Exhibit 10.11

AMENDED AND RESTATED SUBORDINATION AGREEMENT

This Amended and Restated Subordination Agreement, dated as of November 30,
2011, is made by JOHN A. MARTELL, an individual (the “Subordinated Creditor”),
for the benefit of WELLS FARGO BANK NATIONAL ASSOCIATION, acting through its
Wells Fargo Business Credit operation division (the “Lender”).

MISCOR GROUP, LTD., an Indiana corporation (“MISCOR”), MAGNETECH INDUSTRIAL
SERVICES, INC., an Indiana corporation (“MIS”) and HK ENGINE COMPONENTS, LLC, an
Indiana limited liability company (“HK”) and together with MISCOR and MIS (the
“Borrowers” and each a “Borrower”) are now or hereafter may be indebted to the
Lender on account of loans or the other extensions of credit or financial
accommodations from the Lender to the Borrowers, or to any other person under
the guaranty or endorsement of the Borrowers. MISCOR issued a promissory note to
the Subordinated Creditor dated November 30, 2011 in the principal amount of One
Million Six Hundred Eighty Thousand Ninety-four and 60/100 Dollars
($1,680,094.60) (together with all renewals, extensions and modifications
thereof and any note or notes issued in substitution therefore, the
“Subordinated Note”), a copy of which is attached as Exhibit A.

As one of the conditions to granting MISCOR and the other Borrowers credit under
the Credit Agreement (as hereafter defined), the Lender has required that the
Subordinated Creditor subordinate the payment of the Subordinated Debt to the
payment of any and all indebtedness of the Borrowers to the Lender, provided
that subject to the terms of this Agreement certain payments of the Subordinated
Debt (defined below as “Permitted Payments”) may be made. Assisting the
Borrowers in obtaining credit accommodations from the Lender and subordinating
his interests pursuant to the terms of this Agreement are in the Subordinated
Creditor’s best interest.

ACCORDINGLY, in consideration of the foregoing and other financial
accommodations that have been made and may hereafter be made by the Lender for
the benefit of the Borrowers, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Subordinated
Creditor agrees as follows:

1. Definitions. All capitalized terms used herein and not otherwise defined
herein shall have the meaning provided in the Credit Agreement. In addition, as
used herein, the following terms have the meanings set forth below:

“Availability” has the meaning provided in the Credit Agreement, and as of any
date of determination shall be such amount as is shown on Lender’s loan system.

“Borrower Default” means a Default or Event of Default as defined in any
agreement or instrument evidencing, governing, or issued in connection with
Lender Indebtedness, including, but not limited to, an extension and related
modification of each

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of the notes issued thereunder, or any default under or breach of any such
agreement or instrument.

“Collateral” means all collateral now or hereafter securing payment of the
Lender Indebtedness, including all proceeds thereof.

“Credit Agreement” means the Credit and Security Agreement dated as of
January 14, 2008, as amended through the date hereof, by and among the Borrowers
and the Lender, as the same may hereafter be further amended, supplemented or
restated from time to time

“Effective Date Payments” means a prepayment of principal of the Subordinated
Note in the amount of $316,666 to be made to the Subordinated Creditor on or
about the date hereof, subject to the terms and conditions hereof, and a
prepayment of principal in the aggregate amount of $633,332 to be made to
BDeWees, Inc. and XGen III, Ltd. on the same date.

“Excess Availability” means, as determined on the date of the Effective Date
Payments, the amount equal to Availability, after giving effect to (i) the
Effective Date Payments, (ii) the payment of Borrowers’ trade payables older
than thirty (30) days past due date (subject to the exclusion of certain account
balances which have extended terms or other payment arrangements evidenced by
documentation reviewed by and acceptable to Lender in its sole discretion), and
(iii) the payment of all book overdrafts and transaction expenses (including the
closing fee payable to Lender).

“Lender Indebtedness” means each and every debt, liability and obligation of
every type and description which the Borrowers and each of them may now or at
any time hereafter owe to the Lender, whether such debt, liability or obligation
now exists or is hereafter created or incurred, and whether it is or may be
direct or indirect, due or to become due, absolute or contingent, primary or
secondary, liquidated or unliquidated, or joint, several or joint and several,
all interest thereon and all fees, costs and other charges related thereto
(including all interest, fees, costs and other charges accruing after the
commencement of any case, proceeding or other action relating to the bankruptcy
insolvency or reorganization of any Borrower, whether or not allowed in such
proceeding or other action), all renewals, extensions and modifications thereof
and any notes issued in whole or partial substitution therefor.

“Lien” means any security interest, mortgage, deed of trust, pledge, lien,
charge, encumbrance, title retention agreement or analogous instrument or
device, including the interest of each lessor under any capitalized lease and
the interest of any bondsman under any payment or performance bond, in, of or on
any assets or properties of a person, whether now owned or hereafter acquired
and whether arising by agreement or operation of law.

“Permitted Payments” means the following payments of principal and interest on
the Subordinated Debt permitted to be made subject to the terms and conditions
of this Agreement, including the conditions set forth below:

 

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1. So long as Excess Availability is not less than Five Hundred Thousand Dollars
($500,000), payment of (a) the Effective Date Payment payable to the
Subordinated Creditor; (b) the second special payment of principal in the amount
of One Hundred Twenty Thousand Dollars ($120,000.00) on or before December 29,
2011; and (c) the third special payment of principal in the amount of Two
Hundred Fifty Thousand Dollars ($250,000.00) on or before June 30, 2012.

2. So long as there is no Borrower Default, payment of scheduled monthly
principal payments per the terms of the Subordinated Note and the final payment
of principal and accrued and unpaid interest on the Subordinated Note due
October 31, 2013.

3. So long as there is no Borrower Default, scheduled payments (but not
prepayments) of interest (other than default interest) required to be paid under
the Subordinated Note.

“Subordinated Debt” means each and every debt, liability and obligation of every
type and description which any Borrower and/or Affiliate may now or at any time
hereafter owe to the Subordinated Creditor, whether such debt, liability or
obligation now exists or is hereafter created or incurred, and whether it is or
may be direct or indirect, due or to become due, absolute or contingent, primary
or secondary, liquidated or unliquidated, or joint, several or joint and
several, including, without limitation, the Subordinated Note.

2. Subordination. Subject to the Subordinated Creditor’s right to receive the
Permitted Payments in accordance with the terms of this Agreement, the payment
of any and all of the Subordinated Debt principal is hereby expressly
subordinated to the extent and in the manner hereinafter set forth to the
payment in full of the Lender Indebtedness; and regardless of any priority
otherwise available to the Subordinated Creditor by law or by agreement, the
Lender shall hold Liens in the Collateral, superior in priority to any Lien of
the Subordinated Creditor, and any Lien claimed therein (including any proceeds
thereof) by the Subordinated Creditor shall be and remain fully subordinate for
all purposes to the Liens of the Lender therein for all purposes whatsoever. The
Subordinated Debt shall continue to be subordinated to the Lender Indebtedness
even if the Lender Indebtedness is subordinated, avoided, or disallowed under
the United States Bankruptcy Code or other applicable law.

3. Payments. Until all of the Lender Indebtedness has been paid in full and the
Lender has released its Lien in the Collateral, the Borrowers shall not pay and
the Subordinated Creditor shall not, without the Lender’s prior written consent,
demand, receive or accept any payment of principal from any Borrower in respect
of the Subordinated Debt, or exercise any right of or permit any setoff in
respect of the Subordinated Debt, except that unless the Lender has provided
written notice to the Subordinated Creditor that a Borrower Default has occurred
and is continuing and that no payments may be made on the Subordinated Debt,
(i) the Borrowers shall be permitted to exercise any right of set off they may
have against the Subordinated Note, and (ii) the Subordinated Creditor may
accept and keep the Permitted Payments.

 

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4. Receipt of Prohibited Payments. If the Subordinated Creditor receives any
payment on the Subordinated Debt that the Subordinated Creditor is not entitled
to accept under the provisions of this Agreement, the Subordinated Creditor will
hold the amount so received in trust for the Lender and will forthwith turn over
such payment to the Lender in the form received (except for the endorsement of
the Subordinated Creditor where necessary) for application to then-existing
Lender Indebtedness (whether or not due), in such manner of application as the
Lenders may deem appropriate. If the Subordinated Creditor exercises any right
of setoff which the Subordinated Creditor is not permitted to exercise under the
provisions of this Agreement, the Subordinated Creditor will promptly pay over
to the Lender, in immediately available funds, an amount equal to the amount of
the claims or obligations offset. If the Subordinated Creditor fails to make any
endorsement required under this Agreement, the Lender, or any of its officers or
employees or agents is hereby irrevocably appointed as the attorney-in-fact
(which appointment is coupled with an interest) for the Subordinated Creditor to
make such endorsement in the Subordinated Creditor’s name.

5. Action on Subordinated Debt. Unless the Lender has commenced an action or
proceeding to recover all of any part of the Lender Indebtedness, the
Subordinated Creditor will not commence any action or proceeding against any
Borrower or Affiliate to recover all or any part of the Subordinated Debt, or
join with any other creditor (unless the Lender shall so join) in bringing any
proceeding against any Borrower or Affiliate under any bankruptcy,
reorganization, readjustment of debt, arrangement of debt, receivership,
liquidation or insolvency law or statute of the federal or any state government;
provided that in no event shall the Subordinated Creditor enforce any judgment
or take possession of, sell, or dispose of any Collateral, or exercise or
enforce any right or remedy available to the Subordinated Creditor with respect
to any such Collateral, unless and until the Lender Indebtedness has been paid
in full and the Lender has released its Liens in the Collateral.

6. Action Concerning Collateral.

(a) Notwithstanding any Lien now held or hereafter acquired by the Subordinated
Creditor, the Lender may take possession of, sell, dispose of, and otherwise
deal with all or any part of the Collateral, and may enforce any right or remedy
available to it with respect to any Borrower or the Collateral, all with notice
to and/or consent of the Subordinated Creditor only to the extent, if any,
specifically required by applicable law.

(b) In addition, and without limiting the generality of the foregoing, if (i) a
Borrower Default has occurred and is continuing, (ii) a Borrower or the Lender
intends to sell or otherwise dispose of any Collateral to an unrelated third
party outside the ordinary course of business, (iii) the Lender has given
written notice thereof to the Subordinated Creditor, and (iv) the Subordinated
Creditor has failed, within ten (10) days after receipt of such notice, to
purchase for cash the Lender Indebtedness for the full amount thereof, the
Subordinated Creditor shall be deemed to have consented to such sale or
disposition, to have released any Lien he may have in such Collateral and to
have authorized the Lender and its agents to file partial releases with respect
to such Collateral.

 

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(c) The Lender shall have no duty to preserve, protect, care for, insure, take
possession of, collect, dispose of, or otherwise realize upon any of the
Collateral, and in no event shall the Lender be deemed the Subordinated
Creditor’s agent with respect to the Collateral. All proceeds received by the
Lender with respect to any Collateral may be applied, first, to pay or reimburse
all costs and expenses (including reasonable attorneys’ fees) incurred in
connection with the collection of such proceeds, and, second, to any Lender
Indebtedness secured by the Liens of the Lender in that Collateral, in any order
that the Lender may choose.

7. Bankruptcy and Insolvency. In the event of any receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization or
arrangement with creditors, whether or not pursuant to bankruptcy law, the sale
of all or substantially all of the assets of any Borrower, dissolution,
liquidation or any other marshalling of the assets or liabilities of any
Borrower, the Subordinated Creditor will file all claims, proofs of claim or
other instruments of similar character necessary to enforce the obligations of
such Borrower in respect of the Subordinated Debt and will hold in trust for the
Lender and promptly pay over to the Lender in the form received (except for the
endorsement of the Subordinated Creditor where necessary) for application to the
then-existing Lender Indebtedness, any and all moneys, dividends or other assets
received in any such proceedings on account of the Subordinated Debt, unless and
until the Lender Indebtedness has been paid in full and the Lender’s Lien in the
Collateral has been terminated. If the Subordinated Creditor shall fail to take
any such action, the Lender, as attorney-in-fact for the Subordinated Creditor,
may, but is not hereby obligated to, take such action on the Subordinated
Creditor’s behalf. In the event of Subordinated Creditor’s failure to take such
action, then Subordinated Creditor hereby irrevocably appoints the Lender, or
any of its officers or employees, as the attorney-in-fact for the Subordinated
Creditor (which appointment is coupled with an interest), with the power, but
not the duty, to demand, sue for, collect and receive any and all such moneys,
dividends or other assets and give acquittance therefor and to file any claim,
proof of claim or other instrument of similar character, to vote claims
comprising Subordinated Debt, to accept or reject any plan of partial or
complete liquidation, reorganization, arrangement, composition or extension, and
to take such other action in the name of the Lender or in the name of the
Subordinated Creditor as the Lender may deem necessary or advisable for the
enforcement of the agreements contained herein; and the Subordinated Creditor
will execute and deliver to the Lender such other and further powers-of-attorney
or instruments as the Lender may request in order to accomplish the foregoing.
If the Lender desires to permit the use of cash collateral or to provide
post-petition financing to a Borrower, the Subordinated Creditor shall not
object to the same or assert that its interests are not being adequately
protected.

8. Restrictive Legend; Transfer of Subordinated Debt. The Subordinated Creditor
will cause all written evidence of the Subordinated Debt, including all notes,
bonds, and other instruments evidencing the Subordinated Debt or any part
thereof, to contain a specific statement thereon to the effect that the
indebtedness thereby evidenced is subject to the provisions of this Agreement;
and the Subordinated Creditor will mark his books conspicuously to evidence the
subordination effected hereby. The Subordinated Creditor is the lawful holder of
the Subordinated Debt and has not transferred any interest therein to any other
person or entity. Without the prior written consent of the Lender, which consent
shall not be unreasonably

 

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withheld, the Subordinated Creditor will not assign, transfer or pledge to any
other person any of the Subordinated Debt or agree to a discharge or forgiveness
of the same.

9. Continuing Effect. This Agreement shall constitute a continuing agreement of
subordination, and the Lender may, without notice to or consent by the
Subordinated Creditor, modify any term of the Lender Indebtedness in reliance
upon this Agreement. Without limiting the generality of the foregoing, the
Lender may, at any time and from time to time, without the consent of or notice
to the Subordinated Creditor and without incurring responsibility to the
Subordinated Creditor or impairing or releasing any of the Lender’s rights or
any of the Subordinated Creditor’s obligations hereunder:

(a) change the interest rate or change the amount of payment or extend the time
for payment or renew or otherwise alter the terms of any Lender Indebtedness or
any instrument evidencing the same in any manner;

(b) sell, exchange, release or otherwise deal with any property at any time
securing payment of the Lender Indebtedness or any part thereof;

(c) release anyone liable in any manner for the payment or collection of the
Lender Indebtedness or any part thereof;

(d) exercise or refrain from exercising any right against any Borrower or any
other person (including the Subordinated Creditor); and

(e) apply any sums received by the Lender, by whomsoever paid and however
realized, to the Lender Indebtedness in such manner as the Lender shall deem
appropriate.

10. No Commitment. None of the provisions of this Agreement shall be deemed or
construed to constitute or imply any commitment or obligation on the part of the
Lender to make any future loans or other extensions of credit or financial
accommodations to the Borrowers.

11. Marshalling. The Subordinated Creditor hereby waives any and all rights to
require the marshalling of assets in connection with the exercise of any of the
Lender’s remedies permitted by applicable law or agreement.

12. Notice. All notices and other communications hereunder shall be in writing
and shall be (i) personally delivered, (ii) transmitted by registered mail,
postage prepaid, or (iii) transmitted by nationally recognized overnight
delivery service, in each case addressed to the party to whom notice is being
given at its address or as set forth below:

If to the Lender:

Wells Fargo Bank, National Association

150 S. Wacker Drive, Suite 2200

Chicago, Illinois 60606

Attn: Daniel J. Manella, Vice President, Wells Fargo Capital Finance

 

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If to the Subordinated Creditor:

John A. Martell

61249 Howell Drive

Cassopolis, Michigan 49031

With a copy to:

James R. Brotherson

Baker & Daniels LLP

202 S. Michigan Street, Suite 1400

South Bend, Indiana 46601

or at such other address or telefacsimile number as may hereafter be designated
in writing by that party. All such notices or other communications shall be
deemed to have been given on (i) the date received if delivered personally,
(ii) the date of posting if delivered by mail, or (iii) the date of transmission
if delivered by overnight courier.

13. Conflict in Agreements. If the subordination provisions of any instrument
evidencing Subordinated Debt conflict with the terms of this Agreement, the
terms of this Agreement shall govern the relationship between the Lender and the
Subordinated Creditor.

14. No Waiver. No waiver shall be deemed to be made by the Lender of any of its
rights hereunder unless the same shall be in writing signed on behalf of the
Lender, and each such waiver, if any, shall be a waiver only with respect to the
specific matter or matters to which the waiver relates and shall in no way
impair the rights of the Lender or the obligations of the Subordinated Creditor
to the Lender in any other respect at any time.

15. Binding Effect; Acceptance. This Agreement shall be binding upon the
Subordinated Creditor and the Subordinated Creditor’s heirs, legal
representatives, and assigns and shall inure to the benefit of the Lender and
its participants, successors and assigns, irrespective of whether this or any
similar agreement is executed by any other subordinated creditor of any
Borrower. Notice of acceptance by the Lender of this Agreement or of reliance by
the Lender upon this Agreement is hereby waived by the Subordinated Creditor.

16. Miscellaneous. The paragraph headings herein are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.

17. Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial. This
Agreement shall be governed by and construed in accordance with the substantive
laws (other than conflict laws) of the State of Ohio.

 

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THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
ON OR PERTAINING TO THIS AGREEMENT.

IN WITNESS WHEREOF, the Subordinated Creditor has executed this Subordination
Agreement as of the date and year first above-written.

 

By:       John A. Martell

 

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ACKNOWLEDGMENT BY BORROWERS

Each of the undersigned, being the Borrowers referred to in the foregoing
Agreement, hereby (i) acknowledges receipt of a copy thereof, (ii) agrees to all
of the terms and provisions thereof, (iii) agrees to and with the Lender that it
shall make no payment on the Subordinated Debt that the Subordinated Creditor
would not be entitled to receive under the provisions of the Agreement,
(iv) agrees that any such payment will constitute a default under the Lender
Indebtedness, and (v) agrees to mark its books conspicuously to evidence the
subordination of the Subordinated Debt effected hereby.

 

MISCOR GROUP, LTD. By:       Michael P. Moore, President & CEO MAGNETECH
INDUSTRIAL SERVICES, INC. By:       Michael P. Moore, President & CEO HK ENGINE
COMPONENTS, LLC By:       Michael P. Moore, President & CEO

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Execution Copy

AMENDED PROMISSORY NOTE

(SECURED)

 

$1,680,094.60

   November __, 2011    South Bend, Indiana

THIS INSTRUMENT REPLACES A $425,149 FEBRUARY 3, 2010 SECURED PROMISSORY NOTE.

THIS INSTRUMENT IS SUBJECT TO THE TERMS OF AN AMENDED AND RESTATED SUBORDINATION
AGREEMENT BY JOHN A. MARTELL IN FAVOR OF WELLS FARGO BANK, NATIONAL ASSOCIATION,
ACTING THROUGH ITS WELLS FARGO BUSINESS CREDIT OPERATING DIVISION, DATED AS OF
NOVEMBER ___, 2011.

FOR VALUE RECEIVED, the undersigned, MISCOR GROUP, LTD., an Indiana corporation
(the “Borrower”), hereby promises to pay to the order of JOHN A. MARTELL, a
resident of Michigan (the “Lender”), at his residence of 61249 Howell Drive,
Cassopolis, Michigan 49031 or at such other place as the holder hereof may
designate in writing, in lawful money of the United States of America, the
principal sum of One Million, Six Hundred Eighty Thousand, Ninety-Four and
60/100 Dollars ($1,680,094.60), or such lesser principal sum as may then be owed
by the Borrower to the Lender under this Amended Promissory Note (Secured) (the
“Note”), and any remaining accrued interest (as set forth below), on or before
the earlier of the following dates:

The entire unpaid principal of the Note, and any unpaid and accrued interest
thereon, shall be due in full on October 31, 2013 (the “Stated Maturity Date”).

THE UNPAID INDEBTEDNESS EVIDENCED HEREBY SHALL BECOME IMMEDIATELY DUE AND
PAYABLE UPON THE STATED MATURITY DATE, TOGETHER WITH ANY REMAINING ACCRUED
INTEREST THEREON (AS SET FORTH BELOW).

This Note shall bear interest as follows:

 

  (a) From today through February 28, 2013, interest on the unpaid principal
amount shall be the greater of 7.5% or 2% plus Prime (as defined below);

 

  (b) From March 1, 2013 until the Stated Maturity Date, interest on the unpaid
principal amount shall be the greater of 9.5% or 2% plus Prime;

 

  (c) The rate of interest on the unpaid principal balance, for any of the time
periods set forth in subparagraphs (a) and (b) above, shall be fixed at the
beginning date of each time period.

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  (d) As used in this Note, “Prime” shall mean the prime rate of interest
published in the “Money Rates” section of The Wall Street Journal. In the event
The Wall Street Journal ceases to be published on a current basis or ceases to
include publication of the “Prime Rate,” then the Lender or his assignee will
select an alternative measure of the cost of money which, in the Lender’s
judgment, is reasonably equivalent to the “Prime Rate” as previously published
in The Wall Street Journal, which alternative cost of money shall be “Prime.”

The first special payment of principal shall be made on the date upon which the
Borrower refinances its primary financing facilities with Well Fargo Bank
National Association. The first special payment of principal shall be in the
amount of Three Hundred Sixteen Thousand Six Hundred Sixty-six Dollars ($316,
666.00).

The second special payment of principal, in the amount of One Hundred, Twenty
Thousand Dollars ($120,000.00) shall be made on or before December 29, 2011.

The third special payment of principal, in the amount of Two Hundred, Fifty
Thousand Dollars ($250,000), shall be made on or before June 30, 2012.

Regular installment payments on the principal sum shall begin January 1, 2012,
and shall be made on the first day of each consecutive month thereafter in
amounts of not less than Seven Thousand Five Hundred Dollars ($7,500). Effective
January 1, 2013, and on the first day of each consecutive calendar month until
the Stated Maturity Date, installment payments on the principal sum shall be not
less than Twelve Thousand Five Hundred Dollars ($12,500), with the final payment
of the entire unpaid principal, and all unpaid accrued interest thereon, due on
the Stated Maturity Date. All payments of principal shall be accompanied by a
payment of all then-accrued but unpaid interest, including unpaid interest which
may have accrued prior to the date of this Note. Payments of both principal and
interest hereunder are to be made in immediately available funds.

At any time there is a Change in Control (as defined in this paragraph) of
Borrower as a result of or contemporaneously with an exchange or issuance of
securities to one or more persons, Borrower will be required to pay the
then-remaining principal balance (plus all then accrued but unpaid interest)
under this Note. For purposes of this Agreement, the term “Change in Control”
shall mean a situation (whether occasioned by issuance, sales, or transfers of a
Borrower’s securities or by any merger, consolidation, recapitalization,
reorganization, or other transaction involving a Borrower) in which any person,
company or organization, not a five percent (5%) or more shareholder as of the
date of this Agreement, acquires record beneficial ownership of more than fifty
percent (50%) of MISCOR’s outstanding capital stock.

If Wells Fargo Bank, National Association lawfully prevents the Borrower from
making payments of principal, then Borrower shall, nonetheless, make payments of
any then-accrued but unpaid interest which would otherwise be payable on the
principal payment date.

If the Borrower fails, refuses, or is prevented from paying any principal,
interest, charges, costs, expenses and/or fees in accordance with the terms of
this Note (“Event of Default”), then Lender shall be entitled, at his sole
option, to accelerate the then outstanding indebtedness hereunder and to take
all other action permissible by law. Upon an Event of Default, the Lender at his
option may, if permitted under applicable law, increase the rate of interest on
this Note to Five (5) percentage points (“Default Rate of Interest”) over the
then applicable interest rate. The Default Rate of Interest will not exceed the
maximum rate permitted by applicable law.

 

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The remedies of the Lender as provided in this Note shall be cumulative and
concurrent, and may be pursued singly, successively, or together against the
Borrower, and/or against any collateral or guarantor, at the sole discretion of
the Lender.

The Borrower hereby waives presentment for payment, demand, notice of
nonpayment, notice of dishonor, protest of any dishonor, notice of protest, and
protest of this Note and all other notices in connection with the delivery,
acceptance, performance, default, or enforcement of the payment of this Note,
and agrees that its liability shall not in any manner be affected by any
indulgence, extension of time, renewal, waiver or modification granted or
consented to by the Lender; and the Borrower agrees that additional makers,
endorsers, guarantors, or sureties may become parties hereto without notice to
the Borrower or affecting the Borrower’s liability hereunder.

It is the intent of the Lender and the Borrower that the rate of interest and
all other charges to the Borrower be lawful. If for any reason the payment of a
portion of the interest or other charges otherwise required to be paid under
this Note would exceed the limit which the Lender may lawfully charge the
Borrower, then the obligation to pay interest or other charges shall
automatically be reduced to such limit.

The Lender shall not by any act of omission or commission be deemed to waive any
of its rights or remedies hereunder unless such waiver be in writing and signed
by the Lender (and then only to the extent specifically set forth therein). A
waiver of any one event shall not be construed as continuing or as a bar to or
waiver of such right or remedy on a subsequent event.

Whenever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited or invalid under such law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions of this Note.

This Note shall not be amended, supplemented or modified except pursuant to a
writing signed by both the Lender and the Borrower.

If at any time or times, the Lender: (a) employs counsel in good faith for
advice or other representation (i) with respect to this Note or any collateral
securing this Note, (ii) to represent Lender in any restructuring, workout,
litigation, contest, dispute, suit or proceeding or to commence, defend or
intervene or to take any other action in or with respect to any litigation,
contest, dispute or proceeding (whether instituted by the Lender, the Borrower
or any other person or entity) in any way or respect relating to this Note or
any collateral securing this Note, or (iii) to enforce any rights of the Lender
against the Borrower; (b) takes any action to protect, collect, sell, liquidate
or otherwise dispose of any collateral securing this Note; and/or (c) attempts
to or enforces any of the Lender’s rights and remedies against the Borrower;
then the costs and expenses incurred by the Lender shall be part of the
indebtedness evidenced by this Note, payable by the Borrower to the Lender on
demand. Without limiting the generality of the foregoing, such expenses and
costs include any and all court costs, reasonable attorneys’ fees and expenses,
and accountants’ fees and expenses.

Payment of this Note is secured pursuant to that certain Security Agreement
dated as of February 10, 2010 (the “Security Agreement”), and other related
documents dealing with the grant of security for the indebtedness represented by
this Note.

This Note may be prepaid in advance of the installments above or the stated
Maturity Date, without penalty and at the election of Borrower at any time.

 

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This Note shall inure to the benefit of the Lender and its successors and
assigns and shall be binding upon the Borrower and its successors and permitted
assigns. As used herein the term “Lender” shall mean and include the successors
and assigns of the identified payee and the holder or holders of this Note from
time to time.

THIS NOTE SHALL BE CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH, AND ENFORCED
AND GOVERNED BY THE INTERNAL LAWS OF INDIANA, WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES.

THE BORROWER AND THE LENDER HEREBY IRREVOCABLY AND KNOWINGLY WAIVE (TO THE
FULLEST EXTENT PERMITTED BY LAW) ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING (INCLUDING, WITHOUT LIMITATION, ANY COUNTERCLAIM) ARISING OUT OF THIS
NOTE OR ANY COLLATERAL SECURING THIS NOTE, INCLUDING, WITHOUT LIMITATION, ANY
ACTION OR PROCEEDING (A) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION
WITH THIS NOTE OR THE SECURITY AGREEMENT, OR (B) ARISING FROM ANY DISPUTE OR
CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS NOTE OR THE SECURITY
AGREEMENT. THE LENDER AND THE BORROWER AGREE THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT A JURY.

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed by its
authorized officer as of the date first above written.

 

MISCOR GROUP, LTD By:      

Michael P. Moore, President and

Chief Executive Officer

 

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