) any law, ordinance, regulation,
ruling, order, injunction, decree, condition or other requirement applicable to
or imposed upon it by any law, the action of any court or any governmental
authority or agency; and the consummation of this Agreement and the transactions
set forth herein will not result in any such default or violation or Event of
Default.

 

- 3 -

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

3.6. Title to Assets. The Borrower has good and marketable title to the assets
reflected on the most recent Financial Statements, free and clear of all liens
and encumbrances, except for (i) current taxes and assessments not yet due and
payable, (ii) assets disposed of by the Borrower in the ordinary course of
business since the date of the most recent Financial Statements, and (iii) those
liens or encumbrances, if any, specified on the Addendum.

3.7. Litigation. There are no actions, suits, proceedings or governmental
investigations pending or, to the knowledge of the Borrower, threatened against
the Borrower, which could result in a material adverse change in its business,
assets, operations, condition (financial or otherwise) or results of operations
and there is no basis known to the Borrower for any action, suit, proceeding or
investigation which could result in such a material adverse change. All pending
and threatened litigation against the Borrower is listed on the Addendum.

3.8. Tax Returns. The Borrower has filed all returns and reports that are
required to be filed by it in connection with any federal, state or local tax,
duty or charge levied, assessed or imposed upon it or its property or withheld
by it, including income, unemployment, social security and similar taxes, and
all of such taxes have been either paid or adequate reserve or other provision
has been made therefor.

3.9. Employee Benefit Plans. Each employee benefit plan as to which the Borrower
may have any liability complies in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of 1974 (as amended
from time to time, “ERISA”), including minimum funding requirements, and (i) no
Prohibited Transaction (as defined under ERISA) has occurred with respect to any
such plan, (ii) no Reportable Event (as defined under Section 4043 of ERISA) has
occurred with respect to any such plan which would cause the Pension Benefit
Guaranty Corporation to institute proceedings under Section 4042 of ERISA,
(iii) the Borrower has not withdrawn from any such plan or initiated steps to do
so, and (iv) no steps have been taken to terminate any such plan.

3.10. Environmental Matters. The Borrower is in compliance, in all material
respects, with all Environmental Laws (as hereinafter defined), including,
without limitation, all Environmental Laws in jurisdictions in which the
Borrower owns or operates, or has owned or operated, a facility or site, stores
Collateral, arranges or has arranged for disposal or treatment of hazardous
substances, solid waste or other waste, accepts or has accepted for transport
any hazardous substances, solid waste or other wastes or holds or has held any
interest in real property or otherwise. Except as otherwise disclosed on the
Addendum, no litigation or proceeding arising under, relating to or in
connection with any Environmental Law is pending or, to the best of the
Borrower’s knowledge, threatened against the Borrower, any real property which
the Borrower holds or has held an interest or any past or present operation of
the Borrower. No release, threatened release or disposal of hazardous waste,
solid waste or other wastes is occurring, or to the best of the Borrower’s
knowledge has occurred, on, under or to any real property in which the Borrower
holds or has held any interest or performs or has performed any of its
operations, in violation of any Environmental Law. As used in this Section,
“litigation or proceeding” means any demand, claim notice, suit, suit in equity,
action, administrative action, investigation or inquiry whether brought by a
governmental authority or other person, and “Environmental Laws” means all
provisions of laws, statutes, ordinances, rules, regulations, permits, licenses,
judgments, writs, injunctions, decrees, orders, awards and standards promulgated
by any governmental authority concerning health, safety and protection of, or
regulation of the discharge of substances into, the environment.

3.11. Intellectual Property. The Borrower owns or is licensed to use all
patents, patent rights, trademarks, trade names, service marks, copyrights,
intellectual property, technology, know-how and processes necessary for the
conduct of its business as currently conducted that are material to the
condition (financial or otherwise), business or operations of the Borrower.

3.12. Regulatory Matters. No part of the proceeds of the Loan will be used for
“purchasing” or “carrying” any “margin stock” within the respective meanings of
each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time in effect or for any purpose
which violates the provisions of the Regulations of such Board of Governors.

 

- 4 -

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

3.13. Solvency. As of the date hereof and after giving effect to the
transactions contemplated by the Loan Documents, (i) the aggregate value of the
Borrower’s assets will exceed its liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities), (ii) the Borrower will
have sufficient cash flow to enable it to pay its debts as they become due, and
(iii) the Borrower will not have unreasonably small capital for the business in
which it is engaged.

3.14. Disclosure. None of the Loan Documents contains or will contain any untrue
statement of material fact or omits or will omit to state a material fact
necessary in order to make the statements contained in this Agreement or the
Loan Documents not misleading. There is no fact known to the Borrower which
materially adversely affects or, so far as the Borrower can now foresee, might
materially adversely affect the business, assets, operations, condition
(financial or otherwise) or results of operation of the Borrower and which has
not otherwise been fully set forth in this Agreement or in the Loan Documents.

4. Affirmative Covenants. The Borrower agrees that from the date of execution of
this Agreement until all Obligations have been paid in full and any commitments
of the Bank to the Borrower have been terminated, the Borrower will:

4.1. Books and Records. Maintain books and records in accordance with GAAP and
give representatives of the Bank access thereto at all reasonable times,
including permission to examine, copy and make abstracts from any of such books
and records and such other information as the Bank may from time to time
reasonably request, and the Borrower will make available to the Bank for
examination copies of any reports, statements and returns which the Borrower may
make to or file with any federal, state or local governmental department, bureau
or agency.

4.2. Interim Financial Statements; Certificate of No Default. Furnish the Bank
within 45 days after the end of each quarter the Borrower’s Financial Statements
for such period, in reasonable detail, certified by an authorized officer of the
Borrower and prepared in accordance with GAAP consistently applied from period
to period. The Borrower shall also deliver a certificate as to its compliance
with applicable financial covenants (containing detailed calculations of all
financial covenants) for the first 3 quarters of each fiscal year and whether
any Event of Default exists, and, if so, the nature thereof and the corrective
measures the Borrower proposes to take. As used in this Agreement, if the
Borrower is not a natural person, “Financial Statements” means the Borrower’s
unaudited consolidated and, if required by the Bank in its sole discretion,
consolidating balance sheets, income statements and statements of cash flows for
the year, month or quarter together with year-to-date figures and comparative
figures for the corresponding periods of the prior year; if the Borrower is a
natural person, “Financial Statements” means the Borrower’s personal financial
statement and tax returns.

4.3. Annual Financial Statements. Furnish the Borrower’s Financial Statements to
the Bank within 120 days after the end of each fiscal year. Those Financial
Statements will be prepared on an audited basis in accordance with GAAP by an
independent certified public accountant selected by the Borrower and
satisfactory to the Bank. The Borrower shall also deliver a certificate as to
its compliance with applicable financial covenants (containing detailed
calculations of all financial covenants) for the period then ended and whether
any Event of Default exists, and, if so, the nature thereof and the corrective
measures the Borrower proposes to take. Audited Financial Statements shall
contain the unqualified opinion of an independent certified public accountant
and all accountant examinations shall have been made in accordance with GAAP
consistently applied from period to period.

4.4. Accounts Receivable/Payable Agings. Borrower shall deliver, or cause to be
delivered, to Bank not later than 20 days after the end of each month Borrower’s
detailed schedule of accounts receivable and accounts payable aging analysis, in
form and substance satisfactory to Bank.

 

- 5 -

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

4.5. Inventory Listings. Borrower shall deliver, or cause to be delivered, to
Bank not later than 20 days after the end of each month Borrower’s detailed
inventory listings.

4.6. Payment of Taxes and Other Charges. Pay and discharge when due all
indebtedness and all taxes, assessments, charges, levies and other liabilities
imposed upon the Borrower, its income, profits, property or business, except
those which currently are being contested in good faith by appropriate
proceedings and for which the Borrower shall have set aside adequate reserves or
made other adequate provision with respect thereto acceptable to the Bank in its
sole discretion.

4.7. Maintenance of Existence, Operation and Assets. Do all things necessary to
(i) maintain, renew and keep in full force and effect its organizational
existence and all rights, permits and franchises necessary to enable it to
continue its business as currently conducted; (ii) continue in operation in
substantially the same manner as at present; (iii) keep its properties in good
operating condition and repair; and (iv) make all necessary and proper repairs,
renewals, replacements, additions and improvements thereto.

4.8. Insurance. Maintain, with financially sound and reputable insurers,
insurance with respect to its property and business against such casualties and
contingencies, of such types and in such amounts, as is customary for
established companies engaged in the same or similar business and similarly
situated. In the event of a conflict between the provisions of this Section and
the terms of any Security Documents relating to insurance, the provisions in the
Security Documents will control.

4.9. Compliance with Laws. Comply with all laws applicable to the Borrower and
to the operation of its business (including without limitation any statute,
ordinance, rule or regulation relating to employment practices, pension benefits
or environmental, occupational and health standards and controls).

4.10. Bank Accounts. Establish and maintain at the Bank the Borrower’s primary
depository accounts.

4.11. Financial Covenants. Comply with all of the financial and other covenants,
if any, set forth on the Addendum.

4.12. Additional Reports. Provide prompt written notice to the Bank of the
occurrence of any of the following (together with a description of the action
which the Borrower proposes to take with respect thereto): (i) any Event of
Default or any event, act or condition which, with the passage of time or the
giving of notice, or both, would constitute an Event of Default (a “Default”),
(ii) any material litigation filed by or against the Borrower, (iii) any
Reportable Event or Prohibited Transaction with respect to any Employee Benefit
Plan(s) (as defined in ERISA) or (iv) any event which might result in a material
adverse change in the business, assets, operations, condition (financial or
otherwise) or results of operation of the Borrower.

5. Negative Covenants. The Borrower covenants and agrees that from the date of
this Agreement until all Obligations have been paid in full and any commitments
of the Bank to the Borrower have been terminated, except as set forth in the
Addendum, the Borrower will not, without the Bank’s prior written consent:

5.1. Indebtedness. Create, incur, assume or suffer to exist any indebtedness for
borrowed money other than: (i) the Loan and any subsequent indebtedness to the
Bank; and (ii) open account trade debt incurred in the ordinary course of
business and not past due.

5.2. Liens and Encumbrances. Except as provided in Section 3.6, create, assume,
incur or permit to exist any mortgage, pledge, encumbrance, security interest,
lien or charge of any kind upon any of its property, now owned or hereafter
acquired, or acquire or agree to acquire any kind of property subject to any
conditional sales or other title retention agreement, except liens securing
purchase money indebtedness permitted pursuant to Section 5.1 above.

 

- 6 -

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

5.3. Guarantees. Guarantee, endorse or become contingently liable for the
obligations of any person, firm, corporation or other entity, except in
connection with the endorsement and deposit of checks in the ordinary course of
business for collection.

5.4. Loans or Advances. Purchase or hold beneficially any stock, other
securities or evidences of indebtedness of, or make or have outstanding, any
loans or advances to, or otherwise extend credit to, or make any investment or
acquire any interest whatsoever in, any other person, firm, corporation or other
entity, except investments disclosed on the Borrower’s Historical Financial
Statements or acceptable to the Bank in its sole discretion.

5.5. Merger or Transfer of Assets. Liquidate or dissolve, or merge or
consolidate with or into any person, firm, corporation or other entity, or sell,
lease, transfer or otherwise dispose of all or any substantial part of its
property, assets, operations or business, whether now owned or hereafter
acquired.

5.6. Change in Business, Management or Ownership. Make or permit, and cause each
Guarantor under the Security Documents not to make or permit, any change in its
form of organization, the nature of its business as carried on as of the date
hereof, in the composition of its current executive management, or in its equity
ownership.

5.7. Dividends. Declare or pay any dividends on or make any distribution with
respect to any class of its equity or ownership interest, or purchase, redeem,
retire or otherwise acquire any of its equity, provided, however, that so long
as the Borrower remains an S corporation, a partnership or a limited liability
company, it may make distributions to its shareholders, partners or members, as
the case may be, in an amount equal to the federal and state income tax of such
principals of the Borrower attributable to the earning of the Borrower.

5.8. Acquisitions. Make acquisitions of all or substantially all of the property
or assets of any person, firm, corporation or other entity.

6. Events of Default. The occurrence of any of the following will be deemed to
be an Event of Default:

6.1. Covenant Default. The Borrower shall default in the performance of any of
the covenants or agreements contained in this Agreement.

6.2. Breach of Warranty. Any Financial Statement, representation, warranty or
certificate made or furnished by the Borrower to the Bank in connection with
this Agreement shall be materially false, incorrect or incomplete when made.

6.3. Other Default. The occurrence of an Event of Default as defined in the Note
or any of the Loan Documents.

Upon the occurrence of an Event of Default, the Bank will have all rights and
remedies specified in the Note and the Loan Documents and all rights and
remedies (which are cumulative and not exclusive) available under applicable law
or in equity.

7. Conditions. The Bank’s obligation to make any advance under the Loan is
subject to the conditions that as of the date of the advance:

7.1. No Event of Default. No Event of Default or event which with the passage of
time, the giving of notice or both would constitute an Event of Default shall
have occurred and be continuing provided, however, that, no such failure to
observe or perform any covenant or other agreement (excluding financial
covenants, financial reporting covenants, and negative covenants) shall
constitute an Event of Default unless such failure continues for a period of 30
days after the earlier to occur of (a) the date when the Borrower becomes aware
of such failure and (b) the date when the Bank gives written notice to the
Borrower of such failure;

 

- 7 -

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

7.2. Authorization Documents. The Bank shall have received certified copies of
resolutions of the board of directors, the general partners or the members or
managers of any partnership, corporation or limited liability company that
executes this Agreement, the Note or any of the other Loan Documents; or other
proof of authorization satisfactory to the Bank; and

7.3. Receipt of Loan Documents. The Bank shall have received the Loan Documents
and such other instruments and documents which the Bank may reasonably request
in connection with the transactions provided for in this Agreement, which may
include an opinion of counsel in form and substance satisfactory to the Bank for
any party executing any of the Loan Documents.

8. Expenses. The Borrower agrees to pay the Bank, upon the execution of this
Agreement, and otherwise on demand, all costs and expenses incurred by the Bank
in connection with the preparation, negotiation and delivery of this Agreement
and the other Loan Documents, and any modifications thereto, and the collection
of all of the Obligations, including but not limited to enforcement actions,
relating to the Loan, whether through judicial proceedings or otherwise, or in
defending or prosecuting any actions or proceedings arising out of or relating
to this Agreement, including reasonable fees and expenses of counsel (which may
include costs of in-house counsel), expenses for auditors, appraisers and
environmental consultants, lien searches, recording and filing fees and taxes.

9. Increased Costs. On written demand, together with written evidence of the
justification therefor, the Borrower agrees to pay the Bank all direct costs
incurred and any losses suffered or payments made by the Bank as a consequence
of making the Loan by reason of any change in law or regulation, or the
interpretation thereof, imposing any reserve, deposit, allocation of capital or
similar requirement (including without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) on the Bank, its holding company or any
of their respective assets.

10. Miscellaneous.

10.1. Notices: All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder (“Notices”) must be in writing
and will be effective upon receipt. Notices may be given in any manner to which
the parties may separately agree, including electronic mail. Without limiting
the foregoing, first-class mail, facsimile transmission and commercial courier
service are hereby agreed to as acceptable methods for giving Notices.
Regardless of the manner in which provided, Notices may be sent to a party’s
address as set forth above or to such other address as any party may give to the
other for such purpose in accordance with this section.

10.2. Preservation of Rights. No delay or omission on the Bank’s part to
exercise any right or power arising hereunder will impair any such right or
power or be considered a waiver of any such right or power, nor will the Bank’s
action or inaction impair any such right or power. The Bank’s rights and
remedies hereunder are cumulative and not exclusive of any other rights or
remedies which the Bank may have under other agreements, at law or in equity.

10.3. Illegality. If any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, it shall not affect or impair
the validity, legality and enforceability of the remaining provisions of this
Agreement.

10.4. Changes in Writing. No modification, amendment or waiver of, or consent to
any departure by the Borrower from, any provision of this Agreement will be
effective unless made in a writing signed by the party to be charged, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. Notwithstanding the foregoing, the Bank may modify
this Agreement or any

 

- 8 -

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

of the other Loan Documents for the purposes of completing missing content or
correcting erroneous content, without the need for a written amendment, provided
that the Bank shall send a copy of any such modification to the Borrower (which
notice may be given by electronic mail). No notice to or demand on the Borrower
will entitle the Borrower to any other or further notice or demand in the same,
similar or other circumstance.

10.5. Entire Agreement. This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement and supersedes all other
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.

10.6. Counterparts. This Agreement may be signed in any number of counterpart
copies and by the parties hereto on separate counterparts, but all such copies
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile transmission
shall be effective as delivery of a manually executed counterpart. Any party so
executing this Agreement by facsimile transmission shall promptly deliver a
manually executed counterpart, provided that any failure to do so shall not
affect the validity of the counterpart executed by facsimile transmission.

10.7. Successors and Assigns. This Agreement will be binding upon and inure to
the benefit of the Borrower and the Bank and their respective heirs, executors,
administrators, successors and assigns; provided, however, that the Borrower may
not assign this Agreement in whole or in part without the Bank’s prior written
consent and the Bank at any time may assign this Agreement in whole or in part.

10.8. Interpretation. In this Agreement, unless the Bank and the Borrower
otherwise agree in writing, the singular includes the plural and the plural the
singular; words importing any gender include the other genders; references to
statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; the word “or”
shall be deemed to include “and/or”, the words “including”, “includes” and
“include” shall be deemed to be followed by the words “without limitation”;
references to articles, sections (or subdivisions of sections) or exhibits are
to those of this Agreement; and references to agreements and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications to such instruments, but only to the extent such amendments and
other modifications are not prohibited by the terms of this Agreement. Section
headings in this Agreement are included for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose. Unless
otherwise specified in this Agreement, all accounting terms shall be interpreted
and all accounting determinations shall be made in accordance with GAAP. If this
Agreement is executed by more than one party as Borrower, the obligations of
such persons or entities will be joint and several.

10.9. No Consequential Damages, Etc. The Bank will not be responsible for any
damages, consequential, incidental, special, punitive or otherwise, that may be
incurred or alleged by any person or entity, including the Borrower and any
Guarantor, as a result of this Agreement, the other Loan Documents, the
transactions contemplated hereby or thereby, or the use of the proceeds of the
Loan.

10.10. Assignments and Participations. At any time, without any notice to the
Borrower, the Bank may sell, assign, transfer, negotiate, grant participations
in, or otherwise dispose of all or any part of the Bank’s interest in the Loan.
The Borrower hereby authorizes the Bank to provide, without any notice to the
Borrower, any information concerning the Borrower, including information
pertaining to the Borrower’s financial condition, business operations or general
creditworthiness, to any person or entity which may succeed to or participate in
all or any part of the Bank’s interest in the Loan.

10.11. Governing Law and Jurisdiction. This Agreement has been delivered to and
accepted by the Bank and will be deemed to be made in the State where the Bank’s
office indicated above is located. THIS AGREEMENT WILL BE INTERPRETED AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE WHERE THE BANK’S OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING
ITS CONFLICT OF LAWS RULES. The Borrower hereby irrevocably consents to the
exclusive jurisdiction of any state or federal court in the county or judicial
district where the Bank’s office

 

- 9 -

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

indicated above is located; provided that nothing contained in this Agreement
will prevent the Bank from bringing any action, enforcing any award or judgment
or exercising any rights against the Borrower individually, against any security
or against any property of the Borrower within any other county, state or other
foreign or domestic jurisdiction. The Bank and the Borrower agree that the venue
provided above is the most convenient forum for both the Bank and the Borrower.
The Borrower waives any objection to venue and any objection based on a more
convenient forum in any action instituted under this Agreement.

10.12. WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE BANK IRREVOCABLY
WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS
EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN
ANY OF SUCH DOCUMENTS. THE BORROWER AND THE BANK ACKNOWLEDGE THAT THE FOREGOING
WAIVER IS KNOWING AND VOLUNTARY.

The Borrower acknowledges that it has read and understood all the provisions of
this Agreement, including the waiver of jury trial, and has been advised by
counsel as necessary or appropriate.

WITNESS the due execution hereof as a document under seal, as of the date first
written above.

 

WITNESS / ATTEST:     MISCOR GROUP, LTD.

 

    By:             (SEAL) Print Name:           Michael P. Moore Title:        
  Chief Executive Officer and President

(Include title only if an officer of entity signing to the right)

          PNC BANK, NATIONAL ASSOCIATION     By:           (SEAL)       Joseph
Luckring       Senior Vice President

 

- 10 -

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

ADDENDUM to that certain Loan Agreement dated December     , 2012 between MISCOR
GROUP, LTD. as the Borrower and PNC Bank, National Association, as the Bank.
Capitalized terms used in this Addendum and not otherwise defined shall have the
meanings given them in the Agreement. Section numbers below refer to the
sections of the Agreement.

3.6 Title to Assets. Describe additional liens and encumbrances below:

NONE

3.7 Litigation. Describe pending and threatened litigation, investigations,
proceedings, etc. below:

NONE

 

- 11 -

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

CONTINUATION OF ADDENDUM

FINANCIAL COVENANTS

(1) The Borrower will maintain as of the end of each fiscal quarter, on a
rolling four quarters basis, a ratio of Funded Debt to EBITDA of less than or
equal to 2.50 to 1.00 at close and at December 31, 2012; and 2.25 to 1.00 at
December 31, 2013 and thereafter.

(2) The Borrower will maintain as of the end of each fiscal quarter, on a
rolling four quarters basis, a Fixed Charge Coverage Ratio of greater than or
equal to 1.25 to 1.00.

As used herein:

“Current Maturities” means long-term debt paid for the four (4) quarter period
just ended.

“EBITDA” means net income plus interest expense plus income tax expense plus
depreciation plus amortization.

“Fixed Charge Coverage Ratio” means (i) EBITDA, divided by (ii) the sum of
Current Maturities plus interest expense plus cash taxes paid plus
dividends/distributions plus Unfunded Capital Expenditures.

“Funded Debt” means all indebtedness for borrowed money, including but not
limited to capitalized lease obligations, reimbursement obligations in respect
of letters of credit, and guaranties of any such indebtedness for the Borrower
and non-individual guarantors.

“Unfunded Capital Expenditures” means capital expenditures made from the
Borrower’s funds other than funds borrowed as term debt to finance such capital
expenditures.

All of the above financial covenants shall be computed and determined in
accordance with GAAP applied on a consistent basis (subject to normal year-end
adjustments).

 

- 12 -