Document:

mis_8k113041.htm

    

      Exhibit
        4.1

       

      

       

      AMENDMENT
        TO CONVERSION OPTION

       

      This
        Amendment to Conversion Option
        (“Amendment”) is made as of November 28, 2007 (the
“Effective Date”) by MISCOR Group, Ltd. f/k/a Magnetech
        Integrated Services Corp., an Indiana corporation (“Parent”),
        Magnetech Industrial Services, Inc., an Indiana corporation and wholly owned
        subsidiary of Parent  (“Company”), and John A.
        Martell (“Lender”).

       

      Recitals:

       

      A.           The
        Parent and Company previously
        executed a Conversion Option in favor of Lender dated effective September
        12,
        2005 (the “Option”).

      

      B.           Pursuant
        to the Option, Parent agreed to
        reserve from its authorized and unissued Common Stock a sufficient number
        of
        shares to provide for the issuance of such Common Stock upon the full exercise
        of the Option by Lender (the “Reserved
        Shares”).

      

      C.           Parent
desires
        to enter into that
        certain Securities Purchase Agreement (the “Tontine Purchase
        Agreement”) with Tontine Capital Partners, L.P., a Delaware limited
        partnership and Tontine Capital Overseas Master Fund L.P., a Cayman Islands
        limited partnership (collectively, the “Buyers”), pursuant to
        which the Buyers shall purchase from Parent, and Parent shall issue to Buyers,
        a
        total of 83,333,333 shares of Parent’s Common Stock, for a total investment of
        approximately $20,000,000, which investment shall be used by Parent to make
        certain acquisitions and for certain business purposes, as Parent
        determines.

      

      D.           Parent
        also desires to enter into that certain Membership Interest Purchase Agreement
        (the “3-D Purchase Agreement”) with 3-D Service, Ltd., an Ohio
        limited liability company (“3-D”), pursuant to which Parent
        shall purchase from the members of 3-D all of the issued and outstanding
        membership interests of 3-D in exchange for certain consideration from Parent,
        including the issuance of a certain number of Shares of Parent’s Common Stock to
        3-D’s members.

      

      E.           Without
        the Reserved Shares, Parent currently has an insufficient number of shares
        of
authorized and unissued
Common Stock to consummate
        the transactions contemplated by the Tontine
        Purchase Agreement and the 3-D Purchase Agreement (the “Pending
        Transactions”).

      

      F.           Closing
        the Pending Transaction benefits both the Parent and Lender, in that the
        parties
        both believe the Pending Transactions to be in the best interests of the
        Parent.

      

      G.           The
        Parent intends to effect a 1-for-25 reverse stock split of its Common Stock
        shortly after the date of this Agreement, resulting in a reduction in the
        Company’s authorized Common Stock from 300,000,000 shares to 12,000,000 shares,
        with any fractional shares resulting from the reverse stock split being redeemed
        by the Parent.  Thereafter and not later than one hundred twenty (120)
        days after the date of this Agreement, the Parent intends to call a meeting
        of
        the Parent’s shareholders at which the Parent shall propose to amend its Amended
        and Restated Articles of Incorporation to increase the number of authorized
        shares of Common

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Stock
        thereunder to twenty million (20,000,000) shares (the “Articles of
        Amendment”), which will permit the Parent to issue additional shares of
        Common Stock for general corporate purposes (including issuance in connection
        with the closing of the pending Transactions).

      

      H.           The
        parties now desire to amend the
        Option on the terms and conditions hereinafter set forth.

      

      NOW,
        THEREFORE, in
        consideration of the mutual promises contained herein and other good and
        valuable consideration, the receipt and sufficiency of which are hereby
        acknowledged, the parties hereby amend the Option in the following
        manner:

      

      1.           Incorporation
        of Recitals.  The foregoing recitals to this Amendment are
        hereby incorporated in and made a part of this Amendment to the same extent
        as
        if set forth  in full herein.

       

      2.           Definitions.  Unless
        otherwise defined in this Amendment, all capitalized terms shall have the
        meanings assigned to such terms in the Option.

       

      3.           Release
        of Reserved Shares.   Effective as of the Effective
        Date, the parties hereby authorize the release of the Reserved
        Shares.  Lender hereby acknowledges and agrees that Lender shall not
        be entitled to exercise the Option until such time as the Articles of Amendment
        are formally adopted and approved by Parent and its shareholders and
        directors.   Once the Articles of Amendment are adopted and
        approved, Parent agrees to again reserve from its authorized and unissued
        Common
        Stock a sufficient number of shares to provide for the issuance of Common
        Stock
        upon the full exercise of this Option.

       

      4.           Option
        Terms.  Except as set forth in this Amendment, all terms and
        provisions contained in the Option remain in full force and effect.

       

      IN
        WITNESS WHEREOF, the parties have
        executed this Amendment to Conversion Option on the date(s) indicated below,
        effective as of the Effective Date.

      

      
        	 	 	 	
                MISCOR
                  Group, Ltd. f/k/a

              
	 	 	 	
                Magnetech
                  Integrated Services Corp.

              
	 	 	 	 	 
	
                Date:

              	November
                28, 2007	 	
                By:

              	/s/
                Richard J. Mullin
	 	 	 	 	
                Richard
                  J. Mullin, CFO and Treasurer

              
	 	 	 	 
	 	 	 	 
	 	 	 	
                Magnetech
                  Industrial Services, Inc.,

              
	 	 	 	 	 
	
                Date:

              	November
                28, 2007	 	
                By:

              	/s/
                Richard J. Mullin
	 	 	 	 	
                Richard
                  J. Mullin, CFO and Treasurer

              
	 	 	 	 	 
	 	 	 	 	 
	
                Date:

              	November
                28, 2007	 	 	
                /s/
                  John A. Martell

              
	 	 	 	 	
                John
                  A. Martellmis_8k1130ex101.htm

    Exhibit
      10.1

    
 

    PROMISSORY
      NOTE

    

    Date
      of Note:  November 30, 2007

    Principal
      Amount:  $2,000,000.00

    

    PROMISE
      TO PAY.Magnetech
      Industrial Services, Inc., an Indiana
      corporation, and MISCOR Group,
      Ltd., an Indiana limited liability company, (collectively
“Borrowers”) jointly and severally promise to pay to BDeWees, Inc.,
an Ohio corporation, (“Lender”), or order, in
      lawful money of the United States of America, the principal amount of Two
      Million Dollars ($2,000,000.00), together with interest on the unpaid principal
      balance from November 30, 2007, until paid in full.

    

    PAYMENT.     Borrowers
      will pay regular monthly payments of all accrued unpaid interest due beginning
      January 1, 2008, with all subsequent interest payments to be due on the same
      day
      of each successive month thereafter.  Borrowers' final payment, due
      November 30, 2010, will be for all principal and all accrued interest not yet
      paid. Unless otherwise agreed or required by applicable law payments will be
      applied first to accrued unpaid interest, then to unpaid collection costs and
      late charges, and the remainder to unpaid principal.  The annual
      interest rate for this Note is computed on the basis of: actual days in the
      year/ 360; that is, by applying the ratio of the annual interest rate over
      a
      year of 360 days, multiplied by the outstanding principal balance, multiplied
      by
      the actual number of days the principal balance is
      outstanding.  Borrowers will pay Lender at 5316 Hawick St., N.W.,
      Canton, Ohio 44708, or at such other place as Lender may designate in
      writing.

    

    VARIABLE
      INTEREST RATE.   The interest rate to be applied to the
      unpaid principal balance of the Note will be at a rate equal to the Index
      Rate.  The interest rate shall change on the 1st day of
      each
      calendar quarter to the Index Rate then in effect.  The initial Index
      Rate shall be the Index Rate in effect on November 30, 2007.  Under no
      circumstances will the interest rate on this Note be more than the maximum
      rate
      allowed by applicable law.

    

    “Index
      Rate” means the prime rate published by The Wall Street Journal, and if
      that rate is not available for any reason, then the prime rate announced by
      Charter One Bank, Cleveland, Ohio (“Bank”) from time to time which is not
      necessarily the lowest rate charged by Bank on its loans and is set by Bank
      in
      its sole discretion. If the Index Rate becomes unavailable during the term
      of
      this Note, Lender may designate a substitute index from a comparable financial
      institution in the Cleveland, Ohio area after notifying Borrowers.

    

    PREPAYMENT.  Borrowers
      may pay without penalty all or a portion of the amount owed earlier than it
      is
      due.  Early payments will not, unless agreed to by Lender in writing,
      relieve Borrowers of Borrowers’ obligations to continue to make monthly payments
      of interest.  Rather, early payments will reduce the principal balance
      due.  Borrowers agree not to send Lender payments marked "paid in
      full", "without recourse", or similar language.  If Borrowers send
      such a payment, Lender may accept it without losing any of Lender's rights
      under
      this Note, and Borrowers will remain obligated to pay any further amount owed
      to
      Lender.  All written communications concerning disputed amounts,
      including any check or other payment instrument that indicates that the payment
      constitutes "payment in full" of the amount owed or that is tendered with other
      conditions or limitations or as full satisfaction of a disputed amount must
      be
      mailed or delivered to: BDeWees, Inc., 5316 Hawick St., N.W., Canton, Ohio
      44708.

    

    LATE
      CHARGE.  If a payment is 15 days or more late, Borrowers will
      be charged 3.000% of the unpaid portion of the regularly scheduled
      payment.

    

    INTEREST
      AFTER DEFAULT.   Upon default, including failure to pay
      upon final maturity, Lender, at its option, may, if permitted under applicable
      law, increase the variable interest rate on this Note to 3.000 percentage points
      over the Index Rate.  The interest rate will not exceed the maximum
      rate permitted by applicable law.

    

    DEFAULT.  Each
      of the following shall constitute an event of default ("Event of Default")
      under
      this Note:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    Payment
      Default.   Borrowers fail to make any payment when due
      under this Note.

    

    Other
      Defaults.   Borrowers fail to comply with or to perform
      any other term, obligation, covenant or condition contained in this Note or
      to
      comply with or to perform any term, obligation, covenant or condition contained
      in any other agreement between Lender and Borrowers or Lender and 3-D Service,
      Ltd (“3-D”).

    

    Cure
      Provisions.   If any default, other than a default in
      payment is curable, it may be cured (and no event of default will have occurred)
      if Borrowers, after receiving written notice from Lender demanding cure of
      such
      default cure the default within thirty (30) days.

    

    LENDER'S
      RIGHTS.  Upon an Event of Default, Lender may declare the
      entire unpaid principal balance on this Note and all accrued unpaid interest
      immediately due and payable, and then Borrowers will pay that
      amount.

    

    SECURITY.    This
      Note is secured in accordance with the provisions of various security agreements
      between Lender and 3-D now or hereinafter entered into.

    

    ATTORNEYS'
      FEES; EXPENSES.   Lender may hire or pay someone else to
      help collect this Note if Borrowers do not pay.  Borrowers will pay
      Lender that amount.  This includes, subject to any limits under
      applicable law, Lender's attorneys' fees and Lender's legal expenses, whether
      or
      not there is a lawsuit, including attorneys' fees, expenses for bankruptcy
      proceedings (including efforts to modify or vacate any automatic stay or
      injunction), and appeals.  If not prohibited by applicable law,
      Borrowers also will pay any court costs, in addition to all other sums provided
      by law. All of the amounts set forth in this paragraph shall become part of
      the
      principal amount due and owing under this Note, and as such shall bear interest
      hereunder until paid in full. Nevertheless, if Borrowers are prevailing parties
      in any claim or lawsuit between Borrowers and Lender regarding this Promissory
      Note, then Borrowers shall not owe Lender any fees or expenses and, instead,
      Lender shall reimburse Borrowers for the attorneys fees and expenses they incur
      in such action.

    

    GOVERNING
      LAW.   This Note will be governed by, construed and enforced in
      accordance with federal law and the laws of the State of Ohio.  This
      Note has been made and entered into in the State of Ohio.  Borrowers
      consent to personal jurisdiction in the courts in the State of
      Ohio.

    

    SUCCESSOR
      INTERESTS.   The terms of this Note shall be binding
      upon Borrowers, and upon Borrowers’ successors and assigns, and shall inure to
      the benefit of Lender and its successors and assigns.

    

    GENERAL
      PROVISIONS.  If any part of this Note cannot be enforced,
      this fact will not affect the rest of the Note.  Borrowers do not
      agree or intend to pay, and Lender does not agree or intend to contract for,
      charge, collect, take, reserve or receive (collectively referred to herein
      as
      "charge or collect"), any amount in the nature of interest or in the nature
      of a
      fee for this loan, which would in any way or event (including demand,
      prepayment, or acceleration) cause Lender to charge or collect more for this
      loan than the maximum Lender would be permitted to charge or collect by federal
      law or the law of the State of Ohio (as applicable).  Any such excess
      interest or unauthorized fee shall, instead of anything stated to the contrary,
      be applied first to reduce the principal balance of this Note, and when the
      principal has been paid in full, be refunded to Borrowers.  Lender may
      delay or forgo enforcing any of its rights or remedies under this Note without
      losing them.  No single or partial exercise of any right, power or
      remedy of Lender shall preclude the exercise of any other right, power or
      remedy.  Borrowers and any other person who signs, guarantees or
      endorses this Note, to the extent allowed by law, waives presentment, demand
      for
      payment, and notice of dishonor.  The records of Lender shall
      constitute presumptive evidence of the amounts owing under this
      Note.  Upon any change in the terms of this Note, and unless otherwise
      expressly stated in writing, no party who signs this Note, whether as maker,
      guarantor, accommodation maker or endorser, shall be released from
      liability.  All such parties agree that Lender may renew or extend
      (repeatedly and for any length of time) this Note or release any party or
      guarantor collateral; or impair, fail to realize upon or perfect Lender's
      security interest in the collateral; and take any other action deemed necessary
      by Lender without the consent of or notice to anyone.  Borrowers, and
      all endorsers of this Note, hereby waive all acts on the part of the Lender
      or
      holder of this Note required in fixing Borrowers’ liability hereunder,
      including, without limitation, presentment, demand, notice of dishonor, protest,
      and notice of non-payment and protest, and any other notice whatsoever, and
      further waive any default by reason of extension of time for payment or any
      other indulgence or forbearance granted to Borrowers or endorser
      hereof..

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    Borrowers
      hereby acknowledge that the proceeds of this Note have been used for business
      purposes and not for consumer, family or household purposes.

    

    PRIOR
      TO SIGNING THIS NOTE, BORROWERS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
      NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.  BORROWERS
      AGREE TO THE TERMS OF THE NOTE.

    

    BORROWERS
      ACKNOWLEDGE RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY
      NOTE.

    

    
       

      
        	 	 	 	
                BORROWERS:

              
	 	 	 	 
	 	 	 	 
	 	 	 	
                MAGNETECH
                  INDUSTRIAL SERVICES, INC.

              
	 	 	 	 
	 	 	
                By:

              	/s/
                John A. Martell
	 	 	
                Its:

              	
                John
                  A. Martell, President

              
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	
                MISCOR
                  GROUP, LTD.

              
	 	 	 	 
	 	 	
                By:

              	/s/
                John A. Martell
	 	 	
                Its:

              	
                John
                  A. Martell, President

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