Document:

Mortgage

    Exhibit
      10.4

    

    
      	
              STATE
                OF ALABAMA 

            	
              )

            
	 	
              )

            
	
              COUNTY
                OF MOBILE 

            	
              )

            

    

    

    

    REAL
      ESTATE MORTGAGE

    

    

    THIS
      INDENTURE made this 31st
      day of
      May, 2006, by and between MAGNETECH INDUSTRIAL SERVICES OF ALABAMA, LLC, whose
      address is 1125 South Walnut St., South Bend, Indiana 46619, (hereinafter called
      "Borrower"), Mortgagor, and LAURUS CAPITAL MANAGEMENT, L.L.C., whose address
      is
      825 3rd
      Avenue,
      14th
      Floor,
      New York, New York 10022 (hereinafter called "Lender"), Mortgagee:

    

    

    R
      E C I T
      A L S:

    

    WHEREAS,
      Borrower is justly indebted to Lender in the principal sum of ONE MILLION SIX
      HUNDRED THOUSAND AND NO/100 DOLLARS, ($1,600,000.00) as evidenced by a certain
      Promissory Note of even date herewith, payable in accordance with the terms
      and
      conditions set forth therein (hereinafter called "Promissory
      Note").

    

    W
      I T N E
      S S E T H:

    

    NOW
      THEREFORE, KNOW ALL MEN BY THESE PRESENTS that the undersigned, in consideration
      of the indebtedness above mentioned, and to secure the prompt payment of same,
      with interest thereon, and any extensions, modifications or renewals of same,
      and further to secure the performance of the covenants, conditions and
      agreements hereinafter set forth, and in the Promissory Note and all other
      documents evidencing, securing, guaranteeing or executed in connection
      therewith, (hereinafter "Loan Documents", all of the terms of which are
      incorporated herein by reference) has bargained and sold and does hereby GRANT,
      BARGAIN, SELL and CONVEY unto Lender, its successors and assigns, the following
      described land, real estate, buildings and improvements, fixtures, furniture
      and
      other personal property (which together with any additional such property
      hereafter acquired by Borrower and subject to the lien of this Mortgage is
      hereinafter referred to as the "Mortgaged Property"), to-wit:

    

    A. all
      right, title and interest of the Borrower in, to, under and derived from that
      tract or parcel of land described on Exhibit “A” which is attached hereto and
      incorporated herein by reference (the "Premises"); 

    

    
      
        
        

      

      
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    B. all
      buildings, structures and improvements of every kind whatsoever now or hereafter
      situated on the Mortgaged Property described in Exhibit “A” and all fixtures,
      fittings, buildings, materials, machinery, equipment, furniture, furnishings
      and
      personal property of every nature whatsoever now or hereafter owned by Borrower
      and located in, on and used 

    in
      connection with or with the operation of said Premises, buildings, structures
      or
      other improvements, including all extensions, additions, improvements,
      betterments, renewals and replacements to any of the foregoing; 

    

    C. all
      easements, rights of way, rights of ingress and egress, gores of land, streets,
      ways, alleys, passages, sewer rights, waters, water courses, water rights and
      powers, and all estates, rights, titles, interest, privileges, liberties,
      tenements, hereditaments and appurtenances whatsoever, in any way belonging,
      relating or appertaining to any of the Mortgaged Property hereinabove described,
      or which hereafter shall in any way belong, relate or be appurtenant thereto,
      whether now owned or hereafter acquired by Borrower, and the reversion and
      reversions, remainder and remainders, rents, issues, profits thereof, and all
      the estate, right, title, interest, property, possession, claim and demand
      whatsoever at law, as well as in equity, of Borrower of, in and to the same,
      including but not limited to: (i) all rents, profits, issues and revenues of
      the
      Mortgaged Property from time to time accruing, whether under leases or tenancies
      now existing or hereafter created, reserving to Borrower, however, so long
      as
      Borrower is not in Default hereunder, the right to receive and retain the rents,
      issues and profits thereof; and (ii) all judgments, awards of damages and
      settlements hereafter made resulting from condemnation proceedings or the taking
      of the premises or any part thereof under the power of eminent domain, or for
      any damage (whether caused by such taking or otherwise) to the Premises or
      the
      improvements thereon or any part thereof, or to any rights appurtenant thereto,
      including any award for change of grade or streets. Lender is hereby authorized
      on behalf and in the name of Borrower to execute and deliver valid acquittances
      for, and appeal from, any such judgments or awards. Lender may apply all such
      sums or any part thereof so received, after the payment of all its expenses,
      including costs and attorney's fees, on the indebtedness secured hereby in
      such
      manner as it elects, or at its option, the entire amount or any part thereof
      so
      received may be released to Borrower;

    

    D. all
      proceeds, cash or non-cash (including, but not limited to, all inventory,
      accounts, chattel paper, documents, instruments, tort and insurance proceeds,
      equipment, fixtures, consumer goods and general intangibles with cash proceeds
      of any of the property described above), of any of the foregoing types or items
      of property described above;

    

    PROVIDED,
      HOWEVER, that these presents are upon the condition that, if Borrower shall
      pay
      or cause to be paid to Lender the principal and interest payable in respect
      to
      the Promissory Note, and shall keep, perform and observe all the covenants
      and
      promises in the Promissory Note, and any renewal, extensions or modifications
      thereof, the Loan Documents and this Mortgage expressed to be kept, performed
      and observed by and on the part of Borrower, then this Mortgage and all the
      

    

    
      
        
        

      

      
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    properties,
      interest and rights herein granted, bargained and sold shall cease, terminate
      and be void, but shall otherwise remain in full force and effect.

    

    AND,
      Borrower covenants and agrees with Lender as follows:

    

    

    ARTICLE
      I

    

    1.01
      PERFORMANCE OF NOTE AND MORTGAGE. Borrower will perform, observe and comply
      with
      all provisions hereof and of the Loan Documents and of the Promissory Note
      secured hereby and thereby and will duly and punctually pay to Lender the sum
      of
      money expressed in the Promissory Note with interest thereon and all other
      sums
      required to be paid by Borrower pursuant to the provisions of this Mortgage,
      all
      without any deductions or credit for taxes or other similar charges paid by
      Borrower.

    

    1.02
      WARRANTY OF TITLE. Borrower is lawfully seized of an indefeasible fee simple
      estate in the Mortgaged Property and has good and absolute title to all property
      hereby mortgaged or pledged and has full power and lawful authority to sell,
      convey and mortgage the same in the manner and form aforesaid; that the same
      is
      free and clear of all liens, charges and encumbrances whatsoever, and that
      Borrower shall and will warrant and forever defend the title thereto unto
      Lender, it successors and assigns, against the lawful claims of all persons
      or
      entities whatsoever, except as shown, if applicable, in Exhibit "B" attached
      hereto.

    

    1.03 
      MONTHLY
      TAX DEPOSITS. If required by Lender following an Event of Default or Default,
      Borrower will pay to Lender at the same time as the scheduled payments due
      under
      the Promissory Note, together with and in addition to the regular installment
      of
      principal and interest, until the Promissory Note is fully paid, an amount
      equal
      to one-twelfth (1/12) of the yearly taxes and assessments as estimated by Lender
      to be sufficient to enable Lender to pay at least thirty (30) days before they
      become due, all taxes, assessments and other similar charges against the
      Mortgaged Property or any part thereof. Such added payments shall not be, nor
      be
      deemed to be, trust funds, but may be commingled with the general funds of
      Lender, and no interest shall be payable in respect thereof. Upon demand of
      Lender, Borrower agrees to deliver to Lender such additional monies as are
      necessary to make up any deficiencies in the amounts necessary to enable Lender
      to pay such taxes, assessments and similar charges. In the event of a Default
      by
      Borrower in the performance of any of the terms, covenants or conditions in
      the
      Promissory Note, Mortgage or other Loan Documents, Lender may apply to the
      reduction of the sums secured hereby, in such manner as Lender shall determine,
      any amount under this Paragraph 1.03 of Article I remaining to Borrower's
      credit.

    

    

    

    
      
        
        

      

      
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    1.04
      OTHER TAXES, UTILITIES AND LIENS.

    

    A. Borrower
      will pay promptly, when and as due, and will promptly exhibit to Lender receipts
      for the payment of all taxes, assessments, water rates, dues, charges, fines
      and
      impositions of every nature whatsoever imposed, levied or assessed or to be
      imposed, levied or assessed upon or against the Mortgaged Property or any part
      thereof, or upon the interest of Lender in the Mortgaged Property (other than
      any of the same for which provision has been made in Paragraph l.03 of this
      Article I), as well as all income taxes, assessments and other governmental
      charges lawfully levied and imposed by the United States of America or any
      state, county, municipality, borough or other taxing authority upon Borrower
      or
      in respect of the Mortgaged Property or any part thereof, or any charge which,
      if unpaid, would become a lien or charge upon the Mortgaged Property prior
      to or
      equal to the lien of the Mortgage for any amounts secured hereby or would have
      priority or equality with the Mortgage in distribution of the proceeds of any
      foreclosure sale of the Mortgaged Property or any part thereof.

    

    B. Borrower
      will promptly pay all charges by utility companies, whether public or private,
      for electricity, gas, water, sewer or other utilities.

    

    C. Borrower
      shall promptly pay and will not suffer any mechanic's, laborer's statutory
      or
      other lien which might or could be prior to or equal to the lien of the Mortgage
      to be created or to remain outstanding upon any of the Mortgaged Property.
      

    

    1.05
      INSURANCE. Borrower will procure for, deliver to and maintain for the benefit
      of
      Lender, during the life of this Mortgage, insurance policies in such amounts
      as
      Lender shall require, insuring the Mortgaged Property against fire, extended
      coverage and such other insurable hazards, casualties and contingencies as
      Lender may require. The form of such policies and the companies issuing them
      shall be acceptable to Lender. All policies shall contain a New York standard
      non-contributory mortgagee endorsement making losses payable to Lender. At
      least
      fifteen (15) days prior to the expiration date of all such policies, renewals
      thereof satisfactory to Lender shall be delivered to Lender. Borrower shall
      deliver to Lender a receipt evidencing the payment of all such insurance
      policies and renewals. In the event of the foreclosure of this Mortgage or
      any
      other transfer of title to the Mortgaged Property in extinguishment of the
      indebtedness secured hereby, all right, title and interest of Borrower in and
      to
      all insurance policies then in force shall pass to the purchaser or grantee.
      

    

    If
      an
      Event of Default or Default shall have occurred, Lender is authorized and
      empowered, at its option, to adjust or compromise any loss under any insurance
      policies on the Mortgaged Property, and to collect and receive the proceeds
      from
      any such policy or policies. Each insurance company is hereby authorized and
      directed, under such conditions, to make payments for all such losses, directly
      to Lender instead of to Borrower and Lender jointly. After deducting from

    
      
        
        

      

      
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    said
      insurance proceeds any expenses incurred by it in the collection or handling
      of
      said fund, Lender may apply the net proceeds, at its option, either toward
      restoring the improvements, or as a credit on any portion of the Mortgage
      indebtedness selected by it, whether then matured or to mature in the future,
      or
      at the option of Lender, such sums either wholly or in part may be paid over
      to
      Borrower to be used to repair such buildings, or to build new buildings in
      their
      place, or for any other purpose or object satisfactory to Lender, without
      affecting the lien of the Mortgage for the full amount secured hereby before
      such payment took place. Lender shall not be held responsible for any failure
      to
      collect any insurance proceeds due under the terms of any policy regardless
      of
      the cause of such failure.

    

    If
      required by Lender following an Event of Default or Default, Borrower will
      pay
      to Lender at the same time as the scheduled payments due under the Promissory
      Note, together with and in addition to the regular installment of principal
      and
      interest and monthly tax deposit (as required by Paragraph 1.03 of Article
      I
      herein) until the Promissory Note is fully paid, an amount equal to one-twelfth
      (1/12) of the yearly premiums for insurance. Such amount shall be used by Lender
      to pay such insurance premiums when due. Such added payments shall not be,
      nor
      be deemed to be, trust funds, but may be commingled with the general funds
      of
      Lender and no interest shall be payable in respect thereof. Upon demand of
      Lender, Borrower agrees to deliver to Lender such additional monies as are
      necessary to make up any deficiencies in the amounts necessary to enable Lender
      to pay such insurance premiums. In the event of a Default by Borrower in the
      performance of any of the terms, covenants and conditions in the Promissory
      Note
      or Mortgage, Lender may apply to the reduction of the sums secured hereby,
      in
      such manner as Lender shall determine, any amount paid in accordance herewith
      remaining to Borrower's credit.

    

    If
      the
      Mortgaged Property is ever designated as a part of a flood plain area or any
      other designation which would make such Mortgaged Property subject to the
      Federal Flood Insurance Act of 1968, as amended heretofore or hereafter, or
      any
      similar law, then Borrower agrees to do everything reasonably possible to comply
      with the requirements of said law (including all regulations and other
      requirements applicable thereto) in order that flood insurance will be available
      to said Borrower. Thereafter, Borrower agrees to obtain for the benefit of
      Lender an insurance policy satisfactory to Lender in all respects (including
      amount, insurer, form and otherwise), to deliver such policy to Lender as soon
      as possible, to pay all expenses in connection therewith and to maintain such
      insurance in full force and effect at all times at Borrower's
      expense.

    

    1.06
      CONDEMNATION. If all of the Mortgaged Property shall be damaged or taken through
      condemnation (which term as used in this Mortgage shall include any damage
      or
      taking by any governmental authority, and any transfer by private sale in lieu
      thereof), either temporarily or permanently, the entire indebtedness secured
      hereby shall at the option of Lender become immediately due and payable. Lender
      shall be entitled to all compensation, appear in and prosecute, in its own
      or
      the Borrower's name, any action or proceeding relating to any condemnation,
      and
      to settle or compromise any claim in connection therewith. All such
      compensation, awards, damages, 

    
      
        
        

      

      
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    claims,
      rights of action and proceeds and the right thereto are hereby assigned by
      Borrower to Lender who, after deducting therefrom all its expenses, including
      attorney's fees, may release any monies so received by it without affecting
      the
      lien of this Mortgage or may apply the same in such manner as Lender shall
      determine to the reduction of the sums secured hereby, and any balance of such
      monies then remaining shall be paid to Borrower. Borrower agrees to execute
      such
      further assignment of any compensations, awards, damages, claims, rights of
      action and proceeds as Lender may require.

    

    Notwithstanding
      the foregoing, if there is a partial taking such that the Mortgaged Property
      can
      be repaired and made tenantable, Lender, after deducting its expenses, including
      reasonable attorney's fees, shall apply the balance of such award, or so much
      thereof as is necessary, to pay the cost of restoring the Mortgaged Property
      as
      nearly as possible to its condition prior to such taking; and the balance,
      if
      any, shall be applied to the reduction of the indebtedness hereby
      secured.

    

    1.07
      CARE
      OF THE PROPERTY.

    

    A. Borrower
      will preserve and maintain the Mortgaged Property in good condition and repair
      and will not commit or suffer any waste and will not do or suffer to be done
      anything which will increase the risk of fire or other hazard to the Mortgaged
      Property or any part thereof.

    

    B. If
      the
      Mortgaged Property or any part thereof is damaged by fire or any other cause,
      Borrower will give immediate written notice of the same to Lender. 

    

    C. Lender
      is
      hereby authorized to enter upon and inspect the Mortgaged Property at any time
      during normal business hours. 

    

    D. Borrower
      will promptly comply with all present and future laws, ordinances, rules and
      regulations of any governmental authority affecting the Mortgaged Property
      or
      any part thereof. 

    

    E. Borrower
      represents, warrants and covenants as follows:

    

    1. no
      Hazardous Materials (hereinafter defined) have been, are or will be while any
      part of the indebtedness secured by the Mortgage remains unpaid, contained
      in,
      treated, stored, handled, located on, discharged from or disposed of on, or
      constitute a part of, the Mortgaged Property. As used herein, the term
      "Hazardous Materials" includes without limitation, any asbestos, urea
      formaldehyde foam insulation, flammable explosives, radioactive materials,
      hazardous materials defined, regulated, controlled, limited or prohibited in
      the
      Comprehensive Environmental Response Compensation and Liability Act of 1980
      (CERCLA), as amended (42 U.S.C. Sections 9601, et
      seq.),
      the
      Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801
      et
      seq.),
      the
      Resource Conservation and Recovery Act (RCRA), as amended (42 U.S.C. Sections
      6901 et
      seq.),
      the
      Clean Water Act, as amended (33 U.S.C. Sections 1251, et
      seq.),
      the
      Clean Air Act, as amended (42 U.S.C. Sections 7401 et
      seq.),
      the
      Toxic Substances Control Act, as amended (15 U.S.C. 

    
      
        
        

      

      
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    Sections
      2601 et
      seq.),
      and in
      the rules and regulations adopted and publications promulgated pursuant thereto,
      and in the rules and regulations of the Occupational Safety Health
      Administration (OSHA) pertaining to occupational exposure to asbestos, as
      amended, or in any other federal, state or local environmental law, ordinance,
      rule, or regulation now or hereafter in effect;

    

    2. no
      underground storage tanks, whether in use or not in use, are located in, on
      or
      under any party of the Mortgaged Property;

    

    3. the
      Mortgaged Property complies and will comply in all respects with applicable
      environmental laws, rules, regulations, and court or administrative
      orders;

    

    4. there
      are
      no pending claims or threats of claims by private or governmental or
      administrative authorities relating to environmental impairment, conditions,
      or
      regulatory requirements with respect to the Mortgaged Property;

    

    5. borrower
      shall give immediate oral and written notice to Lender of its receipt of any
      notice of a violation of any law, rule or regulation covered hereby, or of
      any
      notice of other claim relating to the environmental condition of the Mortgaged
      Property or of its discovery of any matter which would make the representations,
      warranties and/or covenants herein to be inaccurate or misleading in any
      respect;

    

    6. the
      Borrower promptly shall comply with all present and future laws, ordinances,
      rules, regulations, orders and decrees of any governmental authority affecting
      the Mortgaged Property or any part thereof. Without limiting the foregoing,
      the
      Borrower represents and covenants that the Mortgaged Property is in present
      compliance with, and in the future shall comply with, as applicable, the
      Americans With Disabilities Act of 1990, ("ADA") (42 U.S.C. Sections 12101,
      et
      seq.)
      and the
      Rehabilitation Act of 1973 ("Rehabilitation Act") (29 U.S.C. Sections 749
et
      seq.)
      each
      such Act as amended from time to time, and in the rules and regulations adopted
      and publications promulgated pursuant thereto;

    

    7. borrower
      hereby agrees to indemnify and hold Lender harmless from all loss, cost, damage,
      claim and expense incurred by Lender on account of (a) the violation of any
      representation, warranty, and covenant set forth herein, (b) Borrower's failure
      to perform any obligations of this Paragraph 1.07 (E.) (c) Borrower's failure
      or
      the Mortgaged Property's failure to fully comply with all environmental laws,
      rules and regulations or all other occupational health and safety laws, rules
      and regulations, with ADA or the Rehabilitation Act as applicable, or (d) any
      other matter related to environmental conditions on, under or affecting the
      Mortgaged Property. This indemnification shall survive the closing of the Loan,
      payment of the Loan, the exercise of any right or remedy under any Loan
      Documents, any subsequent sale or transfer of the Mortgaged Property, and all
      similar or related events or occurrences.

    

    
      
        
        

      

      
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    F. If
      all or
      any part of the Mortgaged Property shall be damaged by fire or other casualty,
      Borrower will promptly restore the Mortgaged Property to the equivalent of
      its
      original condition, regardless of whether or not there shall be any insurance
      proceeds therefor. If a part of the Mortgaged Property shall be physically
      damaged through condemnation, Borrower will promptly restore, repair or alter
      the remaining Mortgaged Property in a manner satisfactory to Lender. Both of
      these requirements are contingent upon Lender making available to Borrower
      the
      full amount of any insurance proceeds relating to such damage.

    

    1.08
      FURTHER ASSURANCES.

    

    A. At
      any
      time, and from time to time, upon request by Lender, Borrower will make, execute
      and deliver or cause to be made, executed and delivered to Lender and, where
      appropriate, to cause to be recorded and/or filed and from time to time
      thereafter to be re-recorded and/or refiled at such time and in such offices
      and
      places as shall be deemed desirable by Lender, any and all such other and
      further mortgages, instruments of further assurance, certificates and other
      documents as may, in the opinion of Lender, be necessary or desirable in order
      to effectuate, complete, enlarge, or perfect, or to continue and preserve the
      obligation of Borrower under the Promissory Note, this Mortgage and the Loan
      Documents, and the lien of this Mortgage as a first and prior lien upon all
      of
      the Mortgaged Property, whether now owned or hereafter acquired by Borrower.
      Upon any failure by Borrower so to do, Lender may make, execute and record
      any
      and all such mortgages, instruments, certificates and documents for and in
      the
      name of Borrower, and Borrower hereby irrevocably appoints Lender the agent
      and
      attorney-in-fact of Borrower so to do. The lien hereof will automatically
      attach, without further act, to all after acquired property attached to and/or
      used in the operation of the Mortgaged Property or any part
      thereof.

    

    B. The
      Lender also shall have and hereby is granted a security interest in all monies,
      securities and other property of the Borrower, now or hereafter assigned, held,
      received, or coming into the possession, control, or custody of the Lender
      by or
      for the account of the Borrower (including indebtedness due from the Lender
      to
      the Borrower, and any and all claims of Borrower against Lender, at any time
      existing) whether expressly as collateral security, custody, pledge,
      transmission, collection or for any other purpose, and also upon any and all
      deposit balances, including any dividends declared, or interest accruing
      thereon, and proceeds thereof. On an Event of Default, the Lender may, in
      addition to any other rights provided by this Mortgage or any of the other
      Loan
      Documents, but shall not be obligated to, apply to the payment of the Loan
      or
      Other Indebtedness secured hereby, and in such manner as the Lender may
      determine, any such monies, securities or other property held or controlled
      by
      the Lender. No such application of funds shall, unless otherwise expressly
      agreed by the Lender in writing, reduce, alter, delay or otherwise affect any
      regularly scheduled payment with respect to the Loan or such Other Indebtedness
      or obligations.

    

    1.09
      LEASES AFFECTING MORTGAGED PROPERTY. Borrower will comply with and observe
      its
      obligations as landlord under all leases affecting the Mortgaged Property or
      any
      part 

    
      
        
        

      

      
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    thereof.
      If requested by Lender, Borrower will furnish Lender with executed copies of
      all
      leases now or hereafter created on said premises; and all leases now or
      hereafter entered into will be in form and substance subject to the approval
      of
      Lender. Borrower will not accept payment of rent more than one month in advance
      without the express written consent of Lender. If requested by Lender, Borrower
      will assign to Lender as additional security, any and all such leases whether
      now existing or hereafter created, including without limitation, all rents,
      royalties, issues and profits of the premises from time to time accruing, and
      will not cancel, surrender or modify any lease so assigned without the written
      consent of Lender.

    

    1.10
      EXPENSES. Borrower will pay or reimburse Lender for all reasonable attorney's
      fees, costs and expenses incurred by Lender in any proceeding involving the
      estate of a decedent or an insolvent, or in any action, proceeding or dispute
      of
      any kind in which Lender is made a party, or appears as party plaintiff or
      defendant, affecting the Promissory Note, Mortgage, other Loan Documents,
      Borrower or Mortgaged Property, including but not limited to, the foreclosure
      of
      this Mortgage, any condemnation action involving the Mortgaged Property, or
      any
      action to protect the security hereof; and, any such amounts paid by Lender
      shall be added to the indebtedness and secured by the lien of this Mortgage.
      

    

    1.11
      PERFORMANCE BY LENDER OF DEFAULTS BY BORROWER. If Borrower shall Default in
      the
      payment of any tax, lien, assessment or charge levied or assessed against the
      Mortgaged Property; in the payment of insurance premiums, in the procurement
      of
      insurance coverage and the delivery of the insurance policies required
      hereunder, or in the performance or observance of any other covenant, condition
      or term of this Mortgage, then Lender, at its option, may perform or observe
      the
      same and all payments made for costs or incurred by Lender in connection
      therewith, shall be secured hereby and shall be, upon demand, immediately repaid
      by Borrower to Lender with interest thereon at the rate stated in the above
      described Promissory Note. Lender is hereby empowered to enter and to authorize
      others to enter upon the Mortgaged Property or any part thereof for the purpose
      of performing or observing any such Default, covenant, condition or term,
      without thereby becoming liable to Borrower or any person in possession holding
      under the Borrower.

    

    1.12 INSPECTIONS.
      Lender shall have the right, and Borrower shall allow Lender, at all times
      to
      inspect the Mortgaged Property, and shall permit Lender and its authorized
      representative: (a) to visit, examine, inspect and make extracts from books
      and
      records of Borrower and will discuss with Lender or its representatives the
      affairs, finances and accounts of Borrower; and (b) to inspect the Mortgaged
      Property at such reasonable times and as often as may be reasonably requested.
      Any such inspection shall be solely for the benefit of Lender and neither
      Borrower nor any third party shall be entitled to claim any loss or damage
      as a
      result either of such inspections or the failure to make the same. Borrower
      shall provide Lender with such financial information as Lender may require,
      including without limitation, such financial statements and other information
      as
      set out in the Loan Agreement executed in connection herewith.

    

    
      
        
        

      

      
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    1.13 ESTOPPEL
      CERTIFICATES. Borrower shall furnish, within ten (10) days after written request
      from the Lender, a written statement, duly acknowledged, setting forth the
      unpaid rent, if any, and whether or not any offsets or demands exist
      thereto.

    

    1.14 ALIENATION
      OR SALE OF MORTGAGED PROPERTY. Borrower shall not transfer, assign, sell,
      mortgage, encumber or otherwise convey all or any portion of the Mortgaged
      Property, without the Lender's prior written consent, which consent may be
      approved or refused in Lender's sole discretion but shall not be unreasonably
      withheld. A change in ownership of Borrower shall constitute a sale of the
      Mortgaged Property.

    

    

    ARTICLE
      II

    

    2.01
      EVENT OF DEFAULT. The term "Event of Default" or "Default" wherever used in
      this
      Mortgage shall mean any one or more of the following events:

    

    (a) the
      occurrence of an "Event of Default" as used and defined in the Loan Agreement
      or
      any other Loan Document; or

    

    (b) if
      Borrower shall fail to perform or observe any other covenant, agreement, or
      provision of this Mortgage, or a breach in any material respect shall exist
      in
      any representation or warranty herein contained; or

    

    (c) the
      failure to make any payment of principal or interest or any other charge under
      the Promissory Note as and when the same becomes due and payable;
      or

    

    (d) the
      sale
      or other transfer of all or any portion of the Mortgaged Property, or any
      interest therein without the Lender's prior written consent, which consent
      may
      be granted or refused in Lender's sole discretion but shall not be unreasonably
      withheld; or

    

    (e) the
      creation or suffering to exist by Borrower of any lien or encumbrance on the
      Mortgaged Property, other than the lien of this Mortgage, the lien for ad
      valorem taxes not then delinquent, and matters set forth on Exhibit "B", if
      any,
      unless the written consent of the Lender is first obtained, which consent may
      be
      granted or refused by the Lender in its sole discretion but shall not be
      unreasonably withheld.

    

    2.02 ACCELERATION
      OF MATURITY. If an Event of Default or Default shall have occurred, then the
      entire principal amount of the indebtedness secured hereby with interest accrued
      thereon shall, at the option of Lender, become due and payable without notice
      or
      demand, time being 

    
      
        
        

      

      
        10.

        
          

        

      

      
        
        

      

    

    of
      the
      essence; and any omission on the part of Lender to exercise such option when
      entitled to do so shall not be considered as a waiver of such
      right.

    

    2.03
      RIGHT OF LENDER TO ENTER AND TAKE POSSESSION. If an Event of Default shall
      have
      occurred and be continuing, Borrower, upon demand of Lender, shall forthwith
      surrender to Lender the actual possession, and to the extent permitted by law,
      Lender may enter and take possession of all the Mortgaged Property and may
      exclude Borrower and Borrower's agents and employees wholly therefrom. Upon
      every such entering upon or taking of possession, Lender may hold, store, use,
      operate, manage and control the Mortgaged Property and conduct the business
      thereof and, from time to time (a) make all necessary and proper maintenance,
      repairs, renewals, replacements, additions, betterments and improvements thereto
      and thereon and purchase or otherwise acquire additional fixtures, personalty
      and other property; (b) insure or keep the Mortgaged Property insured; (c)
      manage and operate the Mortgaged Property and exercise all the rights and powers
      of Borrower in its name or otherwise, with respect to the same; (d) enter into
      any and all agreements with respect to the exercise by others of any of the
      powers herein granted Lender, all as Lender from time to time may determine
      to
      be to its best advantage; (e) Lender may collect and receive all the income,
      revenues, rents, issues and profits of the same, including those past due as
      well as those accruing thereafter, and, after deducting (i) all expenses of
      taking, holding, managing and operating the Mortgaged Property (including
      compensation for the services of all persons employed for such purposes); (ii)
      the cost of all such maintenance, repairs, renewals, replacements, additions,
      betterments, improvements and purchases and acquisitions; (iii) the cost of
      such
      insurance; (iv) such taxes, assessments and other charges prior to the lien
      of
      this Mortgage as Lender may determine to pay; (v) other proper charges upon
      the
      Mortgaged Property or any part thereof; and (vi) the reasonable compensation,
      expenses and disbursements of the attorneys and agents of Lender. Lender shall
      apply the remainder of the monies so received by Lender, first, to the payment
      of accrued interest, then, to the payment of the deposits required in Paragraphs
      1.03 and 1.05 and, finally, to the payment of overdue installments of interest
      and/or principal. Whenever all such Events of Default have been cured and
      satisfied, Lender may, at its option, surrender possession of the Mortgaged
      Property to Borrower, Borrower, its successors and assigns. The same right
      of
      taking possession, however, shall exist if any subsequent Event of Default
      shall
      occur and be continuing.

    

    2.04
      RECEIVER. If an Event of Default shall have occurred and be continuing, Lender,
      upon application to a court of competent jurisdiction, shall be entitled,
      without notice and without regard to the adequacy of any security for the
      indebtedness hereby secured or the solvency or any party bound for its payment,
      to the appointment of a receiver to take possession of and to operate the
      Mortgaged Property and to collect the rents, profits, issues and revenues
      thereof. Borrower will pay to Lender upon demand, all expenses, including
      receiver's fees, attorney's fees, costs and agent's compensation, incurred
      pursuant to the provisions contained in this Paragraph 2.04; and all such
      expenses shall be secured by this Mortgage.

    

    
      
        
        

      

      
        11.

        
          

        

      

      
        
        

      

    

    2.05
      LENDER'S POWER OF ENFORCEMENT. If an Event of Default shall have occurred and
      be
      continuing, Lender may, either with or without entry or taking possession as
      hereinabove provided or otherwise, proceed by suit or suits at law or in equity
      or any other appropriate proceeding or remedy (a) to enforce payment of the
      Promissory Note or the performance of any term thereof or any other right;
      (b)
      to foreclose this Mortgage and to sell, as an entirety or in separate lots
      or
      parcels, the Mortgaged Property, as provided by law; and (c) to pursue any
      other
      remedy available to it, all as Lender shall deem most effectual for such
      purposes. Lender shall take action either by such proceedings or by the exercise
      of its powers with respect to entry or taking possession, as Lender may
      determine.

    

    2.06
      POWER OF SALE. If an Event of Default shall have occurred, Lender may sell
      the
      Mortgaged Property at public outcry to the highest bidder for cash in front
      of
      the Courthouse door in the county where said Mortgaged Property is located,
      either in person or by auctioneer, after having first given notice of the time,
      place and terms of sale together with a description of the Mortgaged Property
      to
      be sold, by publication once a week for three (3) consecutive weeks prior to
      said sale in some newspaper published in said county and, upon payment of the
      purchase money, Lender or any person conducting the sale for Lender is
      authorized to execute to the purchaser at said sale a deed to the premises
      so
      purchased. Lender may bid at said sale and purchase said premises, or any part
      thereof, if the highest bidder therefor. At the foreclosure sale, the Mortgaged
      Property may be offered for sale and sold as a whole without first offering
      it
      in any other manner, or the Mortgaged Property may be offered for sale and
      sold
      in any other manner Lender may elect.

    

    2.07
      APPLICATION OF FORECLOSURE PROCEEDS. The proceeds of any foreclosure pursuant
      to
      Paragraph 2.06 of Article II shall be applied as follows:

    

    (a) first,
      to
      the expenses of making the sale, including a reasonable attorney's fee for
      such
      services as may be necessary in the collection of said indebtedness or the
      foreclosure of this Mortgage; 

    

    (b) second,
      to the repayment of any monies, with interest thereon, which Lender may have
      paid, or become liable to pay, or which it may then be necessary to pay for
      taxes, insurance, assessments or other charges, liens or debts as hereinabove
      provided;

    

    (c) third,
      to
      the payment and satisfaction of the indebtedness hereby specially secured with
      interest to date of sale; 

    

    (d) fourth,
      the balance, if any, shall be paid to the party or parties appearing of record
      to be the owner of the premises at the time of the sale, after deducting any
      expenses of ascertaining who is such owner. 

    

    
      
        
        

      

      
        12.

        
          

        

      

      
        
        

      

    

    2.08
      LENDER'S OPTION ON FORECLOSURE. At the option of Lender, this Mortgage may
      be
      foreclosed as provided by law or in equity, in which event a reasonable
      attorney's fee shall, among other costs and expenses, be allowed and paid out
      of
      the proceeds of the sale. 

    

    2.09 
      WAIVER
      OF EXEMPTION. Borrower waives all rights of exemption pertaining to real or
      personal property as to any indebtedness secured by or that may be secured
      by
      this Mortgage, and Borrower waives the benefit of any statute regulating the
      obtaining of a deficiency judgment or requiring that the value of the premises
      be set off against any part of the indebtedness secured hereby.

    

    2.10
      SUITS TO PROTECT THE MORTGAGED PROPERTY. Lender shall have power (a) to
      institute and maintain such suits and proceedings as it may deem expedient
      to
      prevent any impairment of the Mortgaged Property by any acts which may be
      unlawful or any violation of the Mortgage; (b) to preserve or protect its
      interest in the Mortgaged Property and in the income, revenues, rents and
      profits arising therefrom; and (c) to restrain the enforcement of or compliance
      with any legislation or other government enactment, rule or order that may
      be
      unconstitutional or otherwise invalid, if the enforcement of or compliance
      with,
      such enactment, rule or order would impair the security hereunder or be
      prejudicial to the interest of Lender.

    

    2.11
      BORROWER TO PAY THE PROMISSORY NOTE ON ANY DEFAULT IN PAYMENT: APPLICATION
      OF
      MONIES BY LENDER. If Default shall be made in the payment of any amount due
      under the Promissory Note or Mortgage, then, upon demand of Lender, Borrower
      will pay to Lender the whole amount due and payable under the Promissory Note;
      and, in case Borrower shall fail to pay the same forthwith upon such demand,
      Lender shall be entitled to sue for and to recover judgment for the whole amount
      so due and unpaid together with costs, which shall include the reasonable
      compensation, expenses and disbursements of Lender's agents and
      attorneys.

    

    2.12
      DELAY OR OMISSION NO WAIVER. No delay or omission of Lender or of any holder
      of
      the Promissory Note to exercise any right, power or remedy accruing upon any
      Default shall exhaust or impair any such right, power or remedy, or shall be
      construed to be a waiver of any such Default or acquiescence therein; and,
      every
      right, power and remedy given by this Mortgage to Lender may be exercised from
      time to time and as often as may be deemed expedient by Lender.

    

    2.13
      NO
      WAIVER OF ONE DEFAULT TO AFFECT ANOTHER. No waiver of any Default hereunder
      shall extend to or shall affect any subsequent or any other then existing
      Default or shall impair any rights, powers or remedies consequent
      thereon.

    

    If
      Lender
      (a) grants forbearance or an extension of time for the payment of any sums
      secured hereby; (b) takes other or additional security for the payment thereof;
      (c) waives or does not exercise any right granted herein or in the Promissory
      Note; (d) releases any part of the Mortgaged Property from the lien of the
      Mortgage or otherwise changes any of the terms of the Promissory

    
      
        
        

      

      
        13.

        
          

        

      

      
        
        

      

    

    Note,
      Mortgage or other Loan Documents; (e) consents to the filing of any map, plat
      or
      replat thereof; (f) consents to the granting of any easement thereon; or (g)
      makes or consents to any agreement subordinating the lien or charge hereof,
      any
      such act or omission shall not release, discharge, modify, change or affect
      the
      original liability under the Promissory Note, Mortgage or otherwise of Borrower
      or any subsequent purchaser of the Mortgaged Property or any part thereof,
      or
      any maker, co-signer, endorser, surety or guarantor; nor shall any such act
      or
      omission preclude Lender from exercising any right, power or privilege herein
      granted or intended to be granted in the event of any other Default or of any
      subsequent Default, nor, except as otherwise expressly provided in an instrument
      or instruments executed by Lender, shall the lien of this Mortgage be altered
      thereby. In the event of the sale or transfer by operation or law or otherwise
      of all or any part of the Mortgaged Property, Lender, without notice to any
      person or entity is hereby authorized and empowered to deal with any such vendee
      or transferee with reference to the Mortgaged Property or the indebtedness
      secured hereby, or with reference to any of the terms or conditions hereof,
      as
      fully and to the same extent as it might deal with the original parties hereto
      and without in any way releasing or discharging any of the liabilities or
      undertakings hereunder.

    

    2.14
      DISCONTINUANCE OF PROCEEDINGS: POSITION OF PARTIES, RESTORED. In case Lender
      shall have proceeded to enforce any right or remedy under this Mortgage by
      foreclosure, entry or otherwise, and such proceedings shall have been
      discontinued or abandoned for any reason, or shall have been determined
      adversely to Lender, then, and in every such case, Borrower and Lender shall
      be
      restored to their former positions and rights hereunder, and all rights, powers
      and remedies of Lender shall continue as if no such proceeding had been taken.
      

    

    2.15
      REMEDIES CUMULATIVE. No right, power or remedy conferred upon or reserved to
      Lender by this Mortgage is intended to be exclusive of any right, power or
      remedy, but each and every such right, power and remedy shall be cumulative
      and
      concurrent and shall be in addition to any other right, power and remedy given
      hereunder or now or hereafter existing at law or in equity or by statute.

    

    

    ARTICLE
      III

    

    3.01
      SUCCESSORS AND ASSIGNS INCLUDED IN PARTIES. Whenever in this Mortgage one of
      the
      parties hereto is named or referred to, the heirs, personal representatives,
      successors and assigns of such party shall be included, and all covenants and
      agreements contained in this Mortgage by or on behalf of Borrower or by or
      on
      behalf of Lender shall bind and inure to the benefit of their respective heirs,
      personal representatives, successors and assigns, whether so expressed or not.
      

    

    3.02
      HEADINGS AND PRONOUN AND SINGULAR/PLURAL REFERENCES. The headings of the
      articles, sections, paragraphs and subdivisions of this Mortgage are for
      convenience 

    
      
        
        

      

      
        14.

        
          

        

      

      
        
        

      

    

    of
      reference only, are not to be considered a part hereof, and shall not limit
      or
      otherwise affect any of the terms hereof. The masculine pronoun, wherever herein
      used, shall mean and include the appropriate feminine or neuter pronoun.
      Whenever herein used and where appropriate, the singular number shall include
      the plural and the plural number shall include the singular. 

    

    3.03
      INVALID PROVISIONS TO AFFECT NO OTHERS. In case any one or more of the
      covenants, agreements, terms or provisions contained in this Mortgage or in
      the
      Promissory Note or any of the other Loan Documents shall be invalid, illegal
      or
      unenforceable in any respect, the validity of the remaining covenants,
      agreements, terms or provisions contained herein and therein shall be in no
      way
      affected, prejudiced or disturbed thereby. 

    

    3.04
      NOTICE TO PARTIES. All notices provided for herein shall be by ordinary mail
      addressed to the Lender at the mortgagee’s address at the end of this instrument
      or such other address as the Lender may designate in writing, and to the
      Borrower at the address of the mortgagor at the end of this instrument or at
      such other address as the Borrower may designate in writing.. Notice shall
      be
      completed by depositing the same in the mail addressed to the party at such
      address with the proper amount of postage affixed thereto. Actual receipt of
      notice shall not be required to effect notice hereunder.

    

    3.05 LIEN
      ON
      PERSONAL PROPERTY. This Mortgage creates a lien on and grants a security
      interest in the personal property of Borrower described herein which constitutes
      part of the Mortgaged Property, and it shall constitute a security agreement
      under the Alabama Uniform Commercial Code or other law applicable to the
      creation of liens on personal property. Borrower covenants and agrees to
      execute, file and refile such financing statements, continuation statements
      or
      other documents as Lender shall require from time to time with respect to such
      personal property. This Mortgage shall constitute a financing statement under
      the Alabama Uniform commercial Code with Borrower as the "Debtor" and Lender
      as
      the "Secured Party", and their respective addresses are set forth in the heading
      to this instrument. If an Event of Default occurs, the Lender shall have all
      rights and remedies of a Secured Party under the Alabama Uniform Commercial
      Code.

    

    3.06 CONFLICT
      IN LOAN DOCUMENTS. In the event of conflict in the terms of any provision of
      this Mortgage, the Promissory Note, or the Loan Documents, the terms of the
      provisions most favorable to the Lender shall apply.

    

    3.07 APPLICABLE
      LAW. This Mortgage shall be governed in all respects by the laws of the State
      of
      Alabama.

    

    IN
      WITNESS WHEREOF, Borrower has executed these presents as of the year and day
      first set forth above.

    

    
      
        
        

      

      
        15.

        
          

        

      

      
        
        

      

    

    

    
      	 	
              MAGNETECH
                INDUSTRIAL SERVICES OF ALABAMA, LLC

            
	 	 	 
	 	
              By:

            	/s/
John
              A. Martell
	 	
              Name:

            	
              John
                A. Martell

            
	 	
              Title:

            	
              President

            

    

    

    
      	
              STATE
                OF INDIANA

            	
              )

            	 
	 	
              )

            	 
	
              COUNTY
                OF ST. JOSEPH

            	
              )

            	 

    

    

    I,
      the
      undersigned authority, a Notary Public in and for said County in said State,
      hereby certify that John A. Martell, whose name as President, of MAGNETECH
      INDUSTRIAL SERVICES OF ALABAMA, LLC, a limited liability company, is signed
      to
      the foregoing instrument and who is known to me, acknowledged before me on
      this
      day that, being informed of the contents of the instrument, he as such officer
      and with full authority, executed the same voluntarily for and as the act of
      said corporation.

    

    Given
      under my hand and official seal this the 31st day of May, 2006.

    

    
      	 	/s/
              James M. Lewis
	 	
              James
                M. Lewis, NOTARY PUBLIC

            
	 	
              My
                Commission Expires: Feb. 09, 2008 

            

    

    Mortgagor's
      mailing address:

    

    1125
      South Walnut St.,

    South
      Bend, Indiana 46619

    

    Mortgagee’s
      mailing address:

    

    825
      3rd
      Avenue,
      14th
      Floor

    New
      York,
      New York 10022

    

    This
      instrument prepared by:

    Ferrell
      S. Anders

    ANDERS,
      BOYETT & BRADY, P.C.

    One
      Maison Building

    3800
      Airport Blvd., Ste 203

    Mobile,
      AL 36608

    (251)
      344-0880Guaranty

     

    Exhibit
      10.5

     

    

     

    GUARANTY

    
      	
               

              New
                York, New York

            	
               

              May
                31, 2006

            

    

     

    FOR
      VALUE
      RECEIVED, and in consideration of note purchases from, or credit otherwise
      extended or to be extended by Laurus Master Fund, Ltd. (“Laurus”) to or for the
      account of Magnetech Industrial Services of Alabama, LLC, an Indiana limited
      liability company (the “Company”), from time to time and at any time and for
      other good and valuable consideration and to induce Laurus, in its discretion,
      to purchase such notes or make other extensions of credit and to make or grant
      such renewals, extensions, releases of collateral or relinquishments of legal
      rights as Laurus may deem advisable, each of the undersigned (and each of them
      if more than one, the liability under this Guaranty being joint and several)
      (jointly and severally referred to as “Guarantors“ or “the undersigned”)
      unconditionally guaranties to Laurus, its successors, endorsees and assigns
      the
      prompt payment when due (whether by acceleration or otherwise) of all present
      and future obligations and liabilities of any and all kinds of the Company
      to
      Laurus and of all instruments of any nature evidencing or relating to any such
      obligations and liabilities upon which the Company or one or more parties and
      the Company is or may become liable to Laurus, whether incurred by the Company
      as maker, endorser, drawer, acceptor, guarantors, accommodation party or
      otherwise, and whether due or to become due, secured or unsecured, absolute
      or
      contingent, joint or several, and however or whenever acquired by Laurus,
      whether arising under, out of, or in connection with (i) that certain Security
      and Purchase Agreement dated as of the date hereof by and among the Company
      and
      Laurus (the “Security Agreement”) and (ii) each Ancillary Agreement referred to
      in the Security Agreement (the Security Agreement and each Ancillary Agreement,
      as each may be amended, modified, restated and/or supplemented from time to
      time, are collectively referred to herein as the “Documents”), or any documents,
      instruments or agreements relating to or executed in connection with the
      Documents or any documents, instruments or agreements referred to therein or
      otherwise, or any other obligations or liabilities of the Company to Laurus,
      whether now existing or hereafter arising, direct or indirect, liquidated or
      unliquidated, absolute or contingent, due or not due and whether under, pursuant
      to or evidenced by a note, agreement, guaranty, instrument or otherwise (all
      of
      which are herein collectively referred to as the “Obligations”), and
      irrespective of the genuineness, validity, regularity or enforceability of
      such
      Obligations, or of any instrument evidencing any of the Obligations or of any
      collateral therefor or of the existence or extent of such collateral, and
      irrespective of the allowability, allowance or disallowance of any or all of
      the
      Obligations in any case commenced by or against the Company under Title 11,
      United States Code, including, without limitation, obligations or indebtedness
      of the Company for post-petition interest, fees, costs and charges that would
      have accrued or been added to the Obligations but for the commencement of such
      case. Terms not otherwise defined herein shall have the meaning assigned such
      terms in the Security Agreement. In furtherance of the foregoing, the
      undersigned hereby agrees as follows:

     

    1. No
      Impairment.
      Laurus
      may at any time and from time to time, either before or after the maturity
      thereof, without notice to or further consent of the undersigned, extend the
      time of payment of, exchange or surrender any collateral for, renew or extend
      any of the Obligations or increase or decrease the interest rate thereon, or
      any
      other agreement with the Company or with any other party to or person liable
      on
      any of the Obligations, or interested

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    therein,
      for the extension, renewal, payment, compromise, discharge or release thereof,
      in whole or in part, or for any modification of the terms thereof or of any
      agreement between Laurus and the Company or any such other party or person,
      or
      make any election of rights Laurus may deem desirable under the United States
      Bankruptcy Code, as amended, or any other federal or state bankruptcy,
      reorganization, moratorium or insolvency law relating to or affecting the
      enforcement of creditors’ rights generally (any of the foregoing, an “Insolvency
      Law”) without in any way impairing or affecting this Guaranty. This Guaranty
      shall be effective regardless of the subsequent incorporation, merger or
      consolidation of the Company, or any change in the composition, nature,
      personnel or location of the Company and shall extend to any successor entity
      to
      the Company, including a debtor in possession or the like under any Insolvency
      Law.

     

    2. Guaranty
      Absolute.
      Subject
      to Section 5(f) hereof, each of the undersigned jointly and severally guarantees
      that the Obligations will be paid strictly in accordance with the terms of
      the
      Documents and/or any other document, instrument or agreement creating or
      evidencing the Obligations, regardless of any law, regulation or order now
      or
      hereafter in effect in any jurisdiction affecting any of such terms or the
      rights of the Company with respect thereto. Guarantors hereby knowingly accept
      the full range of risk encompassed within a contract of “continuing guaranty”
which risk includes the possibility that the Company will contract additional
      obligations and liabilities for which Guarantors may be liable hereunder after
      the Company’s financial condition or ability to pay its lawful debts when they
      fall due has deteriorated, whether or not the Company has properly authorized
      incurring such additional obligations and liabilities. The undersigned
      acknowledge that (i) no oral representations, including any representations
      to
      extend credit or provide other financial accommodations to the Company, have
      been made by Laurus to induce the undersigned to enter into this Guaranty and
      (ii) any extension of credit to the Company shall be governed solely by the
      provisions of the Documents. The liability of each of the undersigned under
      this
      Guaranty shall be absolute and unconditional, in accordance with its terms,
      and
      shall remain in full force and effect without regard to, and shall not be
      released, suspended, discharged, terminated or otherwise affected by, any
      circumstance or occurrence whatsoever, including, without limitation: (a) any
      waiver, indulgence, renewal, extension, amendment or modification of or
      addition, consent or supplement to or deletion from or any other action or
      inaction under or in respect of the Documents or any other instruments or
      agreements relating to the Obligations or any assignment or transfer of any
      thereof, (b) any lack of validity or enforceability of any Document or other
      documents, instruments or agreements relating to the Obligations or any
      assignment or transfer of any thereof, (c) any furnishing of any additional
      security to Laurus or its assignees or any acceptance thereof or any release
      of
      any security by Laurus or its assignees, (d) any limitation on any party’s
      liability or obligation under the Documents or any other documents, instruments
      or agreements relating to the Obligations or any assignment or transfer of
      any
      thereof or any invalidity or unenforceability, in whole or in part, of any
      such
      document, instrument or agreement or any term thereof, (e) any bankruptcy,
      insolvency, reorganization, composition, adjustment, dissolution, liquidation
      or
      other like proceeding relating to the Company, or any action taken with respect
      to this Guaranty by any trustee or receiver, or by any court, in any such
      proceeding, whether or not the undersigned shall have notice or knowledge of
      any
      of the foregoing, (f) any exchange, release or nonperfection of any collateral,
      or any release, or amendment or waiver of or consent to departure from any
      guaranty or security, for all or any of the Obligations or (g) any other
      circumstance which might otherwise constitute a defense

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    available
      to, or a discharge of, the undersigned. Any amounts due from the undersigned
      to
      Laurus shall bear interest until such amounts are paid in full at the highest
      rate then applicable to the Obligations. Obligations include post-petition
      interest whether or not allowed or allowable.

     

    3. Waivers.

     

    (a) This
      Guaranty is a guaranty of payment and not of collection. Laurus shall be under
      no obligation to institute suit, exercise rights or remedies or take any other
      action against the Company or any other person or entity liable with respect
      to
      any of the Obligations or resort to any collateral security held by it to secure
      any of the Obligations as a condition precedent to the undersigned being
      obligated to perform as agreed herein and each of the Guarantors hereby waives
      any and all rights which it may have by statute or otherwise which would require
      Laurus to do any of the foregoing. Each of the Guarantors further consents
      and
      agrees that Laurus shall be under no obligation to marshal any assets in favor
      of Guarantors, or against or in payment of any or all of the Obligations. The
      undersigned hereby waives all suretyship defenses and any rights to interpose
      any defense, counterclaim or offset of any nature and description which the
      undersigned may have or which may exist between and among Laurus, the Company
      and/or the undersigned with respect to the undersigned’s obligations under this
      Guaranty, or which the Company may assert on the underlying debt, including
      but
      not limited to failure of consideration, breach of warranty, fraud, payment
      (other than cash payment in full of the Obligations), statute of frauds,
      bankruptcy, infancy, statute of limitations, accord and satisfaction, and
      usury.

     

    (b) Each
      of
      the undersigned further waives (i) notice of the acceptance of this Guaranty,
      of
      the extensions of credit, and of all notices and demands of any kind to which
      the undersigned may be entitled, including, without limitation, notice of
      adverse change in the Company’s financial condition or of any other fact which
      might materially increase the risk of the undersigned and (ii) presentment
      to or
      demand of payment from anyone whomsoever liable upon any of the Obligations,
      protest, notices of presentment, non-payment or protest and notice of any sale
      of collateral security or any default of any sort.

     

    (c) Notwithstanding
      any payment or payments made by the undersigned hereunder, or any setoff or
      application of funds of the undersigned by Laurus, the undersigned shall not
      be
      entitled to be subrogated to any of the rights of Laurus against the Company
      or
      against any collateral or guarantee or right of offset held by Laurus for the
      payment of the Obligations, nor shall the undersigned seek or be entitled to
      seek any contribution or reimbursement from the Company in respect of payments
      made by the undersigned hereunder, until all amounts owing to Laurus by the
      Company on account of the Obligations are indefeasibly paid in full and Laurus’
obligation to extend credit pursuant to the Documents has been irrevocably
      terminated. If, notwithstanding the foregoing, any amount shall be paid to
      the
      undersigned on account of such subrogation rights at any time when all of the
      Obligations shall not have been paid in full and Laurus’ obligation to extend
      credit pursuant to the Documents shall not have been terminated, such amount
      shall be held by the undersigned in trust for Laurus, segregated from other
      funds of the undersigned, and shall forthwith upon, and in any event within
      two
      (2) business days of, receipt by the undersigned, be turned over to Laurus
      in
      the exact form

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    received
      by the undersigned (duly endorsed by the undersigned to Laurus, if required),
      to
      be applied against the Obligations, whether matured or unmatured, in such order
      as Laurus may determine, subject to the provisions of the Documents. Any and
      all
      present and future obligations and liabilities of the Company to any of the
      undersigned are hereby waived and postponed in favor of, and subordinated to
      the
      full payment and performance of, all Obligations of the Company to
      Laurus.

     

    4. Security.
      All
      sums at any time to the credit of the undersigned and any property of the
      undersigned in Laurus’ possession or in the possession of any bank, financial
      institution or other entity that directly or indirectly, through one or more
      intermediaries, controls or is controlled by, or is under common control with,
      Laurus (each such entity, an “Affiliate”) shall be deemed held by Laurus or such
      Affiliate, as the case may be, as security for any and all of the undersigned’s
      obligations and liabilities to Laurus and to any Affiliate of Laurus, no matter
      how or when arising and whether under this or any other instrument, agreement
      or
      otherwise. 

     

    5. Representations
      and Warranties.
      Each of
      the undersigned hereby jointly and severally represents and warrants (all of
      which representations and warranties shall survive until all Obligations are
      indefeasibly satisfied in full and the Documents have been irrevocably
      terminated), that:

     

    (a) Security
      Agreement Representations and Warranties.
      Except
      as set forth in Schedule
      5(a)
      to this
      Guaranty, each representation and warranty contained in that certain Security
      and Purchase Agreement by and among MISCOR Group, Ltd. (“MISCOR”) and certain of
      its Subsidiaries (as defined in such Security and Purchase Agreement) dated
      as
      of August 24, 2005 (as amended, modified or supplemented, the “MISCOR Security
      Agreement”) is true and correct and is hereby reiterated in its entirety as if
      fully set forth in this Guaranty, in each case with respect to each of the
      Guarantors.

     

    (b) Organization,
      Good Standing and Qualification.
      Each
      Guarantor is a corporation, partnership or limited liability company, as the
      case may be, duly organized, validly existing and in good standing under the
      laws of its jurisdiction of organization. Each Guarantor has the corporate,
      limited liability company or partnership, as the case may be, power and
      authority to own and operate its properties and assets and, insofar as it is
      or
      shall be a party thereto, to (1) execute and deliver (i) this Guaranty,
      (ii) the Master Security Agreement dated as of the date hereof between the
      Guarantors and Laurus (as amended, modified and/or supplemented from time to
      time, the “Master Security Agreement”), (iii) the Registration Rights Agreement
      dated as of the date hereof between MISCOR and Laurus relating to the common
      stock issuable upon exercise of the Warrants (as amended, modified and/or
      supplemented from time to time, the “Registration Rights Agreement”), (iv) the
      Pledge Agreement dated as of the date hereof between the Guarantors, the Company
      and Laurus, (v) the Warrants issued by MISCOR to Laurus on the date hereof,
      and
      (vi) all other documents, instruments and agreements entered into in connection
      with the transactions contemplated hereby and thereby (the preceding clauses
      (ii) through (vi), collectively, the “Related Agreements”); and (2) carry out
      the provisions of this Guaranty and the Related Agreements and to carry on
      its
      business as presently conducted.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (c) Authorization;
      Binding Obligations.
      All
      corporate, partnership or limited liability company, as the case may be, action
      on the part of each Guarantor (including their respective officers and
      directors) necessary for the authorization of this Guaranty and the Related
      Agreements, the performance of all obligations of the Guarantors hereunder
      and
      under the other Related Agreements at the Closing and, the authorization, sale,
      issuance and delivery of the Warrant has been taken or will be taken prior
      to
      the Closing. 

     

    (d) Compliance
      with Other Instruments.
      No
      Guarantor is in violation or default of (x) any term of its Charter or Bylaws,
      or (y) any provision of any indebtedness, mortgage, indenture, contract,
      agreement or instrument to which it is party or by which it is bound or of
      any
      judgment, decree, order or writ, which violation or default, in the case of
      this
      clause (y), has had, or could reasonably be expected to have, either
      individually or in the aggregate, a material adverse effect. The execution,
      delivery and performance of and compliance with this Guaranty and the Related
      Agreements to which it is a party, each pursuant hereto and thereto, will not,
      with or without the passage of time or giving of notice, result in any such
      material violation, or be in conflict with or constitute a default under any
      such term or provision, or result in the creation of any mortgage, pledge,
      lien,
      encumbrance or charge upon any of the properties or assets of the Company or
      the
      suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
      license, authorization or approval applicable to the Company, its business
      or
      operations or any of its assets or properties. 

     

    (e) Authority
      and Execution.
      Each
      Guarantor has full power, authority and legal right to execute and deliver,
      and
      to perform its obligations under, this Guaranty and has taken all necessary
      corporate, partnership or limited liability company, as the case may be, action
      to authorize the execution, delivery and performance of this
      Guaranty.

     

    (f) Legal,
      Valid and Binding Character.
      This
      Guaranty constitutes each Guarantor’s legal, valid and binding obligation
      enforceable against each such Guarantor in accordance with its terms, except
      as
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium or other laws of general application affecting the
      enforcement of creditor’s rights and general principles of equity that restrict
      the availability of equitable or legal remedies. 

     

    (g) Violations.
      The
      execution, delivery and performance of this Guaranty will not violate any
      requirement of law applicable to any Guarantor or any contract, agreement or
      instrument to which any Guarantor is a party or by which any Guarantor or any
      of
      its property is bound or result in the creation or imposition of any mortgage,
      lien or other encumbrance other than in favor of Laurus on any of its property
      or assets pursuant to the provisions of any of the foregoing, which, in any
      of
      the foregoing cases, could reasonably be expected to have, either individually
      or in the aggregate, a Material Adverse Effect (as defined in the MISCOR
      Security Agreement).

     

    (h) Consents
      or Approvals.
      No
      consent of any other person or entity (including, without limitation, any
      creditor of the undersigned) and no consent, license, permit, approval or
      authorization of, exemption by, notice or report to, or registration,

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    filing
      or
      declaration with, any governmental authority is required in connection with
      the
      execution, delivery, performance, validity or enforceability of this Guaranty
      by
      any Guarantor, except to the extent that the failure to obtain any of the
      foregoing could not reasonably be expected to have, either individually or
      in
      the aggregate, a Material Adverse Effect.

     

    (i) Litigation.
      Except
      as set forth in Schedule
      5(a)
      hereto,
      no litigation, arbitration, investigation or administrative proceeding of or
      before any court, arbitrator or governmental authority, bureau or agency is
      currently pending or, to the best of its knowledge, threatened (i) with respect
      to this Guaranty or any of the transactions contemplated by this Guaranty or
      (ii) against or affecting any Guarantor, or any of its property or assets,
      which, in each of the foregoing cases, if adversely determined, could reasonably
      be expected to have a Material Adverse Effect.

     

    (j) Financial
      Benefit.
      Each
      Guarantor has derived or expects to derive a financial or other advantage from
      each and every loan, advance or extension of credit made under the Documents
      or
      other Obligation incurred by the Company to Laurus.

     

    (k) Solvency.
      As of
      the date of this Guaranty, (a) the fair saleable value of each Guarantor’s
      assets exceeds its liabilities and (b) each Guarantor is meeting its current
      liabilities as they mature.

     

    6. Covenants.
      Each
      covenant contained in the MISCOR Security Agreement is hereby reiterated in
      its
      entirety as if fully set forth in this Guaranty, in each case with respect
      to
      each of the Guarantors.

     

    7. Acceleration.

     

    (a) If
      any
      breach of any covenant or condition or other event of default shall occur and
      be
      continuing under any agreement made by the Company or any of the undersigned
      to
      Laurus, or either the Company or any of the undersigned should at any time
      become insolvent, or make a general assignment, or if a proceeding in or under
      any Insolvency Law shall be filed or commenced by, or in respect of, any of
      the
      undersigned, or if a notice of any lien, levy, or assessment is filed of record
      with respect to any assets of any of the undersigned by the United States of
      America or any department, agency, or instrumentality thereof, or if any taxes
      or debts owing at any time or times hereafter to any one of them becomes a
      lien
      or encumbrance upon any assets of the undersigned in Laurus’ possession, or
      otherwise, any and all Obligations shall for purposes hereof, at Laurus’ option,
      be deemed due and payable without notice notwithstanding that any such
      Obligation is not then due and payable by the Company.

     

    (b) Each
      of
      the undersigned will promptly notify Laurus of any default by such undersigned
      in its respective performance or observance of any term or condition of any
      agreement to which the undersigned is a party if the effect of such default
      is
      to cause, or permit the holder of any obligation under such agreement to cause,
      such obligation to become due prior to its stated maturity and, if such an
      event
      occurs, Laurus shall have the right to accelerate such undersigned’s obligations
      hereunder.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    8. Payments
      from Guarantors.
      Laurus,
      in its sole and absolute discretion, with or without notice to the undersigned,
      may apply on account of the Obligations any payment from the undersigned or
      any
      other guarantors, or amounts realized from any security for the Obligations,
      or
      may deposit any and all such amounts realized in a non-interest bearing cash
      collateral deposit account to be maintained as security for the
      Obligations.

     

    9. Costs.
      The
      undersigned shall pay on demand, all costs, fees and expenses (including
      expenses for legal services of every kind) relating or incidental to the
      enforcement or protection of the rights of Laurus hereunder or under any of
      the
      Obligations.

     

    10. Covenants
      of the Guarantors and Laurus Regarding Indemnification.

     

    (a) Company
      Indemnification. The Guarantors each agree, jointly and severally, to indemnify,
      hold harmless, reimburse and defend Laurus, each of Laurus’ officers, directors,
      agents, affiliates, control persons, and principal shareholders, against all
      claims, costs, expenses, liabilities, obligations, losses or damages (including
      reasonable legal fees) of any nature, incurred by or imposed upon Laurus which
      result, arise out of or are based upon: (i) any misrepresentation by the
      Guarantors or breach of any warranty by the Guarantors in this Guaranty, any
      Related Agreement or in any exhibits or schedules attached hereto or thereto;
      or
      (ii) any breach or default in performance by the Guarantors of any covenant
      or
      undertaking to be performed by the Guarantors hereunder, under any Related
      Agreement or any other agreement entered into by the Guarantors and Laurus
      relating hereto or thereto.

     

    (b) Purchaser’s
      Indemnification. Laurus agrees to indemnify, hold harmless, reimburse and defend
      the Guarantors and each of the Guarantors’ officers, directors, agents,
      affiliates, control persons and principal shareholders, at all times against
      any
      claims, costs, expenses, liabilities, obligations, losses or damages (including
      reasonable legal fees) of any nature, incurred by or imposed upon the Guarantors
      which result, arise out of or are based upon: (i) any misrepresentation by
      Laurus or breach of any warranty by Laurus in this Guaranty, any Related
      Agreement or in any exhibits or schedules attached hereto or thereto; or
      (ii) any breach or default in performance by Laurus of any covenant or
      undertaking to be performed by Laurus hereunder, under any Related Agreement
      or
      any other agreement entered into by the Guarantors and Laurus relating hereto
      or
      thereto.

     

    11. No
      Termination.
      This is
      a continuing irrevocable guaranty and shall remain in full force and effect
      and
      be binding upon the undersigned, and each of the undersigned’s successors and
      assigns, until all of the Obligations have been indefeasibly paid in full and
      Laurus’ obligation to extend credit pursuant to the Documents has been
      irrevocably terminated. If any of the present or future Obligations are
      guarantied by persons, partnerships, corporations or other entities in addition
      to the undersigned, the death, release or discharge in whole or in part or
      the
      bankruptcy, merger, consolidation, incorporation, liquidation or dissolution
      of
      one or more of them shall not discharge or affect the liabilities of any
      undersigned under this Guaranty.

     

    12. Recapture.
      Anything in this Guaranty to the contrary notwithstanding, if Laurus receives
      any payment or payments on account of the liabilities guaranteed hereby, which
      

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    payment
      or payments or any part thereof are subsequently invalidated, declared to be
      fraudulent or preferential, set aside and/or required to be repaid to a trustee,
      receiver, or any other party under any Insolvency Law, common law or equitable
      doctrine, then to the extent of any sum not finally retained by Laurus, the
      undersigned’s obligations to Laurus shall be reinstated and this Guaranty shall
      remain in full force and effect (or be reinstated) until payment shall have
      been
      made to Laurus, which payment shall be due on demand.

     

    13. Books
      and Records.
      The
      books and records of Laurus showing the account between Laurus and the Company
      shall be admissible in evidence in any action or proceeding, shall be binding
      upon the undersigned for the purpose of establishing the items therein set
      forth
      and shall constitute prima facie proof thereof.

     

    14. No
      Waiver.
      No
      failure on the part of Laurus to exercise, and no delay in exercising, any
      right, remedy or power hereunder shall operate as a waiver thereof, nor shall
      any single or partial exercise by Laurus of any right, remedy or power hereunder
      preclude any other or future exercise of any other legal right, remedy or power.
      Each and every right, remedy and power hereby granted to Laurus or allowed
      it by
      law or other agreement shall be cumulative and not exclusive of any other,
      and
      may be exercised by Laurus at any time and from time to time.

     

    15. Waiver
      of Jury Trial.
      EACH OF
      THE UNDERSIGNED DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
      APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
      OF
      THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH OF THE UNDERSIGNED HERETO WAIVES
      ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
      RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
      LAURUS, AND/OR ANY OF THE UNDERSIGNED ARISING OUT OF, CONNECTED WITH, RELATED
      OR
      INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
      THIS
      GUARANTY, ANY DOCUMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

     

    16. Governing
      Law; Jurisdiction.
      THIS
      GUARANTY CANNOT BE CHANGED OR TERMINATED ORALLY, AND SHALL BE GOVERNED BY AND
      CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
      APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO
      PRINCIPLES OF CONFLICTS OF LAWS. EACH OF THE UNDERSIGNED HEREBY CONSENTS AND
      AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK,
      STATE
      OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
      OR DISPUTES BETWEEN ANY OF THE UNDERSIGNED, ON THE ONE HAND, AND LAURUS, ON
      THE
      OTHER HAND, PERTAINING TO THIS GUARANTY OR ANY OF THE DOCUMENTS OR TO ANY MATTER
      ARISING OUT OF OR RELATED TO THIS GUARANTY OR ANY OF THE DOCUMENTS; PROVIDED,
      THAT
      EACH OF THE UNDERSIGNED ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY
      HAVE
      TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF
      NEW
      YORK; AND FURTHER PROVIDED,
      THAT
      NOTHING IN THIS GUARANTY SHALL BE DEEMED OR OPERATE TO PRECLUDE LAURUS FROM
      BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT
      

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    THE
      OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
      OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LAURUS.
      EACH OF THE UNDERSIGNED EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
      JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
      UNDERSIGNED HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
      PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
      NON CONVENIENS.
      EACH OF
      THE UNDERSIGNED HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
      OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF
      SUCH
      SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
      MAIL
      ADDRESSED TO SUCH UNDERSIGNED IN ACCORDANCE WITH SECTION 18 AND THAT SERVICE
      SO
      MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH UNDERSIGNED’S ACTUAL
      RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
      POSTAGE PREPAID.

     

    17. Understanding
      With Respect to Waivers and Consents.
      Each
      Guarantor warrants and agrees that each of the waivers and consents set forth
      in
      this Guaranty is made voluntarily and unconditionally after consultation with
      outside legal counsel and with full knowledge of its significance and
      consequences, with the understanding that events giving rise to any defense
      or
      right waived may diminish, destroy or otherwise adversely affect rights which
      such Guarantor otherwise may have against the Company, Laurus or any other
      person or entity or against any collateral. If, notwithstanding the intent
      of
      the parties that the terms of this Guaranty shall control in any and all
      circumstances, any such waivers or consents are determined to be unenforceable
      under applicable law, such waivers and consents shall be effective to the
      maximum extent permitted by law.

     

    18. Severability.
      To the
      extent permitted by applicable law, any provision of this Guaranty which is
      prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
      be ineffective to the extent of such prohibition or unenforceability without
      invalidating the remaining provisions hereof, and any such prohibition or
      unenforceability in any jurisdiction shall not invalidate or render
      unenforceable such provision in any other jurisdiction.

     

    19. Amendments,
      Waivers.
      No
      amendment or waiver of any provision of this Guaranty nor consent to any
      departure by the undersigned therefrom shall in any event be effective unless
      the same shall be in writing executed by each of the undersigned directly
      affected by such amendment and/or waiver and Laurus.

     

    20. Notice.
      All
      notices, requests and demands to or upon the undersigned, shall be in writing
      and shall be deemed to have been duly given or made (a) when delivered, if
      by
      hand, (b) three (3) days after being sent, postage prepaid, if by
      registered or certified mail, (c) when confirmed electronically, if by
      facsimile, or (d) when delivered, if by a recognized overnight delivery service
      in each event, to the numbers and/or address set forth beneath the signature
      of
      the undersigned.

     

    21. Successors.
      Laurus
      may, from time to time, without notice to the undersigned, sell, assign,
      transfer or otherwise dispose of all or any part of the Obligations and/or
      rights under 

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    this
      Guaranty. Without limiting the generality of the foregoing, Laurus may assign,
      or grant participations to, one or more banks, financial institutions or other
      entities all or any part of any of the Obligations. In each such event, Laurus,
      its Affiliates and each and every immediate and successive purchaser, assignee,
      transferee or holder of all or any part of the Obligations shall have the right
      to enforce this Guaranty, by legal action or otherwise, for its own benefit
      as
      fully as if such purchaser, assignee, transferee or holder were herein by name
      specifically given such right. Laurus shall have an unimpaired right to enforce
      this Guaranty for its benefit with respect to that portion of the Obligations
      which Laurus has not disposed of, sold, assigned, or otherwise
      transferred.

     

    22. Joinder.
      It is
      understood and agreed that any person or entity that desires to become a
      Guarantor hereunder, or is required to execute a counterpart of this Guaranty
      after the date hereof pursuant to the requirements of any Document, shall become
      a Guarantor hereunder by (x) executing a joinder agreement in form and substance
      satisfactory to Laurus, (y) delivering supplements to such exhibits and
      annexes to such Documents as Laurus shall reasonably request and/or as may
      be
      required by such joinder agreement and (z) taking all actions as specified
      in
      this Guaranty as would have been taken by such Guarantor had it been an original
      party to this Guaranty, in each case with all documents required above to be
      delivered to Laurus and with all documents and actions required above to be
      taken to the reasonable satisfaction of Laurus.

     

    23. Release.
      Nothing
      except indefeasible payment in full of the Obligations shall release any of
      the
      undersigned from liability under this Guaranty.

     

    24. Remedies
      Not Exclusive.
      The
      remedies conferred upon Laurus in this Guaranty are intended to be in addition
      to, and not in limitation of any other remedy or remedies available to Laurus
      under applicable law or otherwise.

     

    25. Limitation
      of Obligations under this Guaranty.
      Each
      Guarantor and Laurus (by its acceptance of the benefits of this Guaranty) hereby
      confirms that it is its intention that this Guaranty not constitute a fraudulent
      transfer or conveyance for purposes of the Bankruptcy Code, the Uniform
      Fraudulent Conveyance Act of any similar Federal or state law. To effectuate
      the
      foregoing intention, each Guarantor and Laurus (by its acceptance of the
      benefits of this Guaranty) hereby irrevocably agrees that the Obligations
      guaranteed by such Guarantor shall be limited to such amount as will, after
      giving effect to such maximum amount and all other (contingent or otherwise)
      liabilities of such Guarantor that are relevant under such laws and after giving
      effect to any rights to contribution pursuant to any agreement providing for
      an
      equitable contribution among such Guarantor and the other Guarantors (including
      this Guaranty), result in the Obligations of such Guarantor under this Guaranty
      in respect of such maximum amount not constituting a fraudulent transfer or
      conveyance. 

     

    [REMAINDER
      OF THIS PAGE IS BLANK.

    SIGNATURE
      PAGE IMMEDIATELY FOLLOWS] 

     

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, this Guaranty has been executed by the undersigned as of the
      date and year here above written.

    

    
      	 	
              MISCOR
                GROUP, LTD.

            
	 	 	 
	 	 	 
	 	
              By:

            	/s/
John
              A. Martell
	 	
              Name:

            	
              John
                A. Martell

            
	 	
              Its:

            	President
	 	 	 
	 	
              Address:
                

            	
              1125
                S. Walnut Street

            
	 	 	
              South
                Bend, Indiana

            
	 	 	
              Telephone:
                574-234-8131

            
	 	 	
              Facsimile:
                574-2332-7648

            
	 	
              State
                of Formation: Indiana

            
	 	 	 
	 	 	 
	 	
              MAGNETECH
                INDUSTRIAL SERVICES, INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	/s/
John
              A. Martell
	 	
              Name:

            	
              John
                A. Martell

            
	 	
              Its:

            	President
	 	 	 
	 	
              Address:

            	
              1125
                S. Walnut Street

            
	 	 	
              South
                Bend, Indiana

            
	 	 	
              Telephone:
                574-234-8131

            
	 	 	
              Facsimile:
                574-2332-7648

            
	 	
              State
                of Formation: Indiana

            
	 	 	 
	 	 	 
	 	
              MARTELL
                ELECTRIC, LLC

            
	 	 	 
	 	 	 
	 	
              By:

            	/s/
John
              A. Martell
	 	
              Name:

            	
              John
                A. Martell

            
	 	
              Its:

            	President
	 	 	 
	 	
              Address:
                

            	
              1125
                S. Walnut Street

            
	 	 	
              South
                Bend, Indiana

            
	 	 	
              Telephone:
                574-234-8131

            
	 	 	
              Facsimile:
                574-2332-7648

            
	 	
              State
                of Formation: Indiana

            
	 	 	 

    

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    
      	 	
              HK
                ENGINE COMPONENTS, LLC

            
	 	 	 
	 	 	 
	 	
              By:

            	/s/
John
              A. Martell
	 	
              Name:

            	
              John
                A. Martell

            
	 	
              Its:

            	President
	 	 	 
	 	
              Address:
                

            	
              1125
                S. Walnut Street

            
	 	 	
              South
                Bend, Indiana

            
	 	 	
              Telephone:
                574-234-8131

            
	 	 	
              Facsimile:
                574-2332-7648

            
	 	
              State
                of Formation: Indiana

            

    

     

     

    12

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