Document:

Funds Escrow Agreement

    

      Exhibit
        10.8

       

       

      FUNDS
        ESCROW AGREEMENT

       

      This
        Agreement (this “Agreement”)
        is
        dated as of the 31st day of May 2006 among Magnetech Industrial Services
        of
        Alabama, LLC, an Indiana limited liability corporation (the “Company”),
        Laurus Master Fund, Ltd. (the “Purchaser”),
        and
        Loeb & Loeb LLP (the “Escrow
        Agent”):

       

      W I T N E S S E T H:

       

      WHEREAS,
        the Purchaser has advised the Escrow Agent that (a) the Company and the
        Purchaser have entered into a Security and Purchase Agreement (the “Security
        Agreement”)
        for
        the sale by the Company to the Purchaser of a secured term note (the
“Secured
        Term Note”)
        and a
        secured non-convertible revolving note (the “Secured
        Non-Convertible Revolving Note”),
        (b)
        MISCOR Group, Ltd., the parent of the Company (“MISCOR”) has issued to the
        Purchaser a common stock purchase warrant (the “Warrant”)
        in
        connection with the issuance of the Secured Term Note and the Secured
        Non-Convertible Revolving Note, and (c) the Company and the Purchaser have
        entered into a Registration Rights Agreement covering the registration of
        MISCOR’s common stock underlying the Warrant (the “Registration
        Rights Agreement”);

       

      WHEREAS,
        the Company and the Purchaser wish to deliver to the Escrow Agent copies
        of the
        Documents (as hereafter defined) and, following the satisfaction of all closing
        conditions relating to the Documents, the Purchaser to deliver the Escrowed
        Payment (as hereafter defined), in each case, to be held and released by
        Escrow
        Agent in accordance with the terms and conditions of this Agreement;
        and

       

      WHEREAS,
        the Escrow Agent is willing to serve as escrow agent pursuant to the terms
        and
        conditions of this Agreement;

       

      NOW
        THEREFORE, the parties agree as follows:

       

      ARTICLE
        I

      INTERPRETATION

       

      1.1.  Definitions.
        Whenever used in this Agreement, the following terms shall have the meanings
        set
        forth below.

       

      (a)  “Agreement”
        means this Agreement, as amended, modified and/or supplemented from time
        to time
        by written agreement among the parties hereto.

       

      (b)  “Closing
        Payment” means the closing payment to be paid to Laurus Capital Management, LLC,
        the fund manager, as set forth on Schedule A hereto. 

       

      (c)  “Disbursement
        Letter” means that certain letter delivered to the Escrow Agent by the Company,
        acceptable in form and substance to the Purchaser, setting forth wire
        instructions and amounts to be funded at the Closing. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      (d)  “Documents”
        means copies of the Disbursement Letter, the Security Agreement, the Secured
        Term Note, the Secured Non-Convertible Revolving Note, the Warrant and the
        Registration Rights Agreement.

       

      (e)  “Escrowed
        Payment” means $3,377,000.

       

      1.2.  Entire
        Agreement.
        This
        Agreement constitutes the entire agreement among the parties hereto with
        respect
        to the arrangement with the Escrow Agent and supersedes all prior agreements,
        understandings, negotiations and discussions of the parties, whether oral
        or
        written with respect to the arrangement with the Escrow Agent. There are
        no
        warranties, representations and other agreements made by the parties in
        connection with the arrangement with the Escrow Agent except as specifically
        set
        forth in this Agreement.

       

      1.3.  Extended
        Meanings.
        In this
        Agreement words importing the singular number include the plural and vice
        versa;
        words importing the masculine gender include the feminine and neuter genders.
        The word “person” includes an individual, body corporate, partnership, trustee
        or trust or unincorporated association, executor, administrator or legal
        representative.

       

      1.4.  Waivers
        and Amendments.
        This
        Agreement may be amended, modified, superseded, cancelled, renewed or extended,
        and the terms and conditions hereof may be waived, in each case only by a
        written instrument signed by all parties hereto, or, in the case of a waiver,
        by
        the party waiving compliance. Except as expressly stated herein, no delay
        on the
        part of any party in exercising any right, power or privilege hereunder shall
        operate as a waiver thereof, nor shall any waiver on the part of any party
        of
        any right, power or privilege hereunder preclude any other or future exercise
        of
        any other right, power or privilege hereunder.

       

      1.5.  Headings.
        The
        division of this Agreement into articles, sections, subsections and paragraphs
        and the insertion of headings are for convenience of reference only and shall
        not affect the construction or interpretation of this Agreement.

       

      1.6.  Law
        Governing this Agreement; Consent to Jurisdiction.
        THIS
        AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
        OF THE
        STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. With
        respect to any suit, action or proceeding relating to this Agreement or to
        the
        transactions contemplated hereby (“Proceedings”), each party hereto irrevocably
        submits to the exclusive jurisdiction of the courts of the County of New
        York,
        State of New York and the United States District court located in the county
        of
        New York in the State of New York. Each party hereto hereby irrevocably and
        unconditionally (a) waives trial by jury in any Proceeding relating to this
        Agreement and for any related counterclaim and (b) waives any objection which
        it
        may have at any time to the laying of venue of any Proceeding brought in
        any
        such court, waives any claim that such Proceedings have been brought in an
        inconvenient forum and further waives the right to object, with respect to
        such
        Proceedings, that such court does not have jurisdiction over such party.
        As
        between the Company and the Purchaser, the prevailing party shall be entitled
        to
        recover from the other party its reasonable attorneys’ fees and costs. In the
        event that any provision of this Agreement is determined by a court of competent
        jurisdiction to be invalid or unenforceable, then the remainder of this
        Agreement shall not be affected and shall remain in full force and
        effect.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

       

      1.7.  Construction.
        Each
        party acknowledges that its legal counsel participated in the preparation
        of
        this Agreement and, therefore, stipulates that the rule of construction that
        ambiguities are to be resolved against the drafting party shall not be applied
        in the interpretation of this Agreement to favor any party against the
        other.

       

      ARTICLE
        II

      APPOINTMENT
        OF AND DELIVERIES TO THE ESCROW AGENT

       

      2.1.  Appointment.
        The
        Company and the Purchaser hereby irrevocably designate and appoint the Escrow
        Agent as their escrow agent for the purposes set forth herein, and the Escrow
        Agent by its execution and delivery of this Agreement hereby accepts such
        appointment under the terms and conditions set forth herein.

       

      2.2.  Copies
        of Documents to Escrow Agent.
        On or
        about the date hereof, the Purchaser and the Company shall deliver to the
        Escrow
        Agent copies of the Documents executed by such parties.

       

      2.3.  Delivery
        of Escrowed Payment to Escrow Agent.
        Following the satisfaction of all closing conditions relating to the Documents
        (other than the funding of the Escrowed Payment), the Purchaser shall deliver
        to
        the Escrow Agent the Escrowed Payment. At such time, the Escrow Agent shall
        hold
        the Escrowed Payment as agent for the Company, subject to the terms and
        conditions of this Agreement.

       

      2.4.  
        Intention to Create Escrow Over the Escrowed Payment.
        The
        Purchaser and the Company intend that the Escrowed Payment shall be held
        in
        escrow by the Escrow Agent and released from escrow by the Escrow Agent only
        in
        accordance with the terms and conditions of this Agreement.

       

      ARTICLE
        III

      RELEASE
        OF ESCROW

       

      3.1.  Release
        of Escrow.
        Subject
        to the provisions of Section 4.2, the Escrow Agent shall release the Escrowed
        Payment from escrow as follows:

       

      (a)  Upon
        receipt by the Escrow Agent of (i) oral instructions from David Grin and/or
        Eugene Grin (each of whom is a director of the Purchaser) consenting to the
        release of the Escrowed Payment from escrow in accordance with the Disbursement
        Letter following the Escrow Agent’s receipt of the Escrowed Payment, (ii) the
        Disbursement Letter, and (iii) the Escrowed Payment, the Escrowed Payment
        shall
        promptly be disbursed in accordance with the Disbursement Letter. The
        Disbursement Letter shall include, without limitation, Escrow Agent’s
        authorization to retain from the Escrowed Payment Escrow Agent’s fee for acting
        as Escrow Agent hereunder and the Closing Payment for delivery to Laurus
        Capital
        Management, LLC in accordance with the Disbursement Letter.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      

       

      (b)  Upon
        receipt by the Escrow Agent of a final and non-appealable judgment, order,
        decree or award of a court of competent jurisdiction (a “Court
        Order”)
        relating to the Escrowed Payment, the Escrow Agent shall remit the Escrowed
        Payment in accordance with the Court Order. Any Court Order shall be accompanied
        by an opinion of counsel for the party presenting the Court Order to the
        Escrow
        Agent (which opinion shall be satisfactory to the Escrow Agent) to the effect
        that the court issuing the Court Order is a court of competent jurisdiction
        and
        that the Court Order is final and non-appealable.

       

      3.2.  Acknowledgement
        of Company and Purchaser; Disputes.
        The
        Company and the Purchaser acknowledge that the only terms and conditions
        upon
        which the Escrowed Payment are to be released from escrow are as set forth
        in
        Sections 3 and 4 of this Agreement. The Company and the Purchaser reaffirm
        their
        agreement to abide by the terms and conditions of this Agreement with respect
        to
        the release of the Escrowed Payment. Any dispute with respect to the release
        of
        the Escrowed Payment shall be resolved pursuant to Section 4.2 or by written
        agreement between the Company and Purchaser.

       

      ARTICLE
        IV

      CONCERNING
        THE ESCROW AGENT

       

      4.1.  Duties
        and Responsibilities of the Escrow Agent.
        The
        Escrow Agent’s duties and responsibilities shall be subject to the following
        terms and conditions:

       

      (a)  The
        Purchaser and the Company acknowledge and agree that the Escrow Agent (i)
        shall
        not be required to inquire into whether the Purchaser, the Company or any
        other
        party is entitled to receipt of any Document or all or any portion of the
        Escrowed Payment; (ii) shall not be called upon to construe or review any
        Document or any other document, instrument or agreement entered into in
        connection therewith; (iii) shall be obligated only for the performance of
        such
        duties as are specifically assumed by the Escrow Agent pursuant to this
        Agreement; (iv) may rely on and shall be protected in acting or refraining
        from
        acting upon any written notice, instruction, instrument, statement, request
        or
        document furnished to it hereunder and believed by the Escrow Agent in good
        faith to be genuine and to have been signed or presented by the proper person
        or
        party, without being required to determine the authenticity or correctness
        of
        any fact stated therein or the propriety or validity or the service thereof;
        (v)
        may assume that any person purporting to give notice or make any statement
        or
        execute any document in connection with the provisions hereof has been duly
        authorized to do so; (vi) shall not be responsible for the identity, authority
        or rights of any person, firm or company executing or delivering or purporting
        to execute or deliver this Agreement or any Document or any funds deposited
        hereunder or any endorsement thereon or assignment thereof; (vii) shall not
        be
        under any duty to give the property held by Escrow Agent hereunder any greater
        degree of care than Escrow Agent gives its own similar property; and (viii)
        may
        consult counsel satisfactory to Escrow Agent (including, without limitation,
        Loeb & Loeb, LLP or such other counsel of Escrow Agent’s choosing), the
        opinion of such counsel to be full and complete authorization and protection
        in
        respect of any action taken, suffered or 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      omitted
        by Escrow Agent hereunder in good faith and in accordance with the opinion
        of
        such counsel.

       

      (b)  The
        Purchaser and the Company acknowledge that the Escrow Agent is acting solely
        as
        a stakeholder at their request and that the Escrow Agent shall not be liable
        for
        any action taken by Escrow Agent in good faith and believed by Escrow Agent
        to
        be authorized or within the rights or powers conferred upon Escrow Agent
        by this
        Agreement. The Purchaser and the Company hereby, jointly and severally,
        indemnify and hold harmless the Escrow Agent and any of Escrow Agent’s partners,
        employees, agents and representatives from and against any and all actions
        taken
        or omitted to be taken by Escrow Agent or any of them hereunder and any and
        all
        claims, losses, liabilities, costs, damages and expenses suffered and/or
        incurred by the Escrow Agent arising in any manner whatsoever out of the
        transactions contemplated by this Agreement and/or any transaction related
        in
        any way hereto, including the fees of outside counsel and other costs and
        expenses of defending itself against any claims, losses, liabilities, costs,
        damages and expenses arising in any manner whatsoever out the transactions
        contemplated by this Agreement and/or any transaction related in any way
        hereto,
        except for such claims, losses, liabilities, costs, damages and expenses
        incurred by reason of the Escrow Agent’s gross negligence or willful misconduct.
        The Escrow Agent shall owe a duty only to the Purchaser and the Company under
        this Agreement and to no other person. 

       

      (c)  The
        Purchaser and the Company shall jointly and severally reimburse the Escrow
        Agent
        for its reasonable out-of-pocket expenses (including counsel fees (which
        counsel
        may be Loeb & Loeb LLP or such other counsel of the Escrow Agent’s choosing)
        incurred in connection with the performance of its duties and responsibilities
        hereunder, which shall not (subject to Section 4.1(b)) exceed $[1,500 - 4,000].
        

       

      (d)  The
        Escrow Agent may at any time resign as Escrow Agent hereunder by giving five
        (5)
        business days prior written notice of resignation to the Purchaser and the
        Company. Prior to the effective date of resignation as specified in such
        notice,
        the Purchaser and Company will issue to the Escrow Agent a joint instruction
        authorizing delivery of the Documents and the Escrowed Payment to a substitute
        Escrow Agent selected by the Purchaser and the Company. If no successor Escrow
        Agent is named by the Purchaser and the Company, the Escrow Agent may apply
        to a
        court of competent jurisdiction in the State of New York for appointment
        of a
        successor Escrow Agent, and deposit the Documents and the Escrowed Payment
        with
        the clerk of any such court, and/or otherwise commence an interpleader or
        similar action for a determination of where to deposit the same.

       

      (e)  The
        Escrow Agent does not have and will not have any interest in the Documents
        and
        the Escrowed Payment, but is serving only as escrow agent, having only
        possession thereof. 

       

      (f)  The
        Escrow Agent shall not be liable for any action taken or omitted by it in
        good
        faith and reasonably believed by it to be authorized hereby or within the
        rights
        or powers conferred upon it hereunder, nor for action taken or omitted by
        it in
        good faith, 

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      and
        in
        accordance with advice of counsel (which counsel may be Loeb & Loeb, LLP or
        such other counsel of the Escrow Agent’s choosing), and shall not be liable for
        any mistake of fact or error of judgment or for any acts or omissions of
        any
        kind except to the extent any such liability arose from its own willful
        misconduct or gross negligence.

       

      (g)  This
        Agreement sets forth exclusively the duties of the Escrow Agent with respect
        to
        any and all matters pertinent thereto and no implied duties or obligations
        shall
        be read into this Agreement.

       

      (h)  The
        Escrow Agent shall be permitted to act as counsel for the Purchaser or the
        Company, as the case may be, in any dispute as to the disposition of the
        Documents and the Escrowed Payment, in any other dispute between the Purchaser
        and the Company, whether or not the Escrow Agent is then holding the Documents
        and/or the Escrowed Payment and continues to act as the Escrow Agent hereunder.
        

       

      (i)  The
        provisions of this Section 4.1 shall survive the resignation of the Escrow
        Agent
        or the termination of this Agreement.

       

      4.2.  Dispute
        Resolution; Judgments.
        Resolution of disputes arising under this Agreement shall be subject to the
        following terms and conditions:

       

      (a)  If
        any
        dispute shall arise with respect to the delivery, ownership, right of possession
        or disposition of the Documents and/or the Escrowed Payment, or if the Escrow
        Agent shall in good faith be uncertain as to its duties or rights hereunder,
        the
        Escrow Agent shall be authorized, without liability to anyone, to (i) refrain
        from taking any action other than to continue to hold the Documents and the
        Escrowed Payment pending receipt of a joint instruction from the Purchaser
        and
        the Company, (ii) commence an interpleader or similar action, suit or proceeding
        for the resolution of any such dispute; and/or (iii) deposit the Documents
        and
        the Escrowed Payment with any court of competent jurisdiction in the State
        of
        New York, in which event the Escrow Agent shall give written notice thereof
        to
        the Purchaser and the Company and shall thereupon be relieved and discharged
        from all further obligations pursuant to this Agreement. The Escrow Agent
        may,
        but shall be under no duty to, institute or defend any legal proceedings
        which
        relate to the Documents and the Escrowed Payment. The Escrow Agent shall
        have
        the right to retain counsel if it becomes involved in any disagreement, dispute
        or litigation on account of this Agreement or otherwise determines that it
        is
        necessary to consult counsel which such counsel may be Loeb & Loeb
LLP
        or
such
        other counsel of the Escrow Agent’s choosing.

       

      (b)  The
        Escrow Agent is hereby expressly authorized to comply with and obey any Court
        Order. In case the Escrow Agent obeys or complies with a Court Order, the
        Escrow
        Agent shall not be liable to the Purchaser and the Company or to any other
        person, firm, company or entity by reason of such compliance.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      

       

      ARTICLE
        V

      GENERAL
        MATTERS

       

      5.1.  Termination.
        This
        escrow shall terminate upon disbursement of the Escrowed Payment in accordance
        with the terms of this Agreement or earlier upon the agreement in writing
        of the
        Purchaser and the Company or resignation of the Escrow Agent in accordance
        with
        the terms hereof.

       

      5.2.  Notices.
        All
        notices, requests, demands and other communications required or permitted
        hereunder shall be in writing and shall be deemed to have been duly given
        one
        (1) day after being sent by telecopy (with copy delivered by overnight courier,
        regular or certified mail):

       

      
        	
                (a)

              	
                If
                  to the Company, to:

              	
                Magnetech
                  Integrated Services of Alabama, LLC

              
	 	 	
                c/o
                  MISCOR Group, Ltd.

              
	 	 	
                1125
                  South Walnut Street

              
	 	 	
                South
                  Bend, Indiana 46619

              
	 	 	
                Fax:
                  (574) 232-7648

              
	 	 	
                Attention:
                  John A. Martell

              
	 	 	 
	 	
                With
                  a copy to:

              	
                Barnes
                  & Thornburg, LLP

              
	 	 	
                100
                  North Michigan St.

              
	 	 	
                South
                  Bend, Indiana 46601

              
	 	 	
                Fax:
                  (574) 237-1125

              
	 	 	
                Attention:
                  Richard L. Mintz, Esq.

              
	 	 	 
	
                (b)

              	
                If
                  to the Purchaser, to:

              	
                Laurus
                  Master Fund, Ltd.

              
	 	 	
                M&C
                  Corporate Services Limited, 

              
	 	 	
                P.O.
                  Box 309 GT, Ugland House

              
	 	 	
                South
                  Church Street, George Town

              
	 	 	
                Grand
                  Cayman, Cayman Islands

              
	 	 	
                Fax:
                  345-949-8080

              
	 	 	
                Attention:
                  John Tucker, Esq.

                 

              
	
                (c)

              	
                If
                  to the Escrow Agent, to:

              	
                Loeb
                  & Loeb LLP

              
	 	 	
                345
                  Park Avenue

              
	 	 	
                New
                  York, New York 10154

              
	 	 	
                Fax:
                  (212) 407-4990

              
	 	 	
                Attention:
                  Scott J. Giordano, Esq.

                 

              

      

      or
        to
        such other address as any of them shall give to the others by notice made
        pursuant to this Section 5.2.

       

      5.3.  Interest.
        The
        Escrowed Payment shall not be held in an interest bearing account nor will
        interest be payable in connection therewith.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      

       

      5.4.  Assignment;
        Binding Agreement.
        Neither
        this Agreement nor any right or obligation hereunder shall be assignable
        by any
        party without the prior written consent of the other parties hereto. This
        Agreement shall inure to the benefit of and be binding upon the parties hereto
        and their respective legal representatives, successors and assigns.

       

      5.5.  Invalidity.
        In the
        event that any one or more of the provisions contained herein, or the
        application thereof in any circumstance, is held invalid, illegal, or
        unenforceable in any respect for any reason, the validity, legality and
        enforceability of any such provision in every other respect and of the remaining
        provisions contained herein shall not be in any way impaired thereby, it
        being
        intended that all of the rights and privileges of the parties hereto shall
        be
        enforceable to the fullest extent permitted by law.

       

      5.6.  Counterparts/Execution.
        This
        Agreement may be executed in any number of counterparts and by different
        signatories hereto on separate counterparts, each of which, when so executed,
        shall be deemed an original, but all such counterparts shall constitute but
        one
        and the same agreement. This Agreement may be executed by facsimile
        transmission.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
        date
        and year first above written.

       

      
        	 	
                COMPANY:

              
	 	 	 
	 	
                MAGNETECH
                  INTEGRATED SERVICES OF ALABAMA, LLC

              
	 	 	 
	 	
                By:

              	/s/
                Richard J. Mullin
	 	 	
                Name: 
                  Richard J. Mullin

              
	 	 	
                Title: 
                  Vice President and CFO

              
	 	 	 
	 	
                PURCHASER:

              
	 	 	 
	 	
                LAURUS
                  MASTER FUND, LTD.

              
	 	 	 
	 	 	 
	 	
                By:

              	/s/
                David Grin
	 	 	
                Name: 
                  David Grin

              
	 	 	
                Title: 
                  Partner

              
	 	 	 
	 	
                ESCROW
                  AGENT:

              
	 	 	 
	 	
                LOEB
                  & LOEB LLP

              
	 	 	 
	 	 	 
	 	
                By:

              	/s/
                Scott Giordano
	 	 	
                Name: 
                  Scott Giordano

              
	 	 	
                Title: 
                  Partner

              

      

      

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      SCHEDULE
        A TO FUNDS ESCROW AGREEMENT

       

      
        	
                PURCHASER

                 

              	
                PRINCIPAL
                  NOTE AMOUNT

                 

              
	
                LAURUS
                  MASTER FUND, LTD.,

                M&C
                  Corporate Services Limited,

                P.O.
                  Box 309 GT,

                Ugland
                  House, South Church Street,

                George
                  Town, Grand Cayman, Cayman Islands

                Fax: 345-949-8080

                 

              	
                Secured
                  Term Note in an aggregate principal amount of $2,100,000

                 

                Secured
                  Non-Convertible Revolving Note in an aggregate principal amount
                  of
                  $1,600,000

                 

              
	
                TOTAL

              	
                $3,700,000

              

      

      

       

      
        	
                FUND
                  MANAGER

                 

              	
                CLOSING
                  PAYMENT

                 

              
	
                LAURUS
                  CAPITAL MANAGEMENT, L.L.C.

                825
                  Third Avenue, 14th
                  Floor

                New
                  York, New York 10022

                Fax:
                  212-541-4434

                 

              	
                Closing
                  payment payable in connection with investment by Laurus Master
                  Fund, Ltd.
                  for which Laurus Capital Management, L.L.C. is the Manager.

                 

              
	
                TOTAL

              	
                $133,200

              

      

       

      WARRANTS

       

      
        	
                WARRANT
                  RECIPIENT

                 

              	
                WARRANTS
                  IN CONNECTION WITH OFFERING

                 

              
	
                LAURUS
                  MASTER FUND, LTD.

                M&C
                  Corporate Services Limited,

                P.O.
                  Box 309 GT,

                Ugland
                  House, South Church Street,

                George
                  Town, Grand Cayman, Cayman Islands 

                Fax: 345-949-8080

                 

              	
                Warrant
                  exercisable into 375,000 shares of common stock of the Company
                  issuable in
                  connection with the Secured Term Note and the Secured Non-Convertible
                  Revolving Note.

                 

              
	
                TOTAL

                 

              	
                Warrants
                  exercisable into 375,000 shares of common stock of the
                  CompanyFunds Escrow Disbursement Letter/Joint Instructions

    

      Exhibit
        10.9

      

      

      Magnatech
        Industrial Services of Alabama, Inc.

      1125
        South Walnut Street

      South
        Bend, Indiana 46619

      (574)
        234-5966

      Fax
        (574)
        232-7648

      

      

      May
        31,
        2006

      

      Scott
        J.
        Giordano 

      Loeb
        & Loeb LLP 

      345
        Park
        Avenue 

      New
        York,
        New York 10154 

      Direct
        Dial:  (212) 407-4104 

      Fax: 
        (212) 407-4990

      

      
        	
                 

                RE:

              	
                 

                Magnatech
                  Industrial Services of Alabama, Inc. - Escrow Release Gross Escrow
                  Deposit: $3,377,000

              

      

       

      Dear
        Mr.
        Giordano:

      

      These
        instructions are given to you pursuant to a Funds Escrow Agreement among
        Magnatech (the “Company”) and Loeb & Loeb LLP, as Escrow Agent. Subject to
        the terms set forth below, you are instructed to disburse $3,377,000
        of the investor’s funds received by you to and on the Company’s behalf as
        follows:

       

      

       

      Disbursements
        to the Title Insurance Company

       

      	1.  	
              $1,600,000
                - The Guarantee Title Company, LLC., pursuant to the following wire
                instructions:

            

      

      
        	 	
                Bank:

              	
                Amsouth
                  Bank of Alabama

              
	 	 	
                31
                  N. Royal Street

                Mobile,
                  AL  36602

              
	 	
                Escrow
                  Account #

                Routing
                  #:

              	
                07686951

                062000019

              
	 	
                Account
                  Name:

              	
                Impart,Inc./
                  Impart Media Group,Inc.

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Disbursements
        to the Seller

       

      	2.  	
              $1,626,800
                - Smith
                Services (payoff
                of Term Loan and Revolving Loan ) pursuant to the following wire
                instructions:

            

       

      

      
        	 	
                Bank:

              	
                The
                  Huntington National Bank

              
	 	 	
                One
                  Huntington Square

                P
                  O Box 633

                Charleston,
                  WV 25322

                 

              
	 	
                Account
                  #

                Routing
                  #:

              	
                01221108065

                051903761

              
	 	
                SSI
                  Account: 

              	
                Smith
                  Services, Inc.

              

      

      

       

       

       

       

      

      

      

      Disbursements
        to the Laurus Capital Management, LLC

      

      	3.  	
              $15,000
                - Laurus Capital Management, L.L.C. (for payment in full of all due
                diligence and documentation fees owed by the Company), pursuant to
                the
                following wire instructions:

            

      

      
        	 	
                Bank:

              	
                North
                  Fork Bank

              
	 	 	
                New
                  York, NY 10022

              
	 	
                ABA
                  Number: 

              	
                021407912

              
	 	
                For
                  Credit to: 

              	
                Laurus
                  Capital Management, LL.C.

              
	 	
                Account
                  Number: 

              	
                2774045278

              

      

       

      

      	4.  	
              $133,200
                - Laurus Capital Management, L.L.C. (management fee), pursuant to
                the
                following wire instructions:

            

      

      
        	 	
                Bank:

              	
                North
                  Fork Bank

              
	 	 	
                New
                  York, NY 10022

              
	 	
                ABA
                  Number: 

              	
                021407912

              
	 	
                For
                  Credit to: 

              	
                Laurus
                  Capital Management, LL.C.

              
	 	
                Account
                  Number: 

              	
                2774045278

              

      

       

      

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Disbursements
        to the Escrow Agent

      

      	5.  	
              $2,000
                - Loeb & Loeb LLP (for escrow agent fee), pursuant to the following
                wire instructions:

            

      

      
        	 	
                Bank:
                  

              	
                Citibank,
                  N.A.

              
	 	
                ABA
                  No:

              	
                021000089

              
	 	
                Acct.
                  No.:

              	
                02674308

              
	 	
                Reference:

              	
                Laurus
                  Escrow Arrangement

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	 	
                 

                Very
                  truly yours,

              
	 	 	 
	 	
                Magnatech
                  Industrial Services of Alabama, Inc.

              
	 	 	 
	 	 	 
	 	
                By:

              	/s/
                Richard J. Mullin
	 	
                Name:

              	Richard
                J. Mullin
	 	
                Title:

              	Vice
                President and CFO

      

      

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Schedule
        1

      

      Magnetech
        Industrial Services of Alabama, Inc.

      1125
        South Walnut Street

      South
        Bend, Indiana 46619

      

       

      The
        Guarantee Title Company, LLC

      759
        Downtowner Loop West

      Mobile,
        AL  36609

      

      

      AmSouth
        Bank of Alabama

      31
        N.
        Royal Street

      Mobile,
        AL  36602

      

      Smith
        Services, Inc.

      #4
        Turnpike Industrial Park

      Princeton,
        WV 24740

       

      

      

      The
        Huntington National Bank   

      One
        Huntington Square

      P
        O Box 633

      Charleston,
        WV 25322

       

      Laurus
        Capital Management, LLC

      825
        3rd
        Ave.
        14th
        Floor

      New
        York,
        NY 10022

      

      North
        Fork Bank

      404
        5th
        Ave

      New
        York,
        NY 10018 

       

      Loeb
        & Loeb

      345
        Park
        Avenue

      New
        York,
        NY 10154

      

      Citibank,
        N.A.

      153
        East
        53rd
        Street

      New
        York,
        NY 10022

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