Form of Subordination Agreement made among John Martell, Patricia Minehardt
      and Strasbourger Pearson Tulcin Wolff, Inc., as agent for the holders of subordinated
      convertible debentures, in favor of Laurus Master Fund, Ltd.


    

       

      Exhibit
        10.13

       

       

      


       

       

      FORM
        OF SUBORDINATION AGREEMENT

       

      This
        Subordination Agreement (this “Agreement”) is entered into as of the 24th 
        day of August, 2005, by and among John Martell, Patricia Minehardt and
        Strasbourger Pearson Tulcin Wolff, Inc. (“Strasbourger”) as agent for the
        holders of the Subordinated Secured Convertible Debenture holders listed
        on
        Schedule A (the “Debenture Holder(s),” all of whom are collectively referred to
        herein as the “Subordinated Lenders” and each, a “Subordinated Lender”), and
        Laurus Master Fund, Ltd. (the “Senior Lender”). Unless otherwise defined herein,
        capitalized terms used herein shall have the meaning provided such terms
        in the
        Security and Purchase Agreement referred to below.

      


       

      BACKGROUND

       

      WHEREAS,
        the Senior Lender has made a loan to MISCOR Group, Ltd. f/k/a Magnetech
        Integrated Services Corp., an Indiana corporation (the “Company”) pursuant to,
        and in accordance with, (i) that certain Security and Purchase Agreement
        dated
        as of the date hereof by and between the Company and Laurus (as amended,
        modified or supplemented from time to time, the "Security Agreement") and
        (ii)
        the Ancillary Agreements referred to in the Security and Purchase
        Agreement.

       

      WHEREAS,
        each Debenture Holder is the holder of a subordinated secured convertible
        debenture issued by the Company. Pursuant to Section 9.1 of each debenture,
        Strasbourger is authorized to make, take or give any consent, waiver or other
        action provided by the terms of the Debentures to be made, given or taken
        by the
        Debenture Holders. 

       

      WHEREAS,
        the Subordinated Lenders have made loans to the Company.

       

      NOW,
        THEREFORE, each Subordinated Lender and the Senior Lender agree as
        follows:

       

      TERMS

       

      1. Up
        to
        $10,000,000 aggregate principal amount of loans made by the Senior Lender
        to the
        Company and/or any of its Subsidiaries pursuant to, and all associated interest,
        fees and penalties owing by the Company and/or any of its Subsidiaries to
        the
        Senior Lender under, the Security Agreement and/or any Ancillary Agreement
        are
        referred to as “Senior Liabilities”. Any and all loans made by the Subordinated
        Lenders to the Company and/or any of its Subsidiaries, together with all
        other
        obligations of the Company and/or any of its Subsidiaries to any Subordinated
        Lender (in each case, including any interest, fees or penalties related
        thereto), howsoever created, arising or evidenced, whether direct or indirect,
        absolute or contingent or now or hereafter existing, or due or to become
        due are
        referred to as “Junior Liabilities”. It is expressly understood and agreed that
        the term “Senior Liabilities”, as used in this Agreement, shall include, without
        limitation, any and all interest, fees and penalties accruing on any of the
        Senior Liabilities after the commencement of any proceedings referred to
        in
        paragraph 4 of this Agreement, notwithstanding any provision or rule of law
        which might restrict the rights of the Senior Lender, as against the Company,
        its Subsidiaries or anyone else, to collect such interest, fees or penalties,
        as
        the case may be.

       


      
        
          
          

        

        
          
            

          

        

        
          
          

        

      


      2. Except
        as
        expressly otherwise provided in this Agreement or as the Senior Lender may
        otherwise expressly consent in writing, the payment of the Junior Liabilities
        shall be postponed and subordinated to the payment in full of all Senior
        Liabilities. Furthermore, no payments or other distributions whatsoever in
        respect of any Junior Liabilities shall be made, nor shall any property or
        assets of the Company or any of its Subsidiaries be applied to the purchase
        or
        other acquisition or retirement of any Junior Liability. Notwithstanding
        anything to the contrary contained in this paragraph 2 or elsewhere in this
        Agreement, the Company and its Subsidiaries may make regularly scheduled
        principal and interest payments, as the case may be, to the Subordinated
        Lenders
        with respect to the Junior Liabilities, so long as (i) no Event of Default
        (as
        defined in the Note) has occurred and is continuing at the time of any such
        payment and (ii) the amount of such regularly scheduled principal payments
        and
        the rate of interest, in each case, with respect to the Junior Liabilities
        is
        not increased from that in effect on the date hereof.

       

      3. Each
        Subordinated Lender hereby subordinates all security interests that have
        been,
        or may be, granted by the Company and/or any of its Subsidiaries to such
        Subordinated Lender in respect of the Junior Liabilities, to the security
        interests granted by the Company and/or any of its Subsidiaries to the Senior
        Lender in respect of the Senior Liabilities. 

      


      4. In
        the
        event of any dissolution, winding up, liquidation, readjustment, reorganization
        or other similar proceedings relating to the Company and/or any of its
        Subsidiaries or to its creditors, as such, or to its property (whether voluntary
        or involuntary, partial or complete, and whether in bankruptcy, insolvency
        or
        receivership, or upon an assignment for the benefit of creditors, or any
        other
        marshalling of the assets and liabilities of the Company and/or any of its
        Subsidiaries, or any sale of all or substantially all of the assets of the
        Company and/or any of its Subsidiaries, or otherwise), the Senior Liabilities
        shall first be paid in full before any Subordinated Lender shall be entitled
        to
        receive and to retain any payment or distribution in respect of any Junior
        Liability.

       

      5. Each
        Subordinated Lender will mark his books and records so as to clearly indicate
        that their respective Junior Liabilities are subordinated in accordance with
        the
        terms of this Agreement. Each Subordinated Lender will execute such further
        documents or instruments and take such further action as the Senior Lender
        may
        reasonably request from time to time request to carry out the intent of this
        Agreement.

       

      6. Each
        Subordinated Lender hereby waives all diligence in collection or protection
        of
        or realization upon the Senior Liabilities or any security for the Senior
        Liabilities.

       

      7. No
        Subordinated Lender will without the prior written consent of the Senior
        Lender:
        (a) attempt to enforce or collect any Junior Liability or any rights in respect
        of any Junior Liability; or (b) commence, or join with any other creditor
        in commencing, any bankruptcy, reorganization or insolvency proceedings with
        respect to the Company and/or any of its Subsidiaries.

       

      8. The
        Senior Lender may, from time to time, at its sole discretion and without
        notice
        to any Subordinated Lender, take any or all of the following actions: (a)
        retain
        or obtain a security interest in any property to secure any of the Senior
        Liabilities; (b) retain or obtain the 

       


      
        
          
          

        

        
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      primary
        or secondary obligation of any other obligor or obligors with respect to
        any of
        the Senior Liabilities; (c) extend or renew for one or more periods (whether
        or
        not longer than the original period), alter or exchange any of the Senior
        Liabilities, or release or compromise any obligation of any nature of any
        obligor with respect to any of the Senior Liabilities; and (d) release their
        security interest in, or surrender, release or permit any substitution or
        exchange for, all or any part of any property securing any of the Senior
        Liabilities, or extend or renew for one or more periods (whether or not longer
        than the original period) or release, compromise, alter or exchange any
        obligations of any nature of any obligor with respect to any such
        property.

       

      9. The
        Senior Lender may, from time to time, whether before or after any discontinuance
        of this Agreement, without notice to any Subordinated Lender, assign or transfer
        any or all of the Senior Liabilities or any interest in the Senior Liabilities;
        and, notwithstanding any such assignment or transfer or any subsequent
        assignment or transfer of the Senior Liabilities, such Senior Liabilities
        shall
        be and remain Senior Liabilities for the purposes of this Agreement, and
        every
        immediate and successive assignee or transferee of any of the Senior Liabilities
        or of any interest in the Senior Liabilities shall, to the extent of the
        interest of such assignee or transferee in the Senior Liabilities, be entitled
        to the benefits of this Agreement to the same extent as if such assignee
        or
        transferee were the Senior Lender, as applicable; provided, however, that,
        unless the Senior Lender shall otherwise consent in writing, the Senior Lender
        shall have an unimpaired right, prior and superior to that of any such assignee
        or transferee, to enforce this Agreement, for the benefit of the Senior Lender,
        as to those of the Senior Liabilities which the Senior Lender has not assigned
        or transferred.

       

      10. The
        Senior Lender shall not be prejudiced in its rights under this Agreement
        by any
        act or failure to act of any Subordinated Lender, or any noncompliance of
        any
        Subordinated Lender with any agreement or obligation, regardless of any
        knowledge thereof which the Senior Lender may have or with which the Senior
        Lender may be charged; and no action of the Senior Lender permitted under
        this
        Agreement shall in any way affect or impair the rights of the Senior Lender
        and
        the obligations of any Subordinated Lender under this Agreement.

       

      11. No
        delay
        on the part of the Senior Lender in the exercise of any right or remedy shall
        operate as a waiver of such right or remedy, and no single or partial exercise
        by the Senior Lender of any right or remedy shall preclude other or further
        exercise of such right or remedy or the exercise of any other right or remedy;
        nor shall any modification or waiver of any of the provisions of this Agreement
        be binding upon the Senior Lender except as expressly set forth in a writing
        duly signed and delivered on behalf of the Senior Lender. For the purposes
        of
        this Agreement, Senior Liabilities shall have the meaning set forth in Section
        1
        above, notwithstanding any right or power of any Subordinated Lender or anyone
        else to assert any claim or defense as to the invalidity or unenforceability
        of
        any such obligation, and no such claim or defense shall affect or impair
        the
        agreements and obligations of any Subordinated Lender under this
        Agreement.

       

      12. This
        Agreement shall be binding upon each Subordinated Lender and upon the heirs,
        legal representatives, successors and assigns of each Subordinated Lender
        and
        the successors and assigns of any Subordinated Lender.

       


      
        
          
          

        

        
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      13. This
        Agreement shall be construed in accordance with and governed by the laws
        of New
        York without regard to conflict of laws provisions. Wherever possible each
        provision of this Agreement shall be interpreted in such manner as to be
        effective and valid under applicable law, but if any provision of this Agreement
        shall be prohibited by or invalid under such law, such provision shall be
        ineffective to the extent of such prohibition or invalidity, without
        invalidating the remainder of such provision or the remaining provisions
        of this
        Agreement.

       

      [signature
        page follows]

      



      
        
          
          

        

        
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      IN
        WITNESS WHEREOF, this Agreement has been made and delivered this 24th
        day
        of August, 2005.

       

      


      
        	 	 	 	
                By:

              	 /s/
                John Martell
	 	 	 	
                Name:

              	
                John
                  Martell

              
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	
                By:

              	 /s/
                Patricia Minehardt
	 	 	 	
                Name:

              	
                Patricia
                  Minehardt

              
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	
                STRASBOURGER
                  PEARSON TULCIN WOLFF, INC. as agent for the Debenture
                  Holders

              
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	
                By:

              	 /s/
                Michael J. Schumacher
	 	 	 	
                Name:

              	 Michael
                J. Schumacher
	 	 	 	
                Title:

              	 President
	 	 	 	 	 
	 	 	 	
                LAURUS
                  MASTER FUND, LTD.

              
	 	 	 	 	 
	 	 	 	
                By:

              	 /s/
                David Grin
	 	 	 	
                Name:

              	 David
                Grin
	 	 	 	
                Title:

              	 Director
	
                Acknowledged
                  and Agreed to by:

                 

              	 	 	 
	
                MISCOR
                  GROUP, LTD.

                 

              	 	 	 
	
                By:

              	 /s/
                John A. Martell	 	 	 
	
                Name:

              	 John
                A. Martell	 	 	 
	
                Title:

              	 President 
                CEO	 	 	 


      

      


      


      


      5