IEC ELECTRONICS CORP (Form: 10-K, Received: 12/16/2016 16:23:54)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[x] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended September 30, 2016

[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________ to _________

Commission file number 001-34376

IEC ELECTRONICS CORP.

(Exact name of registrant as specified in its charter)



Delaware	13-3458955
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

105 Norton Street, Newark, New York 14513

(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code: 315-331-7742

Securities registered pursuant to Section 12(b) of the Act:



Common Stock, $.01 par value	NYSE MKT LLC
(Title of each class)	(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [x]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [ ] No [x]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [x] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [x] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

[ ] Large accelerated filer [ ] Accelerated filer

[ ] Non-accelerated filer [x] Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [x]

At April 1, 2016, the last business day of the registrant’s second quarter for the fiscal year ended September 30, 2016 , the aggregate market value of the shares of common stock held by non-affiliates of the registrant was $39,375,738 (based on the closing price of the registrant’s common stock on the NYSE MKT on such date). Shares of common stock held by each executive officer and director and by each person and entity who beneficially owns more than 10% of the outstanding common stock have been excluded in that such person or entity may be deemed to be an affiliate for purposes of this calculation. Such exclusion should not be deemed a determination or admission by registrant that such individuals or entities are, in fact, affiliates of the registrant.

As of December 5, 2016 , there were 10,277,630 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of IEC Electronics Corp.’s definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with its 2017 Annual Meeting of Stockholders are incorporated by reference into Part III Item 10, 11, 12, 13 and 14 of this Form 10-K.

TABLE OF CONTENTS



		Page
PART I
Item 1.	BUSINESS	5
Item 1A.	RISK FACTORS	10
Item 1B.	UNRESOLVED STAFF COMMENTS	18
Item 2.	PROPERTIES	19
Item 3.	LEGAL PROCEEDINGS	19
Item 4.	MINE SAFETY DISCLOSURES	19
	EXECUTIVE OFFICERS OF THE REGISTRANT	19
PART II
Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES	20
Item 6.	SELECTED FINANCIAL DATA	21
Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	27
Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	55
Item 9A.	CONTROLS AND PROCEDURES	55
Item 9B.	OTHER INFORMATION	56
PART III
Item 10.	DIRECTORS, EXCUTIVE OFFICERS AND CORPORATE GOVERNANCE	57
Item 11.	EXECUTIVE COMPENSATION	57
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	57
Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	57
Item 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	58
PART IV
Item 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	58
	SIGNATURES	59
	INDEX TO EXHIBITS	61

“ SAFE HARBOR ” CAUTIONARY STATEMENT UNDER THE

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

References in this report to “IEC,” the “Company,” “we,” “our,” or “us” mean IEC Electronics Corp. and its subsidiaries except where the context otherwise requires. This Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (“Form 10-K”) contains forward-looking statements. In some cases you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "targets," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements regarding future sales and operating results, future prospects, the capabilities and capacities of business operations, any financial or other guidance and all statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events. The ultimate correctness of these forward-looking statements is dependent upon a number of known and unknown risks and events and is subject to various uncertainties and other factors that may cause our actual results, performance or achievements to be different from any future results, performance or achievements expressed or implied by these statements.

The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those views expressed or implied in our forward-looking statements: our ability to successfully remediate material weaknesses in our internal controls; litigation and governmental investigations or proceedings arising out of or relating to accounting and financial reporting matters; business conditions and growth or contraction in our customers’ industries, the electronic manufacturing services industry and the general economy; variability of our operating results; our ability to control our material, labor and other costs; our dependence on a limited number of major customers; the potential consolidation of our customer base; availability of component supplies; dependence on certain industries; variability and timing of customer requirements; technological, engineering and other start-up issues related to new programs and products, uncertainties as to availability and timing of governmental funding for our customers; the impact of government regulations, including FDA regulations; the types and mix of sales to our customers; intellectual property litigation; unforeseen product failures and the potential product liability claims that may be associated with such failures; the availability of capital and other economic, business and competitive factors affecting our customers, our industry and business generally; failure or breach of our information technology systems; and natural disasters. Any one or more of such risks and uncertainties could have a material adverse effect on us or the value of our common stock. For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections elsewhere in this Form 10-K and other filings with the Securities and Exchange Commission (the “SEC”).

All forward-looking statements included in this Form-10-K are made only as of the date indicated or as of the date of this Form 10-K. We do not undertake any obligation to, and may not, publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or which we hereafter become aware of, except as required by law. New risks and uncertainties arise from time to time and we cannot predict these events or how they may affect us and cause actual results to differ materially from those expressed or implied by our forward-looking statements. Therefore, you should not rely on our forward-looking statements as predictions of future events. When considering these risks, uncertainties and assumptions, you should keep in mind the cautionary statements contained in this report and any documents incorporated herein by reference. You should read this document and the documents that we incorporate by reference into this Form-10-K completely and with the understanding that our actual future results may be materially different from what we expect. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

PART I


Item 1.	BUSINESS

Overview

IEC Electronics Corp. (“IEC,” “we,” “our,” “us,” “Company”) conducts business directly, as well as through its subsidiaries, IEC Electronics Wire and Cable, Inc (“Wire and Cable”), IEC Electronics Corp-Albuquerque (“Albuquerque”) and IEC Analysis & Testing Laboratory, LLC (“ATL”) described in this “Overview.” As discussed further in Note 2—SCB Divestiture and Discontinued Operations , SCB, the Company’s formerly wholly-owned subsidiary was divested during the fourth quarter of the fiscal year ended September 30, 2015 (“fiscal 2015”).

IEC is a premier provider of electronic manufacturing services (“EMS”) to advanced technology companies that produce life-saving and mission critical products for the medical, industrial, aerospace and defense sectors. The Company specializes in delivering technical solutions for the custom manufacturing, product configuration, and verification testing of highly engineered complex products that require a sophisticated level of manufacturing to ensure quality and performance.

Within the EMS sector, we have unique capabilities which allow our customers to rely on us to solve their complex challenges, minimize their supply chain risk and deliver full system solutions for their supply chain. These capabilities include, among others:


•	Our engineering services include the design, development, and fabrication of customized stress testing platforms to simulate a product’s end application, such as thermal cycling and vibration, in order to ensure reliable performance and avoid catastrophic failure when the product is placed in service.

•

Our vertical manufacturing model offers customers the ability to simplify their supply chain by utilizing a single supplier for their critical components including complex printed circuit board assembly (“PCBA”), precision metalworking, and interconnect solutions. This service model allows us to control the cost, lead time, and quality of these critical components which are then integrated into full system assemblies and minimizes our customers’ supply chain risk.


•	We provide direct order fulfillment services for our customers by integrating with their configuration management process to obtain their customer orders, customize the product to the specific requirements, functionally test the product and provide verification data, and direct ship to their end customer in order to reduce time, cost, and complexity within our customer's supply chain.

•

We are the only EMS provider with an on-site laboratory that has been approved by the Defense Logistics Agency (“DLA”) for their Qualified Testing Supplier List (“QTSL”) program which deems the site suitable to conduct various QTSL and military testing standards including counterfeit component analysis. In addition, this advanced laboratory is utilized for complex design analysis and manufacturing process development to solve challenges and accelerate our customers’ time to market.

IEC is a 100% US manufacturer which attracts customers who are unlikely to utilize offshore suppliers due to the proprietary nature of their products, governmental restrictions or volume considerations. Our locations include:


•	Newark, New York - Located approximately one hour east of Rochester, NY, our Newark location is our corporate headquarters and is the largest manufacturing location providing complex circuit board manufacturing, interconnect solutions, and system-level assemblies along with an on-site material analysis laboratory for advanced manufacturing process development.


•	Rochester, New York - Focuses on precision metalworking services including complex metal chassis and assemblies.


•	Albuquerque, New Mexico - Specializes in the aerospace and defense markets with complex circuit board and system-level assemblies along with a state of the art analysis and testing laboratory which conducts counterfeit component analysis and complex design analysis.

We excel at complex, highly engineered products that require sophisticated manufacturing support where quality and reliability are of paramount importance. With our customers at the center of everything we do, we have created a high-intensity, rapid response culture capable of reacting and adapting to their ever-changing needs. Our customer-centric approach offers a high degree of flexibility while simultaneously complying with rigorous quality and on-time delivery standards.

We proactively invest in areas we view as important for our continued long-term growth. All of our locations are ISO 9001:2008 certified and ITAR registered. We are Nadcap accredited and AS9100C certified at our Newark and Albuquerque locations to support the stringent quality requirements of the aerospace industry. Our Newark location is ISO 13485 certified to serve the medical market sector and is an approved supplier by the National Security Agency (“NSA”) under the COMSEC standard regarding communications security. Our Analysis & Testing Laboratory in Albuquerque is ISO 17025 accredited, an IPC-approved Validation Services test Laboratory, and is the only on-site EMS laboratory that has been approved by the DLA

for their QTSL program which deems the site suitable to conduct various QTSL and military testing standards including counterfeit component analysis. Albuquerque also performs work per NASA-STD-8739 and J-STD-001ES space standards.

The technical expertise of our experienced workforce enables us to build some of the most advanced electronic, wire and cable, interconnect solutions, and precision metal systems sought by original equipment manufacturers (“OEMs”).

On November 18, 2016, we completed a sale-leaseback transaction pursuant to which our subsidiary, Albuquerque, sold certain property, including its manufacturing facility located in Albuquerque, New Mexico, to Store Capital Acquisitions, LLC for an aggregate purchase price of approximately $5.8 million including a $120.0 thousand holdback. Proceeds from this transaction were used to pay the mortgage on such property and pay down Term Loan A, as discussed in Note 7—Credit Facilities . As part of the transaction, Albuquerque entered into a lease for the property for an initial term of 15 years that may be renewed twice for five-year terms. The initial base annual rental is approximately $474.0 thousand and is subject to certain annual increases. In addition, we entered into a separate payment and performance guaranty with Store Capital Acquisitions, LLC with respect to the lease. The sale-leaseback transaction is further described in Note 18—Subsequent Events .

Organization, Recent Acquisitions and Divestitures

IEC Electronics Corp., a Delaware corporation, is the successor by merger in 1990 to IEC Electronics Corp., a New York corporation, which was originally organized in 1966. Our executive offices are located at 105 Norton Street, Newark, New York 14513. Our telephone number is 315-331-7742, and our Internet address is www.iec-electronics.com.

We have executed several strategic acquisitions over the past decade to advance our capability to support existing and potential customers in the EMS market.

On December 17, 2010, we acquired the assets of Southern California Braiding Co., Inc., a privately held company principally engaged in providing wire and cable products to military and defense markets. The business was operated through IEC’s subsidiary, Southern California Braiding, Inc. (“SCB”). SCB specialized in providing its customers, including military prime contractors and NASA, with complex cables and wire harnesses built to withstand the demands of extreme environments. As discussed further in Note 2—SCB Divestiture and Discontinued Operations , SCB, was divested during the fourth quarter of fiscal 2015.

The Electronics Contract Manufacturing Services Industry

The EMS industry specializes in providing the program management, technical support and manufacturing expertise required to take a product from the early design and prototype stages through volume production and distribution. Primarily as a response to rapid technological change and increased competition in the electronics industry, OEMs have recognized that by utilizing EMS providers they can improve their competitive position, realize an improved return on investment and concentrate on their core competencies such as research, product design and development and marketing. In addition, EMS providers allow OEMs to bring new products to market more rapidly and to adjust more quickly to fluctuations in product demand; avoid additional investment in plant, equipment and personnel; reduce inventory and other overhead costs; and determine known unit costs over the life of a contract. Many OEMs now consider EMS providers valued partners in executing their business and manufacturing strategy.

OEMs increasingly require EMS providers to provide complete turn-key manufacturing and material handling services rather than working on a consignment basis in which the OEM supplies all materials and the EMS provider supplies labor. Turn-key contracts involve design, manufacturing and engineering support, the procurement of all materials, sophisticated in-circuit and functional testing, and distribution.

IEC’s Strategy

IEC is focused on providing services for life-saving and mission critical products in the medical, industrial, aerospace and defense sectors that require a sophisticated level of manufacturing support. We offer our customers a full range of manufacturing services, combined with advanced scientific technical support to ensure their products perform for the critical applications they are intended for. The ability to solve their technical challenges, meet their stringent quality requirements, and integrate seamlessly within their supply chain, is the value add that IEC brings.

We often engage with our customers in the early stages of product or program design, work with customers to evaluate the manufacturability and testability of their products, with the objective of enhancing quality and reducing the overall cost of ownership for our customers. Due to the highly regulated environment for many of our customers, they are seeking a long term partnership throughout the life-cycle of their product.

We are a certified small business with advanced technical capabilities. This allows us to focus on our customer’s needs and deliver solutions in a responsive manner to accelerate their time to market.

Competition

The EMS industry is highly fragmented and characterized by intense competition. We believe that the principal competitive factors in the EMS market include: technology capabilities, quality and range of services, past performance, design, cost, responsiveness and flexibility. We specialize in the custom manufacture of life-saving and mission critical products that require complex circuit boards and system-level assemblies; a wide array of cable and wire harness assemblies capable of withstanding extreme environments; and precision metal components.

We are certified to serve the military and commercial aerospace sector as well as the medical sector and we hold various accreditations. We believe we excel where quality and reliability are of paramount importance and when low-to-medium volume, high-mix production is the norm. We utilize state-of-the-art, automated circuit board assembly equipment together with a full complement of high-reliability manufacturing stress testing methods. Our customer-centric approach offers a high degree of flexibility while simultaneously complying with rigorous quality and on-time delivery standards.

We compete against numerous foreign and domestic companies in addition to the internal capabilities of some of our customers. Some of our competitors include Sparton Corporation, Benchmark Electronics, Inc., Plexus Corp. and Ducommun Incorporated. We may face new competitors in the future as the outsourcing industry evolves and existing or start-up companies develop capabilities similar to ours.

Products and Services

We manufacture a wide range of assemblies that are incorporated into many different products, such as aerospace and defense systems, medical devices, industrial equipment and transportation products. Our products are distributed to and through OEMs. We support multiple divisions and product lines for many of our customers and frequently manufacture successive generations of products. In some cases, we are the sole EMS contract manufacturer for the customer site or division.

Materials Management

We generally procure materials to meet specific contract requirements and are often protected by contract terms that call for reimbursement to us in the event a contract is terminated by the customer. Whether purchased by us or supplied by a customer, materials are tracked and controlled by our internal systems throughout the manufacturing process.

Availability of Components

Our revenues are principally derived from turn-key services that involve the acquisition of raw and component materials, often from a limited number of suppliers, to be manufactured in accordance with each customer’s specifications. While we believe we are well positioned with supplier relationships and procurement expertise, potential shortages of components in the world market could materially adversely affect our revenue levels or operating efficiencies.

Suppliers

Although we depend on a limited number of key suppliers, as a result of strategic relationships we have established with them, the Company frequently benefits from one or more of the following enhancements: reduced lead-times; competitive pricing; favorable payment terms; and preference during periods of limited supply. We have preferred supplier partnership agreements in place to support our business generally and to ensure access to custom commodities such as printed circuit boards.

For the year ended September 30, 2016 (“fiscal 2016”), IEC obtained 22% of the materials used in production from two vendors, Avnet, Inc. and Arrow Electronics, Inc. If either of these vendors were to cease supplying us with materials for any reason, we would be forced to find alternative sources of supply. A change in suppliers could cause a delay in availability of products and a possible loss of sales, which could adversely affect operating results.

Marketing and Sales

Revenue in fiscal 2016 was flat compared to fiscal 2015. Although revenue was flat, our medical and aerospace and defense sectors grew, but were offset by a decline from our industrial customers. We utilize a direct sales force as well as a nationwide network of manufacturer’s representatives. Through this hybrid sales approach, we execute a focused sales strategy targeting those customers whose product profiles are aligned with our core areas of expertise. For example, we focus on customers that

are developing complex, advanced technology products for a wide array of market sectors ranging from satellite communications to medical, military and ruggedized industrial products.

Typically, the demand profiles associated with these customers are in the low-to-moderate volume range with high variability in required quantities and product mix. These customers’ products often employ emerging technologies that require concentrated engineering and manufacturing support from product development through prototyping and on to volume manufacturing, which can result in significant lead times before full production and are difficult to forecast. As a result of the specialized services required, such customers rarely rely on an outsourcing model that focuses primarily on minimizing costs.

To reduce risk, the Company seeks a balanced distribution of business across industry sectors. As indicated in the table that follows, this can fluctuate based on end customer demands.



	Years Ended
% of Sales by Sector	September 30, 2016	September 30, 2015

Aerospace and Defense	40%	38%
Medical	42%	34%
Industrial	16%	26%
Other	2%	2%
	100%	100%

Individual customers representing 10% or more of sales in fiscal 2016 included Zoll Lifecor Corporation (“Zoll”) (15%), and Baxter Corporation (15%), both of which are in the medical sector, and in fiscal 2015, General Electric Company (“GE”) (17%) in the industrial sector, Zoll (14%), and Baxter (14%) in the medical sector.

Three customers represented 10% or more of receivables at September 30, 2016 . One customer each in the medical, military, and industrial sectors together accounted for 40% of outstanding balances at September 30, 2016 . Three customers represented 10% or more of receivables at September 30, 2015 . One customer in the industrial sector and two customers in the medical sector together accounted for 44% of outstanding balances at September 30, 2015 .

Backlog

Our backlog at the end of fiscal 2016 was $54.1 million, which is 40.9% lower than $91.6 million at the end of fiscal 2015 . Just over half the decline is related to the two major customers who slowed down ordering due to reductions in their end market demand. Backlog consists of two categories: purchase orders and firm forecasted commitments. In addition to fulfilling orders and commitments contained in quarter-end backlog reports, we also receive and ship orders within each quarter that do not appear in the period end backlog reports. Variations in the magnitude and duration of contracts as well as customer delivery requirements may result in fluctuations in backlog from period to period. Approximately $46.3 million of our backlog at September 30, 2016 is expected to be shipped within the fiscal year ending September 30, 2017 (“fiscal 2017”), with the remainder expected to ship in future years. This compares to $91.2 million that was expected to be shipped within 12 months from year-end as of September 30, 2015 , with the remainder at such time that was expected to be shipped greater than 12 months from the prior year-end.

Governmental Regulation

Our operations are subject to certain United States government regulations that control the export and import of defense-related articles and services, as well as federal, state and local regulatory requirements relating to environmental protection, waste management, and employee health and safety matters. We believe that our business is operated in substantial compliance with all applicable laws and governmental regulations. While current costs of compliance, including compliance with environmental laws, are not material, our expenses could increase if new laws, regulations or requirements were to be introduced. Some of our medical and other customers are highly regulated. Any failure to comply by them, related to products we produce for them, can delay or disrupt their orders from us.

Employees

Employees are our single greatest resource. IEC’s total employees numbered 634, all of which are full time employees, at September 30, 2016 . The Company decreased by 164 employees during fiscal 2016, mainly driven by improved operational performance and customer mix, as well as lower fourth quarter volume versus 2015. Some of our full-time employees are temporary employees. None of our employees are covered by a collective bargaining agreement, nor have we experienced any

work stoppages. We make a concerted effort to engage our employees in initiatives that improve our business and provide opportunities for growth, and we believe that our employee relations are good. We have access to large and technically qualified workforces in close proximity to our operating locations in Rochester, NY and Albuquerque, NM.

Patents and Trademarks

We hold two patents related to counterfeit detection. We employ various registered trademarks. We do not believe that either patent or trademark protection is material to the operation of our business.


Item 1A.	RISK FACTORS

We depend on a relatively small number of customers, the loss of one or more of whom may negatively affect our operating results.

A relatively small number of customers are responsible for a significant portion of our net sales. During fiscal 2016 and 2015 , our five largest customers accounted for 53% and 61% of net sales, respectively. During fiscal 2016 , sales to one of our larger customers, GE, declined significantly. In addition, we expect a significant reduction in sales to two other large customers during fiscal 2017. The percentage of our sales to our major customers may fluctuate from period to period, and our principal customers may also vary from year to year. Significant reduction in sales to any of our major customers, or the loss of a major customer, could have a material adverse effect on our results of operations and financial condition.

We rely on the continued growth and financial stability of our customers, including our major customers. Adverse changes in the end markets they serve can reduce demand from our customers in those markets and/or make customers in these end markets more price sensitive. Further, mergers or restructurings among our customers, or their end customers, could increase concentration or reduce total demand as the combined entities reevaluate their business and consolidate their suppliers. Future developments, particularly in those end markets that account for more significant portions of our revenues, could harm our business and our results of operations.

Because of this concentration in our customer base, we have significant amounts of trade accounts receivable from some of our customers. If one or more of our customers experiences financial difficulty and is unable to provide timely payment for the services provided, our operating results and financial condition could be adversely affected.

In addition, consolidation among our customers could intensify this concentration and adversely affect our business. In the event of consolidation among our customers, depending on which organization controls the supply chain function following the consolidation, we may not be retained as a preferred or approved supplier. In addition, product duplication could result in the termination of a product line that we currently support. While there is potential for increasing our position with the combined customer, our revenues could decrease if we are not retained as a continuing supplier. Even if we are retained as a supplier, we may also face the risk of increased pricing pressure from the combined customer because of its increased market share.

Our operating results may fluctuate from period to period.

Our annual and quarterly operating results may fluctuate significantly depending on various factors, many of which are beyond our control. These factors may include, but are not necessarily limited to:


•	adverse changes in general economic conditions;


•	natural disasters that may impede our operations, the operation of our customers’ business, or availability of manufacturing inputs from our suppliers;


•	the level and timing of customer orders and the accuracy of customer forecasts;


•	the capacity utilization of our manufacturing facilities and associated fixed costs;


•	price competition;


•	market acceptance of our customers’ products;


•	business conditions in our customers’ end markets;


•	our level of experience in manufacturing a particular product;


•	changes in the mix of sales to our customers;


•	variations in efficiencies achieved in managing inventories and property, plant and equipment;


•	fluctuations in cost and availability of materials;


•	timing of expenditures in anticipation of future orders;


•	changes in cost and availability of labor and components;


•	our effectiveness in managing the high reliability manufacturing process required by our customers; and


•	failure or external breach of our information technology systems.

The EMS industry is affected by the United States and global economies, both of which are influenced by world events. An economic slowdown, particularly in the industries we serve, may result in our customers reducing their forecasts or delaying orders. The demand for our services could weaken, which in turn could substantially influence our sales, capacity utilization, margins and financial results. Recent periods in which EMS sales were adversely affected include Department of Defense spending reductions resulting from sequestration and a partial government shut-down during 2013.

We are subject to ongoing obligations in connection with the SEC settlement and our failure to comply with those obligations could adversely affect our business and the liquidity of our common stock.

On June 8, 2016, we consented to the entry of a settled administrative order by the SEC (the “Administrative Order”). Pursuant to the Administrative Order, we (i) neither admitted nor denied the SEC’s findings, (ii) agreed to pay a penalty of $200,000, and (iii) agreed to cease-and-desist from committing or causing any violations or future violations of certain provisions of the Securities Exchange Act of 1934, as amended, and certain rules thereunder.

We do not expect the Administrative Order to have any direct material impact on our business and operations. However, we cannot be certain that our business will not suffer indirect consequences in dealing with third parties as a result of the publicity and the facts surrounding the settlement, including potential customers concerned about its implications. The SEC settlement could also make it more difficult to attract and retain qualified individuals to serve on our board of directors or as executive officers. Further, if we are found to be in violation of the Administrative Order, we may be subject to additional enforcement actions or lawsuits that could lead to added penalties and consequences. The costs of such actions and of defending lawsuits could be significant and exceed the amount of our available insurance coverage. Adverse publicity, governmental scrutiny, pending or future investigations by regulators or law enforcement agencies or legal proceedings involving us or our affiliates could have a negative impact on our reputation and on the morale and performance of employees, as well as on business retention and sales, which could adversely affect our business and results of operations.

As a result of the settlement with the SEC, we cannot invoke the “safe harbor” for the forward-looking statements provision of the Private Securities Litigation Reform Act of 1995.

As a result of the Administrative Order, we have forfeited the ability to invoke the “safe harbor” for the forward-looking statements provision of the Private Securities Litigation Reform Act of 1995. This safe harbor provided us enhanced protection from liability related to forward-looking statements if the forward-looking statements were accompanied by meaningful cautionary statements or were made without actual knowledge that they were false or misleading. Without the statutory safe harbor, it may be more difficult for us to defend against any claims based on forward-looking statements.

In the past, our internal control over financial reporting and procedures related thereto have been deficient. Although we have taken remedial measures, our previous deficiencies could have a material adverse effect on our business and on our investors’ confidence in our reported financial information, and there is no guarantee that our internal control over financial reporting and procedures will not fail in the future .

Effective internal control over financial reporting and disclosure controls and procedures are necessary for us to provide reliable financial reports and to detect and prevent fraud. In the past, we have experienced material weaknesses with our internal controls and procedures. The remedial measures we have taken may not be sufficient to regain the confidence of investors or any loss of reputation, which could in turn affect our finances and operations. We have been and may be required in the future to expend substantial funds and resources in order to rectify deficiencies in our internal controls. Our disclosure controls and internal control over financial reporting may not prevent all errors or all instances of fraud. Because of the inherent limitations in control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our business have been detected. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The benefits of a control system also must be considered relative to the costs of the system and management’s judgments regarding the likelihood of potential events. There can be no assurance that any control system will succeed in achieving its goals under all possible future conditions, and as a result of these inherent limitations, misstatements due to error or fraud may occur and may or may not be detected. If there is a failure in any of our internal controls and procedures, we could face investigation or enforcement actions by the SEC and other governmental and regulatory bodies, litigation, loss of reputation and investor confidence, the inability to acquire capital, and other material adverse effects on our finances and business operations.

We participate in the electronics industry, which historically produces technologically advanced products with short life cycles.

Factors affecting the electronics industry in general could seriously harm our customers and, as a result, us. These factors may include, but may not be limited to:


•	the inability of our customers to adapt to rapidly changing technology and evolving industry standards, which result in short product life cycles;


•	the inability of our customers to develop and market their products, some of which are new and untested;


•	increased competition among our customers and their competitors, including downward pressure on pricing;


•	the potential that our customers’ products may become obsolete, or the failure of our customers’ products to gain anticipated commercial acceptance; and


•	periods of significantly decreased demand in our customers’ markets.

Since a significant portion of our business is defense-related, reductions or delays in U.S. defense spending may materially adversely affect our revenues.

During fiscal years 2016 and 2015 , our sales to customers serving the military and aerospace industries approximated 40% and 38% of our sales, respectively. Because these products and services are ultimately sold to the U.S. government by our customers, these sales are affected by, among other things, the federal budget process, which is driven by numerous factors beyond our control, including geo-political, macroeconomic and political conditions. The contracts between our direct customers and their government customers are subject to political and budgetary constraints and processes, changes in short-range and long-range strategic plans, the timing of contract awards, the congressional budget authorization and appropriation processes, the government’s ability to terminate contracts for convenience or for default, as well as other risks such as contractor suspension or debarment in the event of certain violations of legal and regulatory requirements.

While we believe that our customers’ programs are well aligned with national defense and other priorities, shifts in domestic and international spending and tax policy, changes in security, defense and intelligence priorities, the affordability of our products and services, general economic conditions and developments, and other factors may affect a decision to fund or the level of funding for existing or proposed programs. An impasse in federal budget decision-making could lead to substantial delays or reductions in federal spending. For example, as a result of the inability of the U.S. Government to reach agreement on budget reduction measures required by the Budget Control Act of 2011, sequestration triggered very substantial automatic spending reductions beginning in January 2013, divided between defense and domestic spending over a nine-year period. As a result, U.S. Government funding for certain of our customers has been and could continue to be reduced, delayed or eliminated, which could significantly impact these customers’ demand for our products and services and if so this could have a material adverse effect on our business, results of operations and cash flows.

We are subject to extensive regulation and audit by the Defense Contract Audit Agency.

The accuracy and appropriateness of certain costs and expenses used to substantiate our direct and indirect costs for U.S. Government contracts are subject to extensive regulation and audit by the Defense Contract Audit Agency, an arm of the U.S. Department of Defense. Such audits and reviews could result in adjustments to our contract costs and profitability. However, we cannot ensure the outcome of any future audits and adjustments may be required to reduce net sales or profits upon completion and final negotiation of audits. If any audit or review were to uncover inaccurate costs or improper activities, we could be subject to penalties and sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from conducting future business with the U.S. Government. Any such outcome could have a material adverse effect on our financial results.

Our business could be negatively impacted by economic slowdowns in the medical sector.

The medical sector represented approximately 42% of our sales during fiscal 2016 with two of our largest customers, Zoll and Baxter, each representing approximately 15% of those sales. Medical device industries are intensely competitive and heavily regulated. Medical businesses must operate within an evolving regulatory and risk environment, with ongoing pricing and cost pressures, and adoption of new business models driven by scientific and technological advances. Any significant change in production rates or any restructuring by customers in this sector would likely have a material effect on our results of operations. There is no assurance that our customers will continue to buy products from us at current levels, that we will retain any or all of our existing customers or that we will be able to form new relationships with customers upon the loss of one or more of our existing customers in this market. Any material reduction in sales, consolidation or slowdowns in the medical sector could have a negative impact on our business and financial results.

Our results of operations and financial condition may be materially adversely affected by global economic and financial market conditions.

Current global economic and financial market conditions, including the slow recovery from the global economic recession or the onset of another recession, may materially and adversely affect our results of operations and financial condition. These conditions may also materially impact our customers and suppliers. Economic and financial market conditions that adversely affect our customers may cause them to terminate or delay existing purchase orders or to reduce the volume of products they purchase from us in the future. We may be owed significant balances from customers that operate in cyclical industries and under leveraged conditions that could impair their ability to pay amounts owed to us on a timely basis. Failure to collect a significant portion of those receivables could have a material adverse effect on our results of operations and financial condition.

Similarly, adverse changes in credit terms extended to us by our suppliers, such as shortening the required payment period for outstanding accounts payable or reducing the maximum amount of trade credit available to us could significantly affect our liquidity and thereby have a material adverse effect on our results of operations and financial condition.

If we are unable to successfully anticipate changing economic and financial market conditions, we may be unable to effectively plan for and respond to those changes, and our operating results could be materially adversely affected.

The agreements governing our debt contain various covenants that may constrain the operation of our business, and our failure to comply with these covenants may have a material adverse effect on our financial condition.

The agreements and instruments governing our secured bank credit facility with M&T Bank (the “Credit Facility”) and other existing debt contain various covenants that, among other things, require us to comply with certain financial covenants including maintenance of minimum earnings before interest, taxes, depreciation, amortization, and stock compensation expense (“EBITDAS”), limits on the ratio of debt to EBITDAS, and maintenance of a fixed charge coverage ratio, maximum inventory levels and maximum capital expenditures (collectively, “Financial Covenants”). The agreements and instruments governing the Credit Facility require financial and other reporting, contain limitations on revolving loan borrowings and restrict or limit our ability to:


•	incur debt;


•	incur or maintain liens;


•	make acquisitions of businesses or entities;


•	make investments, loans or advances;


•	enter into guarantee agreements;


•	engage in mergers, consolidations or certain sales of assets;


•	engage in transactions with affiliates;


•	pay dividends or engage in stock redemptions or repurchases; and


•	make capital expenditures.

The Credit Facility is secured by a general security agreement covering the assets of the Company and its subsidiaries, a pledge of the Company’s equity interest in its subsidiaries, a negative pledge on the Company’s real property, and a guarantee by the Company’s subsidiaries, all of which restrict use of these assets to support other financial instruments.

To the extent we are required to seek additional waivers and/or amendments, we may continue to experience increased borrowing costs. If the Company is not in compliance with all of our debt covenants, and if M&T Bank chooses to exercise its remedies, M&T Bank could accelerate our primary indebtedness which could cause cross-defaults with respect to other obligations, causing a material adverse effect on our financial condition including, our inability to obtain replacement financing or continue operations. Our ability to comply with covenants contained in our Credit Facility and other existing debt may be affected by events beyond our control, including prevailing economic, financial and industry conditions.

Start-up costs and inefficiencies related to new or transferred programs can materially adversely affect our operating results and may not be recoverable.

Our long term success depends in part upon our ability to support our customers as they bring new products and programs to market, or transfer programs to us. Often these products and programs have technological issues and require, or our customers desire, engineering and other changes and innovations in order to facilitate full-scale production and end-user acceptance. Although some of these programs, particularly in the defense and space industries, once mature, will likely profitably extend over many years and will be difficult to transfer to our competitors, we may have to make significant upfront investments in them that may be recovered only over the longer term. These investments may have a significant impact on our profitability in nearer term periods. Moreover, start-up costs, including the management of labor and equipment resources in connection with establishing new programs and new customer relationships; and difficulties in estimating required resources and the timing of those resources in advance of production, can adversely affect our operating results. If new programs or customer relationships are terminated or delayed, our operating results may be materially adversely affected, particularly in the near term, as we may not recoup those start-up costs or quickly replace anticipated new program revenues.

Some of our customers may have regulatory issues that adversely affect our operating results.

Some of our larger customers are in heavily regulated industries, such as health care. If they encounter issues with their regulators related to products we manufacture for them, there may be long delays in resolving those issues or the issues may not be resolved at all, which would adversely affect our operating results.

Most of the customers in our industry do not commit to long-term production schedules, which can make it difficult for us to schedule production.

Customers may cancel their orders, change production quantities or delay production for any number of reasons that are beyond our ability to foresee or control. Although we are always seeking new opportunities, we may not be able to replace any deferred, reduced or cancelled orders. Cancellations, reductions or delays by a significant customer or by a group of customers could adversely affect our operating results and working capital levels. Such cancellations, reductions or delays have occurred and may occur again. The volume and timing of sales to our customers may vary due to:


•	variation in demand for our customers’ products in their end markets;


•	actions taken by our customers to manage their inventory;


•	product design changes by our customers; or


•	changes in our customers’ manufacturing strategy.

Due in part to these factors, most of our customers do not commit to firm, long-term production schedules. Therefore, we make significant judgments based on our estimates of customer requirements, including:


•	deciding on the levels of business that we will seek;


•	production schedules;


•	component procurement commitments;


•	equipment requirements;


•	personnel needs; and


•	other resource requirements.

Increased competition may result in decreased demand or reduced prices for our products and services.

The EMS industry is highly fragmented and characterized by intense competition. We may be operating at a cost disadvantage compared to larger EMS providers who have greater direct buying power from component suppliers, distributors and raw material suppliers or who have lower cost structures as a result of their geographic location. As a result, other EMS providers may have a competitive advantage. Our manufacturing processes are generally not subject to significant proprietary protection, and companies with greater resources or a greater market presence may enter our market or increase their competition with us. We also expect our competitors to continue to improve the performance of their current products or services, to reduce the prices of their products or services and to introduce new products or services that may offer greater performance and improved pricing. Any of these factors may cause a decline in our sales, loss of market acceptance for our products or services, profit margin compression, or loss of market share.

We depend on a limited number of suppliers for components that are critical to our manufacturing processes. A shortage of these components or an increase in their price could interrupt our operations and adversely affect our operating results.

Much of our net revenue is derived from turn-key manufacturing for which we provide the materials specified by our customers. Some of our customer agreements permit periodic adjustments to pricing based on increases or decreases in component prices and other factors. However, we typically bear the risk of component price increases that occur between any such re-pricing dates or, if such re-pricing is not permitted during the balance of the term of a particular customer agreement. As a result, some component price increases may materially adversely affect our operating results, if we cannot increase prices enough to offset increased costs or if increased prices lead to cancelled orders.

Many of the products we manufacture require one or more components that are available from a limited number of suppliers. In response to supply shortages, some of these components are from time to time subject to allocation limits. In some cases, supply shortages or delayed deliveries could substantially curtail production of those assemblies requiring a limited-supply component, which could contribute to an increase in our inventory levels, and could delay shipments to customers and the associated revenue of all products using that component. Component shortages have been prevalent in our industry, and such shortages may recur. An increase in economic activity could result in shortages if manufacturers of components do not adequately anticipate increased order volume or if they have excessively reduced their production capabilities. World events, armed conflict, governmental regulation, natural disaster, and epidemics could also affect our supply chain, leading to an inability to obtain sufficient components on a timely basis.

In addition, due to the specialized nature of some components and our customers’ product specifications, we may be required to use sole-source suppliers for certain components. Such suppliers may encounter financial or operational difficulties that could cause delays in or the curtailment of component deliveries.

Our turn-key manufacturing services involve inventory risk.

Our turn-key manufacturing services described above involve a greater investment in inventory and a corresponding increase in risk as compared to consignment services, for which the customer provides all materials. For example, in our turn-key operations, we must frequently order parts and supplies in minimum lot sizes that may be larger than the quantity of product ultimately needed for our customers. Customers’ cancellation or reduction of orders could result in additional expense to us. If we are not reimbursed for excess inventory ordered to meet customer forecasts, we may accumulate excess inventory and/or incur return charges imposed by suppliers. In addition, component price increases and inventory obsolescence associated with turn-key orders could adversely affect our operating results.

Furthermore, we provide inventory management programs for some of our customers under which we are required to hold and manage finished goods inventories. Such inventory management programs may lead to higher finished goods inventory levels, reduced inventory turns and increased financial exposure. In cases where customers have contractual obligations to purchase managed inventories from us, we remain subject to the risk of enforcing the obligation.

Products we manufacture may contain defects in workmanship, which could result in reduced demand for our services and product liability claims against us.

We manufacture highly complex products to our customers’ specifications, often within tight tolerance ranges, and such products may contain design or manufacturing errors or defects. Defects in the products we manufacture, whether caused by customer design, workmanship, component failure or other error, may result in delayed shipments to customers or reduced or cancelled customer orders, adversely affecting our reputation and may result in product liability claims against us. Even if customers or component suppliers are responsible for the defects, they may be unwilling or unable to assume responsibility for costs associated with product failure.

Security breaches and other disruptions could compromise our information, harm customer relationships and expose us to liability, which would cause our business and reputation to suffer.

We have access to, create and store sensitive data, including intellectual property, our proprietary business information and that of our customers, and personally identifiable information of our employees. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be improperly accessed, disclosed, lost or stolen. Any such access, disclosure or other loss of information could disrupt our operations and the services we provide to customers, damage our reputation or our customer relationships, impair our ability to record, process and report accurate information to our stockholders and the SEC, or result in legal claims or proceedings, any of which could adversely affect our business, financial condition, revenues and competitive position.

Our manufacturing processes and services may result in exposure to intellectual property infringement and other claims.

Providing manufacturing services can expose us to potential claims that products, designs or manufacturing processes we use infringe third party intellectual property rights. Even though many of our manufacturing services contracts generally require our customers to indemnify us for infringement claims relating to their products, including associated product specifications and designs, a particular customer may not, or may not have the resources to, assume responsibility for such claims. In addition, we may be responsible for claims that our manufacturing processes or components used in manufacturing infringe third party intellectual property rights. Infringement claims could subject us to significant liability for damages, potential injunctive action, or hamper our normal operations such as by interfering with the availability of components and, regardless of merits, could be time-consuming and expensive to resolve, and have a material adverse effect on our results of operations and financial position. In the event of such a claim, we may be required to spend a significant amount of money to develop non-infringing alternatives or obtain and maintain licenses. We may not be successful in developing such alternatives or obtaining and maintaining such a license on reasonable terms or at all. Our customers may be required to or decide to discontinue products which are alleged to be infringing rather than face continued costs of defending the infringement claims, and such discontinuance may result in a significant decrease in our business.

A failure to comply with customer-driven policies and standards, including those related to social responsibility and conflict minerals, could adversely affect our business and reputation.

In addition to government regulations and industry standards, our customers may require us to comply with their own social responsibility, conflict minerals, quality or other business policies or standards, which may be more restrictive than current laws and regulations as well as our pre-existing policies, before they commence, or continue, doing business with us. Such policies or standards may be customer-driven, established by the industry sectors in which we operate or imposed by third party organizations, such as the SEC’s conflict mineral rules.

Our compliance with these policies, standards and third party certification requirements could be costly, and our failure to comply could adversely affect our operations, customer relationships, reputation and profitability. In addition, our adoption of these standards could adversely affect our cost competiveness, ability to provide customers with required service levels and ability to attract and retain employees in jurisdictions where these standards vary from prevailing local customs and practices.

If we are unable to maintain satisfactory capacity utilization rates, our results of operations and financial condition would be adversely affected.

Given the high fixed costs of our operations, decreases in capacity utilization rates can have a significant effect on our business. Accordingly, our ability to maintain or enhance gross margins continues to depend, in part, on maintaining satisfactory capacity utilization rates. In turn, our ability to maintain satisfactory capacity utilization depends on the demand for our products, the volume of orders we receive, and our ability to offer products that meet our customers’ requirements at competitive prices. If current or future production capacity fails to match current or future customer demands, our facilities would be underutilized, our sales may not fully cover our fixed overhead expenses, and we would be less likely to achieve anticipated gross margins. If forecasts and assumptions used to support the implied fair value of goodwill or realizability of our long-lived assets including intangible assets change, we may incur significant impairment charges, which would adversely affect our results of operations and financial condition, as we have experienced.

In addition, we generally schedule our production facilities at less than full capacity to retain our ability to respond to unexpected additional quick-turn orders. However, if these orders are not received, we may forego some production and could experience continued excess capacity. If we conclude that we have significant, long-term excess capacity, we may decide to permanently close one or more of our facilities, and lay off some of our employees. Closures or lay-offs could result in our recording restructuring charges such as severance and other exit costs, and asset impairments.

If our customers choose to provide manufacturing services in-house or overseas, our results of operations could suffer.

Our business has benefited from OEMs deciding to outsource their EMS needs to us. Our future revenue growth depends, in part, on new outsourcing opportunities from OEMs. Current and prospective customers continuously evaluate our performance against other providers, including off-shore procurement opportunities. They also evaluate the potential benefits of manufacturing their products themselves. To the extent that outsourcing opportunities are not available either due to OEM decisions to produce these products themselves or to use other domestic or foreign providers, our financial results and prospects could be materially adversely affected.

We may not be able to maintain the engineering, technological and manufacturing capabilities required by our customers in the future.

The markets for our manufacturing and engineering services are characterized by rapidly changing technology and evolving process development. The continued success of our business will depend upon our ability to:


•	hire and retain qualified engineering and technical personnel;


•	maintain and enhance our technological leadership; and


•	develop and market manufacturing services that meet changing customer needs.

Although we believe that our operations provide the assembly and testing technologies, equipment and processes that are currently required by our customers, there is no certainty that we will develop the capabilities required by our customers in the future. The emergence of new technology, industry standards or customer requirements may render our equipment, inventory or processes obsolete or uncompetitive; or we may have to acquire new assembly and testing technologies and equipment to remain competitive. The acquisition and implementation of new technologies and equipment may require significant expense or capital investment that could adversely affect our operating results, as could our failure to anticipate and adapt to our customers’ changing technological requirements.

Failure to attract and retain key personnel and other skilled employees could materially adversely affect our business .

Our continued success depends to a large extent on our ability to recruit, train, and retain skilled employees, particularly executive management and technical employees. The competition for these individuals is significant; hence the loss of the services of certain of these key employees or an inability to attract or retain qualified employees could negatively impact us.

Failure to comply with current and future governmental regulations related to defense, health and safety and the environment could impair our operations or cause us to incur significant expense.

We are subject to a variety of United States government regulations that control the export and import of defense-related articles and services, as well as federal, state and local regulatory requirements relating to employee occupational health and safety, and environmental and waste management regulations relating to the use, storage, discharge and disposal of hazardous materials used in our manufacturing process. To date, the cost to the Company of such compliance has not had a material impact on our business, financial condition or results of operations. However, violations may occur in the future as a result of human error, equipment failure or other causes. Further, we cannot predict the nature, scope or effect of environmental legislation or regulatory requirements that could be imposed in the future, or how existing or future laws or regulations will be administered or interpreted. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of regulatory agencies, could require substantial expenditures by the Company and could have a material adverse effect on our business, financial condition and results of operations. If we fail to comply with any present or future regulations, we could be subject to future liabilities or the suspension of production which could have a material adverse effect on our results of operations. While we are not currently aware of any violations, such regulations could restrict our ability to expand our facilities or could require us to acquire costly equipment, or to incur other significant compliance-related expenses.

We may face heightened liability risks specific to our medical device business as a result of additional healthcare regulatory related compliance requirements and the potential severe consequences that could result from manufacturing defects or malfunctions (e.g., death or serious injury) of the medical devices we manufacture, design or test.

As a manufacturer and designer of medical devices for our customers, we have compliance requirements in addition to those relating to other areas of our business. We are required to register with the FDA and are subject to periodic inspection by the FDA for compliance with the FDA’s Quality System Regulation (“QSR”) and current Good Manufacturing Practices (cGMP) requirements, which require manufacturers of medical devices to adhere to certain regulations and to implement design and process manufacturing controls, quality control, labeling, handling and documentation procedures. The FDA, through periodic inspections and product field monitoring, continually reviews and rigorously monitors compliance with these QSR requirements and other applicable regulatory requirements. If any FDA inspection reveals noncompliance, and we do not address the FDA’s concerns to its satisfaction, the FDA may take action against us, including issuing a form noting the FDA’s inspection observations, a notice of violation or a warning letter, imposing fines, bringing an action against the Company and its officers, requiring a recall of the products we manufactured for our customers, issuing an import detention on products entering the U.S. from an offshore facility or temporarily halting operations at or shutting down a manufacturing facility. If any of these were to occur, our reputation and business could suffer.

In addition, any defects or malfunctions in medical devices we manufacture or in our manufacturing processes and facilities may result in liability claims against us, expose us to liability to pay for the recall or remanufacture of a product, or otherwise adversely affect product sales or our reputation. The magnitude of such claims could be particularly severe as defects in medical devices could cause severe harm or injuries, including death, to users of these products and others.

A failure of our information technology systems could materially adversely affect our business.

A failure or prolonged interruption in our information technology systems, some of which are aging, or difficulties encountered in upgrading our systems or implementing new systems, that compromises our ability to meet our customers’ needs, or impairs our ability to record, process and report accurate information could have a material adverse effect on our financial condition. We are implementing a new enterprise resource planning system (“ERP”) to assist with the collection, storage, management and interpretation of data from our business activities to support future growth and to integrate significant processes. ERP implementations are complex and time-consuming and involve substantial expenditures on system software and implementation activities, as well as changes in business processes. Our ERP system is critical to our ability to accurately maintain books and records, record transactions, provide important information to our management and prepare our consolidated financial statements. ERP implementations also require the transformation of business and financial processes in order to reap the benefits of the ERP system; any such transformation involves risks inherent in the conversion to a new computer system, including loss of information and potential disruption to our normal operations. Any disruptions, delays or deficiencies in the design and implementation of a new ERP system could adversely affect our ability to process orders, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate our business. Additionally, if the ERP system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely affected or our ability to assess it adequately could be further impacted.

Cybersecurity breaches or system failures may interrupt or delay our ability to provide services to our customers, expose our business and our customers to harm and otherwise adversely affect our operations.

System disruptions and failures may interrupt or delay our ability to provide services to our customers and otherwise adversely affect our operations. The secure transmission of confidential information over the internet and other electronic distribution and communication systems is essential to our maintaining consumer confidence. Security breaches, computer viruses, cyberattacks, hacking and other acts of vandalism could result in a compromise or breach of the technology that we use to protect our transaction data and other information that we must keep secure. Our financial, accounting, data processing or other operating systems and facilities may fail to operate properly or become disabled as a result of events that are wholly or partially beyond our control, such as a cyberattack, a spike in transaction volume or unforeseen catastrophic events, potentially resulting in data loss and adversely affecting our ability to process these transactions. If one or more of such events occurs, this could potentially jeopardize data integrity or confidentiality of information processed and stored in, or transmitted through, our computer systems and networks, which could result in our facing significant losses, reputational damage and legal liabilities.

Competition and consolidation in the electronic industry could negatively affect our business .

Consolidation could result in an increasing number of very large electronics companies offering products similar to ours in multiple sectors of the electronics industry. The growth of these large companies, with significant purchasing and marketing power, could result in increased pricing and competitive pressures for us. Accordingly, industry consolidation could harm our business. We may need to increase our efficiencies to compete and may incur additional restructuring charges.

Failure to obtain and retain security clearances could impact sales and materially impact our results of operations .

Certain of our U.S. government contracts require our employees to maintain various levels of security clearances. If our employees are unable to obtain security clearances in a timely manner, or at all, or if our employees who hold security clearances are unable to maintain the clearances or terminate employment with us, then a customer requiring classified work could terminate the contract or decide not to renew it upon its expiration. In addition, we expect that many of the contracts on which we will bid will require us to demonstrate our ability to obtain facility security clearances and employ personnel with specified types of security clearances. To the extent we are not able to obtain facility security clearances or engage employees with the required security clearances for a particular contract, we may not be able to bid on or win new contracts, or effectively bid on expiring contracts.

We may not have the ability to renew facilities leases on terms favorable to us and relocation of operations presents risks due to business interruption .

We recently engaged in a sale leaseback transaction with respect to property located in Albuquerque, New Mexico, that includes the manufacturing facility for our wholly-owned subsidiary, IEC Electronics Corp - Albuquerque. The lease has an initial term of 15 years, provides for renewal options and is subject to annual rental adjustments. We may be unable to offset these cost increases. In addition, continued economic conditions may continue to negatively impact and create greater pressure in the commercial real estate market that could lead to landlord default or foreclosure of the property. While we maintain certain rights in connection with the lease, there can be no guarantee that such rights will be upheld and our continued right of occupancy in such instances could be jeopardized. Such an occurrence could have a material adverse effect on our financial results. Additionally, if we choose to move any of our operations, those operations will be subject to additional relocation costs and associated risks of business interruption.


Item 1B.	UNRESOLVED STAFF COMMENTS

None.

Item 2. PROPERTIES

We own or lease properties in three locations that together house our administrative offices (“AO”), engineering (“E”), manufacturing (“M”), warehouse (“W”) and distribution (“D”) functions, as follows:



Location	Principal Use	Building SF	Owned/Leased	Lease Expiration
Newark, New York	AO,E,M,W,D	235,000	Owned	N/A
Rochester, New York	AO,M,W,D	47,000	Owned	N/A
Albuquerque, New Mexico	AO,E,M,W,D	72,000	Owned ⁽¹⁾	N/A

Our properties are generally in good condition and are suitable for their intended purpose.

⁽¹⁾ As disclosed in Note 18—Subsequent Events , we completed a sale-leaseback transaction for this property on November 18, 2016.

Item 3. LEGAL PROCEEDINGS

From time to time, we may be involved in legal actions in the ordinary course of our business, but management does not believe that any such proceedings commenced through the date of the financial statements included in this Form 10-K, individually or in the aggregate, will have a material adverse effect on our consolidated financial position.

Item 4. MINE SAFETY DISCLOSURES

Not Applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

Our executive officers at September 30, 2016 were as follows:



	Age
Jeffrey T. Schlarbaum	50	President and Chief Executive Officer
Michael T. Williams	49	Vice President of Finance and Chief Financial Officer
Jens Hauvn	49	Senior Vice President, Operations

Jeffrey T. Schlarbaum, age 50 , has served as a director and as our President and Chief Executive Officer since February 2015. From February 2013 to June 2013 and from June 2014 to February 2015, Mr. Schlarbaum pursued personal interests. From June 2013 to June 2014, Mr. Schlarbaum served as Chief Operations Officer for LaserMax, Inc., a manufacturer of laser gun sights for law enforcement and the shooting sports community. From October 2010 to February 2013, Mr. Schlarbaum served as our President. Prior to that, Mr. Schlarbaum served as our Executive Vice President and President of Contract Manufacturing from October 2008 to October 2010, Executive Vice President from November 2006 to October 2008 and Vice President, Sales & Marketing from May 2004 to November 2006. Prior to joining us, Mr. Schlarbaum served in senior management roles with various contract manufacturing companies. Mr. Schlarbaum holds a B.B.A. from National University and an M.B.A. from Pepperdine University.

Michael T. Williams, age 49 , has served as our Vice President, Finance since February 2014 and was appointed as Chief Financial Officer in June 2014. From October 2013 until February 2014, Mr. Williams served as a consultant with JC Jones & Associates, LLC, a business and financial consulting firm, where he provided advice regarding regulatory compliance. Previously, he was employed by Bausch & Lomb Incorporated from 1995 through October 2013, and most recently served as Vice President Finance & Controller for its $1.3 billion Global Vision Care Business. From February 2008 to September 2012, he served as Controller, Global Surgical Business, Bausch & Lomb’s $500 million global medical device business. Prior to that time, he served in various capacities at Bausch & Lomb, including Executive Commercial Director for the U.S. Refractive Business, Director of Finance, U.S. Surgical Business, Controller, U.S. Vision Care Business and Controller, European Logistics Center. Mr. Williams holds a B.B.A. in Accounting from St. Bonaventure University and an M.B.A. from the Simon School of Business at the University of Rochester and is a certified public accountant.

Jens Hauvn, age 49 , has served as our Senior Vice President, Operations since September 2015. From October 2014, when he joined us, until September 2015, Mr. Hauvn served as Vice President of Quality and Operational Excellence. Previously, Mr. Hauvn served as Vice President, Corporate Quality at Ducommun Incorporated, a global provider of manufacturing and engineering services, from June 2011 to July 2014. In this position, Mr. Hauvn was responsible for quality functions across 19

facilities that provide manufacturing and engineering solutions for complex applications in the aerospace, defense, medical, industrial and commercial markets. From June 1992 to June 2011, Mr. Hauvn served in management positions with several of Ducommun Incorporated’s predecessor companies, which were purchased in a series of acquisitions. Mr. Hauvn holds a B.S. in Electrical Engineering from the University of Wisconsin Milwaukee.

PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

(a) Market Information

Our common stock trades on the NYSE MKT LLC (“NYSE MKT”) under the symbol “IEC”.

The following table sets forth, for the fiscal quarters indicated, the high and low sales prices for our common stock as reported on the NYSE MKT.



IEC Closing Stock Prices	Low		High

Fiscal Quarters
Fourth 2016	$	4.30	$	5.27
Third 2016	4.15		4.94
Second 2016	3.05		4.64
First 2016	2.78		3.87

Fourth 2015	$	3.62	$	4.61
Third 2015	3.31		4.69
Second 2015	3.59		5.37
First 2015	4.23		5.58

The closing price of our common stock on the NYSE MKT on December 5, 2016 , was $3.47 per share.

(b) Holders

As of December 5, 2016 , there were approximately 179 holders of record of IEC’s common stock. This figure does not include an estimate of the indeterminate number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies.

We do not pay dividends on our common stock, as it is our current policy to retain earnings for use in the business. Furthermore, certain covenants in our credit agreement with M&T Bank prohibit us from paying cash dividends. We do not expect to pay cash dividends on shares of our common stock in the foreseeable future.

(d) Recent sales of Unregistered Securities

None.

(e) Repurchases of IEC Securities

We did not repurchase any shares during the fourth quarter of the fiscal year ended September 30, 2016 . Furthermore, certain covenants in our credit agreement with M&T Bank prohibit us from repurchasing IEC securities.

Item 6. SELECTED FINANCIAL DATA



		Years Ended September 30,
		2016			2015			2014			2013			2012
(amounts in thousands, except per share data)					^(a)			^(a)			^(a)
Net sales		$	127,010		$	126,999		$	120,837		$	124,800		$	130,361
Gross profit		20,287			16,295			13,689			16,668			24,689
Operating profit/(loss)		6,248			(1,660		)	40			3,135			13,150
Income/(loss) from continuing operations before income taxes		4,856			(3,770		)	(1,772		)	1,923			13,484
Provision for/(benefit from) income taxes		70			1			12,876			706			4,774
Income/(loss) from continuing operations		4,786			(3,771		)	(14,648		)	1,217			8,710
Loss on discontinued operations, net		—			(6,415		)	(423		)	(10,747		)	(2,016		)
Net income/(loss)		$	4,786		$	(10,186	)	$	(15,071	)	$	(9,530	)	$	6,694

Gross margin as a % of sales		16.0		%	12.8		%	11.3		%	13.4		%	18.9		%
Operating profit as % of sales		4.9		%	(1.3		)%	—		%	2.5		%	10.1		%

Diluted net income/(loss) per common and common equivalent share:
	Earnings/(loss) from continuing operations	$	0.47		$	(0.37	)	$	(1.49	)	$	0.12		$	0.87
	Earnings/(loss) from discontinued operations	—			(0.64		)	(0.04		)	(1.09		)	(0.20		)
	Net earnings/loss	$	0.47		$	(1.01	)	$	(1.53	)	$	(0.97	)	$	0.67

Working capital		$	19,772		$	21,866		$	24,046		$	31,592		$	19,320
Total assets		50,626			68,262			72,996			88,935			87,898
Long-term debt (excluding current portion)		16,961			28,323			28,479			34,026			21,104
Stockholders’ equity		13,864			8,688			17,405			31,994			40,796
^(a)	Fiscal years 2015, 2014 and 2013 were impacted by Restatement and Related Expenses as discussed in Note 1-Our Business and Summary of Significant Accounting Policies.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information in this Management’s Discussion and Analysis should be read in conjunction with the accompanying Consolidated Financial Statements (“Financial Statements”), the related Notes and the five-year summary of Selected Financial Data. References to “Notes” in this report are references to the Notes to the Consolidated Financial Statements unless otherwise specified. Forward-looking statements in this Management’s Discussion and Analysis are qualified by the cautionary statement preceding Item 1 of this Form 10-K and the risk factors identified in Item 1A.

Results of Operations

The following discussion of our results of operations is based on our continuing operations and excludes any results of our discontinued operations.

Full Year Ended September 30, 2016 and 2015

A summary of selected income statement amounts for the years ended follows:



	Years Ended
Income Statement Data	September 30, 2016		September 30, 2015
(in thousands)
Net sales	$	127,010	$	126,999

Gross profit	20,287		16,295
Selling and administrative expenses	14,026		16,630
Restatement and related expenses, net	13		1,325
Interest and financing expense	1,392		2,110
Income/(loss) from continuing operations before income taxes	4,856		(3,770		)
Provision for/(benefit from) income taxes	70		1
Income/(loss) from continuing operations	4,786		(3,771		)
Loss on discontinued operations, net	—		(6,415		)
Net income/(loss)	$	4,786	$	(10,186	)

A summary of sales, according to the market sector within which IEC’s customers operate, follows:



	Years Ended
% of Sales by Sector	September 30, 2016	September 30, 2015

Aerospace and Defense	40%	38%
Medical	42%	34%
Industrial	16%	26%
Other	2%	2%
	100%	100%

Revenue was flat as compared to the prior fiscal year. An increase in sales in the medical market sector of $9.3 million and of $3.5 million in the aerospace and defense sector, was offset by decreases in the industrial market sector of $12.3 million. As previously discussed, we anticipate there will be a significant decline in sales in fiscal 2017 from two customers based on a decline in their end market demand.

The net increase in sales in the medical market sector was primarily due to higher demand of $5.4 million from our existing medical customer base. Programs for relatively new customers that have now ramped up caused increases of $3.9 million.

Various increases and decreases for our aerospace and defense customers resulted in a net increase in revenue of $3.5 million during fiscal 2016. Programs frequently fluctuate in demand or end and are replaced by new programs. Aggregate decreases in revenues from existing customers of $7.4 million were more than offset by increases in revenues from other customers of $8.6 million. Increases in revenues of $3.0 million for new programs from existing customers was partially offset by decreases in revenues of $1.6 million due to lost programs or customers. We had an increase in revenues of $0.1 million for a recently added customer.

The net decrease in revenue for the industrial market sector was $12.3 million. As anticipated during fiscal 2015, one of our customers began sourcing more product from an alternate source in China which decreased revenue by $12.0 million. We expect this customer to maintain the mix of sourcing product from China for programs we are currently supporting. Various other fluctuations in demand from existing customers netted to a decrease in revenue of $0.3 million year over year.

Gross profit increased $4.0 million from 12.8% of sales in fiscal 2015 to 16.0% of sales for fiscal 2016. The Company’s overhead contributed 44% of the improvement while labor and material favorability drove the rest. Customer mix and our continued focus on labor efficiencies drove the material and labor improvements. Overhead favorability was driven by operational improvements and cost containment. Also, fiscal 2015 had the additional $0.7 million in stock-based compensation attributed to the change in control resulting from the proxy contest.

Selling and administrative (“S&A”) expense is presented excluding Restatement and related expenses discussed below. S&A expense decreased $2.6 million and represented 11.0% of sales in fiscal 2016, compared to 13.1% of sales in the prior fiscal year. The decrease in S&A expenses was primarily due to expenses in 2015 related to the proxy contest and resulting change in control. These costs totaled $3.5 million and included stock based compensation of $1.0 million, legal and other expenses incurred by the Company and Vintage Opportunity Fund, LP related to the 2015 proxy contest of $1.6 million and severance costs of $0.9 million. In fiscal 2016, the Company incurred additional severance costs of $0.7 million partially offsetting the favorable year over year decrease.

Restatement and related expenses represent third party legal and accounting fees directly attributable to the prior restatements including those more fully described in Note 1—Our Business and Summary of Significant Accounting Policies . Certain of these expenses were reimbursed as a result of directors and officers liability insurance claims. Restatement and related expenses are presented net of these reimbursements. Restatement and related expenses, net were $13.4 thousand in fiscal 2016 and $1.3 million in fiscal 2015, which includes fees for the reaudit of fiscal 2014 due to the 2014 restatement. These expenses, net of reimbursement, have dropped significantly and we anticipate these to end or be immaterial in fiscal 2017.

Interest expense decreased by $0.7 million in fiscal 2016 compared to the prior fiscal year. IEC’s average outstanding debt balances decreased to $25.4 million in fiscal 2016 from $32.7 million in the prior fiscal year. Average borrowings were lower in fiscal 2016 due to improved operating performance coupled with a significant improvement in working capital. The weighted average interest rate on IEC’s debt for fiscal 2016, excluding the impact of the interest rate swap, was 0.09% higher than the prior fiscal year. The net impact of adjusting the swap to fair value also increased interest expense by $0.2 million in fiscal 2016 compared to the prior fiscal year. The interest rate swap was terminated in the fourth quarter of fiscal 2016 for $91.8 thousand. Cash paid for interest was approximately $1.4 million and $1.6 million for fiscal 2016 and fiscal 2015 , respectively. Detailed information regarding our borrowings, including the Fifth Amended and Restated Credit Facility Agreement, is provided in Note 7—Credit Facilities .

There was no material income tax expense or benefit in fiscal 2016 because we have net operating loss (“NOL”) carryforwards to offset any current tax expense and a full valuation on all deferred tax assets. A full valuation allowance was booked on all deferred tax assets beginning in the second quarter of the fiscal year ended September 30, 2014 (“fiscal 2014”).

With respect to tax payments, in the near term IEC expects to be sheltered by sizable NOL carryforwards for federal income tax purposes. At the end of fiscal 2016, the NOL carryforwards amounted to approximately $31.7 million expiring mainly in years 2022 through 2035. The Company also has additional state NOLs available in several jurisdictions in which it files state tax returns.

As further discussed in Note 2—SCB Divestiture and Discontinued Operations , we have included the results of the sale and the activity related to SCB in discontinued operations in the consolidated income statements for all periods presented. The loss on discontinued operations, net was $6.4 million in fiscal 2015. The loss in fiscal 2015 includes impairment charges of $4.1 million as well as the loss on sale of SCB of $0.4 million.

Liquidity and Capital Resources (Full Years Ended September 30, 2016 and 2015 )

Capital Resources

As of September 30, 2016 there were no outstanding capital expenditure commitments for manufacturing equipment and building improvements. We generally fund capital expenditures with cash flow from operations and our revolving credit facility.

Summary of Cash Flows

A summary of selected cash flow amounts for the years ended follows:



	Years Ended
Cash Flow Data	September 30, 2016			September 30, 2015
(in thousands)
Cash, beginning of period	$	407		$	1,980
Net cash flow from:
Operating activities	15,273			(1,149		)
Investing activities	(3,239		)	300
Financing activities	(11,596		)	(724		)
Net (decrease) increase in cash	438			(1,573		)
Cash, end of period	$	845		$	407

Operating activities

Cash flows provided by continuing operations, before considering changes in working capital, were $8.3 million in fiscal 2016 and $2.2 million in fiscal 2015 . The net income from continuing operations of $4.8 million in fiscal 2016 was an improvement compared to the net loss of $3.8 million during fiscal 2015 , however non-cash expenses were lower in fiscal 2016 . Total non-cash expenses were $3.5 million in fiscal 2016 compared to $6.0 million in fiscal 2015 . The non-cash expenses in fiscal 2016 consisted primarily of stock based compensation of $0.4 million and depreciation and amortization of $3.2 million . Stock based compensation was $1.6 million lower in fiscal 2016 than fiscal 2015 as a result of the accelerated vesting of all outstanding equity awards in connection with the change in control from the proxy contest, the remaining decrease was driven by lower depreciation.

Working capital from continuing operations provided cash flows of $7.0 million in fiscal 2016 compared to used cash flows of $2.4 million in fiscal 2015 . The change in working capital in fiscal 2016 was primarily due to a decrease in inventory of $10.5 million and a decrease in accounts receivable of $7.7 million partially offset by a decrease in accounts payable of $7.5 million and customer deposits of $4.0 million . The decrease in inventory during fiscal 2016 was due to a significantly improved process in our supply chain to focus on inventory turns as well as reductions in customer requirements (which also led to a decrease in customer deposits). Accounts payable reduction in fiscal 2016 was due to the inventory reduction as well as the timing of payments. Accounts receivable decreases were primarily due to a drop in revenue in the fourth quarter of fiscal 2016 revenue year over year and improved cash collections.

Investing activities

Cash flows used by investing activities for continuing operations were $3.2 million for fiscal 2016 and $2.0 million for fiscal 2015 . Cash used by investing activities for fiscal 2016 consisted of purchases of equipment and capitalized software costs resulting from the ongoing implementation of a new enterprise resource planning system. Cash used by investing activities in fiscal 2015 primarily consisted of purchases of equipment and capitalized software costs partially offset by $0.7 million of community development block grant proceeds.

Financing activities

Cash flows used in financing activities were $11.6 million and $0.7 million for fiscal 2016 and fiscal 2015 , respectively. During fiscal 2016 , net repayments under all credit facilities were $11.4 million , with $8.5 million of net repayments under the Revolver (defined below) and net repayments of other term debt of $2.9 million . In fiscal 2016 , repayments of the Revolver were possible due to increased cash flow provided by operations. During fiscal 2015 , net repayments under all credit facilities were $0.2 million , with net borrowing of the Revolver of $5.0 million and repayments of other term debt of $5.1 million .

Credit Facilities

At September 30, 2016 , borrowings outstanding under the revolving credit facility (“Revolver”) under the Fifth Amended and Restated Credit Agreement dated as of December 14, 2015, as amended by the First Amendment to the Fifth Amended and Restated Credit Facility Agreement dated as of June 20, 2016 (“Fifth Amended Credit Agreement”) amounted to $4.0 million , and the maximum available was $16.4 million. Repayments on the Revolver during fiscal 2016 were driven by cash flow from

operations discussed above. The Company believes that its liquidity is sufficient to satisfy anticipated operating requirements during the next twelve months.

The Fifth Amended Credit Agreement also contains various affirmative and negative covenants including financial covenants. The Company is required to maintain (i) a minimum level of quarterly EBITDAS, as defined below (“Quarterly EBITDAS”), (ii) a ratio of total debt to twelve month EBITDAS (“Debt to EBITDAS Ratio”) that is below a specified limit, (iii) a minimum fixed charge coverage ratio (“Fixed Charge Coverage Ratio”), (iv) a maximum level of inventory (“Maximum Inventory”), and (v) a maximum amount of capital expenditures (“Maximum Capital Expenditures”). The Debt to EBITDAS Ratio is the ratio of debt to earnings before interest, taxes, depreciation, amortization and non-cash stock compensation expense (“EBITDAS”). The Fixed Charge Coverage Ratio compares (i) 12 month EBITDA plus non-cash stock compensation expense minus unfinanced capital expenditures minus cash taxes paid, to (ii) the sum of interest expense, principal payments and dividends, if any (fixed charges). “EBITDA” means, for the applicable period, net income plus interest expense, tax expense, depreciation and amortization of intangible assets, all on a consolidated basis and determined in accordance with generally accepted accounting principles in the Unites States of America (“GAAP”). The Maximum Inventory covenant allows for specific levels of inventory as defined by the agreement. The Maximum Capital Expenditures covenants allow for a maximum amount of capital expenditures on an annual basis.

The Company was in compliance with all debt covenants at September 30, 2016 .

Certain covenants were further amended on November 28, 2016, when we entered into the Second Amendment to the Fifth Amended Credit Agreement (see Note 18—Subsequent Events ).

The calculation of financial covenants as of the dates indicated follows:



	Limit at		Calculated Amount At
Debt Covenant	September 30, 2016	September 30, 2015	September 30, 2016	September 30, 2015
Quarterly EBITDAS (000s)	Minimum $1,080	Minimum $1,500	$1,269	$2,067
Debt to EBITDAS Ratio	Maximum 3.1x	Maximum 5.75x	2.0x	5.2x
Fixed Charge Coverage Ratio	Minimum 1.25x	Minimum 0.45x	1.5x	0.8x
Maximum Inventory	Maximum $27.0m	Not applicable	$21.2m	Not applicable
Maximum Capital Expenditures	Maximum $4.5m annually	Not applicable	$3.3m	Not applicable

A reconciliation of EBITDAS to Net income follows:



	Three Months Ended
	September 30, 2016
(in thousands)
Net income/(loss)	$	176
Provision for/(benefit from) income taxes	76
Depreciation and amortization expense	697
Interest expense	201
Non-cash stock compensation	119
EBITDAS	$	1,269

A reconciliation of Adjusted EBITDA to Net income follows:



	Three Months Ended
	September 30, 2016
(in thousands)
Net income/(loss)	$	176
Provision for/(benefit from) income taxes	76
Depreciation and amortization expense	697
Interest expense	201
Non-cash stock compensation	119
Unfinanced capital expenditures	(1,074		)
Adjusted EBITDA	$	195

We present EBITDAS and Adjusted EBITDA because certain covenants in our credit facilities are tied to these measures. EBITDAS and Adjusted EBITDA are not measures of financial performance under GAAP and are not calculated through the application of GAAP. As such, they should not be considered as substitutes or alternatives for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. EBITDAS and Adjusted EBITDA, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

Off-Balance Sheet Arrangements

IEC is not a party to any material off-balance sheet arrangements.

Critical Accounting Policies and Use of Estimates

IEC’s financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America, as presented in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”). In preparing financial statements, management is required to (i) determine the manner in which accounting principles are applied and (ii) make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. A discussion of the Company’s critical accounting policies follows.

Revenue recognition: Under FASB ASC 605-10 (Revenue Recognition), revenue from sales is recognized when (i) goods are shipped or title and risk of ownership have passed, (ii) the price to the buyer is fixed or determinable, and (iii) realization is reasonably assured. Service revenues are generally recognized as services are rendered or, in the case of material management contracts, in proportion to materials procured to date. Provisions for discounts and rebates to customers, estimated returns and allowances and other adjustments are recorded in the period the related sales are recognized.

Doubtful accounts : FASB ASC 310-10-35 (Receivables) requires us to establish an allowance for doubtful accounts when it is probable that losses have been incurred in the collection of accounts receivable and the amount of loss can reasonably be estimated. If losses are probable and estimable, they are to be accrued even though the particular customer accounts on which losses will be incurred cannot yet be identified.

Inventory reserves : FASB ASC 330-10-35 (Inventory) requires us to reduce the carrying value of inventory when there is evidence that the utility of goods will be less than cost, whether due to physical deterioration, obsolescence, changes in price levels or other causes. Inventory balances are generally reduced to the lower of cost or market value by establishing offsetting balance sheet reserves.

Impairment of long-lived assets : FASB ASC 360-10 (Property, Plant and Equipment) and 350-30 (Intangibles) require the Company to test long-lived assets (PP&E and amortizing intangible assets) for recoverability whenever events or circumstances indicate that the carrying amount may not be recoverable. If carrying value exceeds undiscounted future cash flows attributable to an asset, it is considered impaired and the carrying amount must be reduced to fair value.

Legal contingencies : When legal proceedings are brought or claims are made against us and the outcome is uncertain, FASB ASC 450-10 (Contingencies) requires that we accrue an estimated loss if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Any such accruals are charged to earnings.

Disclosure of a contingency is required if there is at least a reasonable possibility that a loss will be incurred. In determining whether to accrue or disclose a loss, we evaluate, among other factors, the probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount. Changes in these factors may materially affect our financial position or results of operations.

Income taxes : FASB ASC 740 (Income Taxes) describes the manner in which income taxes are to be provided for in the Company’s financial statements. We are required to recognize (i) the amount of taxes payable or refundable for the current period and (ii) deferred tax assets and liabilities for the future tax consequences of events that have been reported in IEC’s financial statements or tax returns. With respect to uncertain positions that may be taken on a tax return, we recognize related tax benefits only if it is more likely than not that the position will be sustained under examination based on the technical merits of the position. We evaluate whether, based on all available evidence, our deferred income tax assets will be realizable. Valuation allowances are established when it is estimated that it is more likely than not that the tax benefit of a deferred tax asset will not be realized. The determination of income tax balances for financial statement purposes requires significant judgment and actual outcomes may vary from the amounts recorded.

Recently Issued Accounting Standards

Information with respect to recently issued accounting standards is provided in Note 1—Our Business and Summary of Significant Accounting Policies .

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a result of our financing activities, the Company is exposed to changes in interest rates that may adversely affect operating results. The Company actively monitors its exposure to interest rate risk and from time to time uses derivative financial instruments to manage the impact of this risk. The Company uses derivatives only for the purpose of managing risk associated with underlying exposure. The Company does not trade or use instruments with the objective of earning financial gains on the interest rate, nor does the Company use derivatives instruments where it does not have underlying exposure. The Company manages its hedging position and monitors the credit ratings of counterparties and does not anticipate losses due to counterparty nonperformance. Management believes its use of derivative instruments to manage risk is in the Company’s best interest. However, the Company’s use of derivative financial instruments may result in short-term gains or losses and increased volatility.

At September 30, 2016 , the Company had $19.9 million of debt, comprised of $15.1 million with variable interest rates and $4.7 million with fixed interest rates. Interest rates on variable loans are based on London Interbank Offered Rate (“LIBOR”). Interest rates based on LIBOR currently adjust daily, causing interest on such loans to vary from period to period. A sensitivity analysis as of September 30, 2016 , indicates that a one-percentage point increase or decrease in our variable interest rates, which represents more than a 10% change, would increase or decrease the Company’s annual interest expense by approximately $0.2 million. The rates and sensitivity analysis noted above exclude the impact of the swap transaction.

The Company is exposed to credit risk to the extent of non-performance by M&T Bank under the Fifth Amended Credit Agreement described above. M&T Bank’s credit rating (reaffirmed A by Fitch in October 2016) is monitored by the Company, and IEC expects that M&T Bank will perform in accordance with the terms of the Fifth Amended Credit Agreement.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements are included in this Item 8 on the pages indicated below:



	Page
Report of Independent Registered Public Accounting Firm	28
Consolidated Balance Sheets as of September 30, 2016 and 2015	29
Consolidated Income Statements for the years ended September 30, 2016 and 2015	30
Consolidated Statements of Changes in Stockholders’ Equity for the years ended September 30, 2016 and 2015	31
Consolidated Statements of Cash Flows for the years ended September 30, 2016 and 2015	32
Notes to Consolidated Financial Statements	34

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

IEC Electronics Corp.

Newark, New York

We have audited the accompanying consolidated balance sheets of IEC Electronics Corp. as of September 30, 2016 and 2015, and the related consolidated income statements, statements of changes in stockholders' equity, and statements of cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2016 and 2015, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/Crowe Horwath LLP

New York, New York

December 16, 2016

IEC ELECTRONICS CORP.

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2016 and 2015

(in thousands, except share and per share data)



	September 30, 2016			September 30, 2015
ASSETS
Current assets:
Cash	$	845		$	407
Accounts receivable, net of allowance	17,140			24,923
Inventories, net	15,384			25,753
Assets held for sale	4,611			—
Other current assets	1,214			1,444
Total current assets	39,194			52,527

Property, plant and equipment, net	10,994			15,443
Intangible assets, net	95			134
Goodwill	101			101
Other long term assets	242			57

Total assets	$	50,626		$	68,262

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	2,908		$	2,908
Accounts payable	10,864			18,336
Accrued payroll and related expenses	3,365			2,338
Other accrued expenses	529			1,318
Customer deposits	1,756			5,761
Total current liabilities	19,422			30,661

Long-term debt	16,961			28,323
Other long-term liabilities	379			590
Total liabilities	36,762			59,574

STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value:	—			—
500,000 shares authorized; none issued or outstanding
Common stock, $0.01 par value:
Authorized 50,000,000 shares
Issued: 11,330,151 and 11,232,017 shares, respectively
Outstanding: 10,274,663 and 10,196,145 shares, respectively	113			112
Additional paid-in capital	46,294			45,845
Retained earnings/(accumulated deficit)	(30,954		)	(35,740		)
Treasury stock, at cost: 1,055,488 and 1,035,872 shares, respectively	(1,589		)	(1,529		)
Total stockholders’ equity	13,864			8,688

Total liabilities and stockholders’ equity	$	50,626		$	68,262

The accompanying notes are an integral part of these consolidated financial statements.

IEC ELECTRONICS CORP.

CONSOLIDATED INCOME STATEMENTS

YEARS ENDED SEPTEMBER 30, 2016 and 2015

(in thousands, except share and per share data)



	Years Ended
	September 30, 2016		September 30, 2015

Net sales	$	127,010	$	126,999
Cost of sales	106,723		110,704
Gross profit	20,287		16,295

Selling and administrative expenses	14,026		16,630
Restatement and related expenses, net	13		1,325
Operating profit/(loss)	6,248		(1,660		)

Interest and financing expense	1,392		2,110
Income/(loss) from continuing operations before income taxes	4,856		(3,770		)

Provision for/(benefit from) income taxes	70		1
Income/(loss) from continuing operations	4,786		(3,771		)

Loss on discontinued operations, net	—		(6,415		)

Net income/(loss)	$	4,786	$	(10,186	)

Basic net income/(loss) per common and common equivalent share:
Earnings/(loss) from continuing operations	$	0.47	$	(0.37	)
Earnings/(loss) from discontinued operations	—		(0.64		)
Net earnings/loss	$	0.47	$	(1.01	)

Diluted net income/(loss) per common and common equivalent share:
Earnings/(loss) from continuing operations	$	0.47	$	(0.37	)
Earnings/(loss) from discontinued operations	—		(0.64		)
Net earnings/loss	$	0.47	$	(1.01	)

Weighted average number of common and common equivalent shares outstanding:
Basic	10,211,210		10,089,306
Diluted	10,211,210		10,089,306

The accompanying notes are an integral part of these consolidated financial statements.

IEC ELECTRONICS CORP.

CONSOLIDATED STATEMENTS of CHANGES in STOCKHOLDERS’ EQUITY

YEARS ENDED SEPTEMBER 30, 2016 and 2015

(in thousands)



	Common Stock, par $0.01			Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Treasury Stock, at cost			Total Stockholders’ Equity

Balances, October 1, 2014	$	111		$	44,302		$	(25,554	)	$	(1,454	)	$	17,405

Net loss	—			—			(10,186		)	—			(10,186		)
Stock-based compensation	—			2,037			—			—			2,037
Restricted (non-vested) stock grants, net of forfeitures	2			(2		)	—			—			—
Exercise of stock options	—			111			—			(75		)	36
Shares withheld for payment of taxes upon vesting of restricted stock	(1		)	(603		)	—			—			(604		)

Balances, September 30, 2015	$	112		$	45,845		$	(35,740	)	$	(1,529	)	$	8,688



	Common Stock, par $0.01		Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Treasury Stock, at cost			Total Stockholders’ Equity

Balances, October 1, 2015	$	112	$	45,845		$	(35,740	)	$	(1,529	)	$	8,688

Net income	—		—			4,786			—			4,786
Stock-based compensation	—		443			—			—			443
Restricted (non-vested) stock grants, net of forfeitures	1		(1		)	—			—			—
Exercise of stock options	—		2			—			—			2
Return of incentive compensation shares	—		—			—			(60		)	(60		)
Shares withheld for payment of taxes upon vesting of restricted stock	—		(2		)	—			—			(2		)
Employee stock plan purchases	—		7			—			—			7

Balances, September 30, 2016	$	113	$	46,294		$	(30,954	)	$	(1,589	)	$	13,864

The accompanying notes are an integral part of these consolidated financial statements.

IEC ELECTRONICS CORP.

CONSOLIDATED STATEMENTS of CASH FLOWS

YEARS ENDED SEPTEMBER 30, 2016 and 2015

(in thousands)



	Years Ended
	September 30, 2016			September 30, 2015

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)	$	4,786		$	(10,186	)
Less: Loss on discontinued operations, net	—			(6,415		)
Income/(loss) from continuing operations	4,786			(3,771		)
Non-cash adjustments:
Stock-based compensation	443			2,037
Incentive compensation shares returned	(60		)	—
Depreciation and amortization	3,154			3,859
(Gain)/loss on sale of property, plant and equipment	1			12
Provision for doubtful accounts	96			(38		)
Provision for excess/obsolete inventory	(112		)	87
Changes in assets and liabilities:
Accounts receivable	7,687			(2,538		)
Inventory	10,481			(5,360		)
Other current assets	230			1,343
Other long term assets	17			231
Accounts payable	(7,472		)	604
Accrued expenses	238			(763		)
Customer deposits	(4,005		)	4,208
Other long term liabilities	(211		)	(118		)
Net cash flows from operating activities-continuing operations	15,273			(207		)
Net cash flows from operating activities-discontinued operations	—			(942		)
Net cash flows from operating activities	15,273			(1,149		)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	(3,256		)	(2,734		)
Grant proceeds from outside parties	—			698
Proceeds from disposal of property, plant and equipment	17			—
Net cash flows from investing activities-continuing operations	(3,239		)	(2,036		)
Net cash flows from investing activities-discontinued operations	—			2,336
Net cash flows from investing activities	(3,239		)	300

CASH FLOWS FROM FINANCING ACTIVITIES
Advances from revolving line of credit	56,084			66,888
Repayments of revolving line of credit	(64,538		)	(61,904		)
Repayments under other loan agreements	(2,908		)	(5,140		)
Debt issuance costs	(241		)	—
Proceeds from exercise of stock options	2			36
Proceeds from employee stock plan purchases	7			—
Shares withheld for payment of taxes upon vesting of restricted stock	(2		)	(604		)
Net cash flows from financing activities-continuing operations	(11,596		)	(724		)



Net cash flows from financing activities-discontinued operations	—			—
Net cash flows from financing activities	(11,596		)	(724		)

Net cash flows for the period	438			(1,573		)
Cash, beginning of period	407			1,980
Cash, end of period	$	845		$	407

Supplemental cash flow information:
Interest paid	$	1,356		$	1,567
Income taxes paid	3			3

Non-cash transactions:
Incentive compensation shares returned	60			—

The accompanying notes are an integral part of these consolidated financial statements.

IEC ELECTRONICS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2016 and 2015

Note 1—OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our Business

IEC Electronics Corp. (“IEC,” “we,” “our,” “us,” “Company”) provides electronic manufacturing services ( “ EMS ” ) to advanced technology companies that produce life-saving and mission critical products for the medical, industrial, aerospace and defense sectors. The Company specializes in delivering technical solutions for the custom manufacture of complex full system assemblies by providing on-site analytical testing laboratories, custom design and test engineering services combined with a broad array of manufacturing services encompassing electronics, interconnect solutions, and precision metalworking. As a full service EMS provider, IEC holds all appropriate certifications for the market sectors it supports including ISO 9001:2008, AS9100C, ISO 13485, Nadcap and IPC QML. IEC is headquartered in Newark, NY and also has operations in Rochester, NY and Albuquerque, NM. Additional information about IEC can be found on its web site at www.iec-electronics.com .

Generally Accepted Accounting Principles

IEC’s financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”).

Fiscal Calendar

The Company’s fiscal year ends on September 30th, and the first three quarters end generally on the Friday closest to the last day of the calendar quarter.

Consolidation

The consolidated financial statements include the accounts of IEC and its wholly-owned subsidiaries: IEC Electronics Wire and Cable, Inc. (“Wire and Cable”); IEC Electronics Corp-Albuquerque (“Albuquerque”); and IEC Analysis & Testing Laboratory, LLC (“ATL”), formerly Dynamic Research and Testing Laboratories, LLC. The Rochester unit, formerly Celmet, operates as a division of IEC. As further discussed in Note 2—SCB Divestiture and Discontinued Operations , the operations of our wholly-owned subsidiary, formerly known as Southern California Braiding, Inc. (“SCB”), were divested during the fourth quarter of the fiscal year ended September 30, 2015 (“fiscal 2015”). All significant intercompany transactions and accounts are eliminated in consolidation.

Reclassifications

Prior year financial statement amounts are reclassified as necessary to conform to the current year presentation, including presentation of results of discontinued operations. There was no impact on net income or accumulated deficit as a result of the reclassification.

Cash

The Company’s cash represents deposit accounts with Manufacturers and Traders Trust Company (“M&T Bank”), a banking corporation headquartered in Buffalo, NY.

Allowance for Doubtful Accounts

The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that the likelihood of collection is remote.

Inventory Valuation

Inventories are stated at the lower of cost or market value under the first-in, first-out method. The Company regularly assesses slow-moving, excess and obsolete inventory and maintains balance sheet reserves in amounts required to reduce the recorded value of inventory to lower of cost or market.

Property, Plant and Equipment

Property, plant and equipment (“PP&E”) are stated at cost and are depreciated over various estimated useful lives using the straight-line method. Maintenance and repairs are charged to expense as incurred, while renewals and improvements are capitalized. At the time of retirement or other disposition of PP&E, cost and accumulated depreciation are removed from the accounts and any gain or loss is recorded in earnings.

Depreciable lives generally used for PP&E are presented in the table below. Leasehold improvements are amortized over the shorter of the lease term or estimated useful life of the improvement.



PP&E Lives		Estimated Useful Lives
		(years)
Land improvements		10
Buildings and improvements		5 to 40
Machinery and equipment		3 to 5
Furniture and fixtures		3 to 7
Software		3 to 7

Intangible Assets

Intangible assets (other than goodwill) are those that lack physical substance and are not financial assets. Such assets held by IEC were acquired in connection with business combinations or represent economic benefits associated with a property tax abatement. Values assigned to individual intangible assets are amortized using the straight-line method over their estimated useful lives.

Reviewing Long-Lived Assets for Potential Impairment

ASC 360-10 (Property, Plant and Equipment) and ASC 350-30 (Intangibles) require the Company to test long-lived assets (PP&E and definitive lived assets) for recoverability whenever events or circumstances indicate that the carrying amount may not be recoverable. If carrying value exceeds undiscounted future cash flows attributable to an asset, it is considered impaired and the excess of carrying value over fair value must be charged to earnings. No impairment charges were recorded by IEC for PP&E in fiscal 2016 .

Goodwill

Goodwill represents the excess of cost over fair value of net assets acquired in a business combination. Under ASC 350, goodwill is not amortized but is reviewed for impairment at least annually or when events or circumstances indicate that carrying value may exceed fair value. The Company may elect to precede a quantitative review for impairment with a qualitative assessment of the likelihood that fair value of a particular reporting unit exceeds carrying value. If the qualitative assessment leads to a conclusion that it is more than 50 percent likely that fair value exceeds carrying value, no further testing is required. In the event of a less favorable outcome, the Company is required to proceed with quantitative testing.

The quantitative process entails comparing the overall fair value of the unit to which goodwill relates to carrying value. If fair value exceeds carrying value, no further assessment of potential impairment is required. If fair value of the unit is less than carrying value, a valuation of the unit’s individual assets and liabilities is required to determine whether or not goodwill is impaired. Goodwill impairment losses are charged to earnings.

IEC’s remaining goodwill as of September 30, 2016 of $0.1 million relates to the acquisition of the Rochester division in July 2010. There has been no impairment for this goodwill since the acquisition date.

Leases

At the inception of a lease covering equipment or real estate, the lease agreement is evaluated under criteria discussed in ASC 840-10-25 (Leases). Leases meeting one of four key criteria are accounted for as capital leases and all others are treated as operating leases. Under a capital lease, the discounted value of future lease payments becomes the basis for recognizing an asset and a borrowing, and lease payments are allocated between debt reduction and interest. For operating leases, payments are recorded as rent expense. Criteria for a capital lease include (i) transfer of ownership during the lease term; (ii) existence of a bargain purchase option under terms that make it likely to be exercised; (iii) a lease term equal to 75 percent or more of the economic life of the leased property; and (iv) minimum lease payments that equal or exceed 90 percent of the fair value of the property.

Legal Contingencies

When legal proceedings are brought or claims are made against us and the outcome is uncertain, ASC 450-10 (Contingencies) requires that we determine whether it is probable that an asset has been impaired or a liability has been incurred. If such impairment or liability is probable and the amount of loss can be reasonably estimated, the loss must be charged to earnings.

When it is considered probable that a loss has been incurred but the amount of loss cannot be estimated, disclosure but not accrual of the probable loss is required. Disclosure of a loss contingency is also required when it is reasonably possible, but not probable, that a loss has been incurred.

Customer Deposits

Customer deposits represent amounts invoiced to customers for which the revenue has not yet been earned and therefore represent a commitment for the Company to deliver goods or services in the future. Deposits are generally short term in nature and are recognized as revenue when earned.

Grants from Outside Parties

Grants from outside parties are recorded as other long-term liabilities and are amortized over the same period during which the associated property, plant and equipment are depreciated. The Company received grants for certain facility improvements and equipment from state and local agencies in which the Company operates. These grants reimbursed the Company for a portion of the actual cost or provided in kind services in support of capital projects.

The Company received a total of $0.7 million of grants in fiscal 2015. There were no deferred grants recorded during fiscal 2016. The outstanding grant balance was $0.3 million and $0.4 million at September 30, 2016 and 2015, respectively.

Derivative Financial Instruments

The Company actively monitors its exposure to interest rate risk and from time to time uses derivative financial instruments to manage the impact of this risk. The Company uses derivatives only for purposes of managing risk associated with underlying exposures. The Company does not trade or use instruments with the objective of earning financial gains on the interest rate, nor does the Company use derivative instruments where it does not have underlying exposures. The Company manages its hedging position and monitors the credit ratings of counterparties and does not anticipate losses due to counterparty nonperformance. However, the Company’s use of derivative financial instruments may result in short-term gains or losses and increased earnings volatility. The Company’s instruments are recorded in the consolidated balance sheets at fair value in other assets or other long-term liabilities.

Fair Value Measurements

Under ASC 825 (Financial Instruments), the Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value. The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities, borrowings and an interest rate swap agreement. IEC believes that recorded value approximates fair value for all cash, accounts receivable, accounts payable and accrued liabilities.

ASC 820 (Fair Value Measurements and Disclosures) defines fair value, establishes a framework for measurement, and prescribes related disclosures. ASC 820 defines fair value as the price that would be received upon sale of an asset or would be paid to transfer a liability in an orderly transaction. Inputs used to measure fair value are categorized under the following hierarchy:

Level 1: Quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date.

Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs are observable market data.

Level 3: Model-derived valuations in which one or more significant inputs are unobservable.

The Company deems a transfer between levels of the fair value hierarchy to have occurred at the beginning of the reporting period. There were no such transfers during fiscal 2016 or fiscal 2015 .

Revenue Recognition

The Company’s revenue is principally derived from the sale of electronic products built to customer specifications, but also from other value-added support services and repair work. Revenue from product sales is recognized when (i) goods are shipped or title and risk of ownership have passed, (ii) the price to the buyer is fixed or determinable, and (iii) realization is reasonably assured. Service revenue is generally recognized once the service has been rendered. For material management arrangements, revenue is generally recognized as services are rendered. Under such arrangements, some or all of the following services may be provided: design, bid, procurement, testing, storage or other activities relating to materials the customer expects to incorporate into products that it manufactures. Value-added support services revenue, including material management and repair work revenue, amounted to less than 5% of total revenue in fiscal 2016 and fiscal 2015 .

Provisions for discounts, allowances, rebates, estimated returns and other adjustments are recorded in the period the related sales are recognized.

Stock-Based Compensation

ASC 718 (Stock Compensation) requires that compensation expense be recognized for equity awards based on fair value as of the date of grant. For stock options, the Company uses the Black-Scholes pricing model to estimate grant date fair value. Costs associated with stock awards are recorded over requisite service periods, generally the vesting period. If vesting is contingent on the achievement of performance objectives, fair value is accrued over the period the objectives are expected to be achieved only if it is considered probable that the objectives will be achieved. The Company also has an employee stock purchase plan (“ESPP”) that provides for the purchase of Company common stock at a discounted stock purchase price. Compensation expense related to the discount is recognized as employees contribute to the plan. During fiscal 2015 and the first quarter of fiscal 2016, the ESPP was suspended in connection with the 2014 Restatements described below. The ESPP was reinstated as of the beginning of the second quarter of fiscal 2016.

Restatement and Related Expenses

Restatement and related expenses represent third-party expenses arising from prior restatements. These expenses include legal and accounting fees incurred by the Company from external counsel and independent accountants directly attributable to the prior restatements. The Company receives reimbursement for certain of these expenses which may result in a benefit in a given period.

Legal Expense Accrual

The Company records legal expenses as they are incurred, based on invoices received or estimates provided by legal counsel. Future estimated legal expenses are not recorded until incurred.

Income Taxes and Deferred Taxes

ASC 740 (Income Taxes) requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns, but not in both. Deferred tax assets are also established for tax benefits associated with tax loss and tax credit carryforwards. Such deferred balances reflect tax rates that are scheduled to be in effect, based on currently enacted legislation, in the years the book/tax differences reverse and tax loss and tax credit carryforwards are expected to be realized. An allowance is established for any deferred tax asset for which realization is not likely.

ASC 740 also prescribes the manner in which a company measures, recognizes, presents, and discloses in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the position will be sustained following examination by taxing authorities, based on technical merits of the position. The Company believes that it has no material uncertain tax positions.

Any interest incurred is reported as interest expense. Any penalties incurred is reported as tax expense. The Company’s income tax filings are subject to audit by various tax jurisdictions and current open years are fiscal 2010 through fiscal 2014. The Company is currently under federal income tax audit for fiscal 2013 and does not expect the audit to have a material impact on the financial statements.

Earnings Per Share

Basic earnings per common share are calculated by dividing income available to common stockholders by the weighted average number of shares outstanding during each period. Diluted earnings per common share add to the denominator incremental shares resulting from the assumed exercise of all potentially dilutive stock options, as well as restricted (non-vested) stock, restricted stock units (“RSUs”) and anticipated issuance under the ESPP. Options, restricted stock and RSUs are primarily held by directors, officers and certain employees. A summary of shares used in earnings per share (“EPS”) calculations follows.



	Years Ended
Shares for EPS Calculation	September 30, 2016	September 30, 2015

Weighted average shares outstanding	10,211,210	10,089,306
Incremental shares	—	—
Diluted shares	10,211,210	10,089,306

Anti-dilutive shares excluded	988,554	772,605

As a result of the net loss for the year ended September 30, 2015 , the Company calculated diluted earnings per share using weighted average basic shares outstanding, as using diluted shares would be anti-dilutive to loss per share.

As a result of the incremental shares being negative for the years ended September 30, 2016 and September 30, 2015 , the Company calculated diluted earnings per share using weighted average basic shares outstanding, as using diluted shares would be anti-dilutive.

Dividends

IEC does not pay dividends on its common stock, as it is the Company’s current policy to retain earnings for use in the business. Furthermore, the Company’s Fifth Amended and Restated Credit Facility Agreement with M&T Bank includes certain restrictions on paying cash dividends as more fully described in Note 7—Credit Facilities .

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses and the disclosure of contingent assets and liabilities. Actual results may differ from management’s estimates.

Statements of Cash Flows

The Company presents operating cash flows using the indirect method of reporting under which non-cash income and expense items are removed from net income.

Recently Issued Accounting Standards

FASB Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” was issued May 2014 and updates the principles for recognizing revenue. The ASU will supersede most of the existing revenue recognition requirements in GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which a company expects to be entitled in exchange for transferring goods or services to a customer. This ASU also amends the required disclosures of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that period. Early adoption is permitted for annual periods beginning after December 15, 2016. The Company is determining its implementation approach and evaluating the potential impacts of the new standard on its existing revenue recognition policies and procedures.

FASB ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” was issued in March 2016 and improves implementation guidance on principal versus agent considerations. The effective dates are the same as those for Topic 606.

FASB ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” was issued in April 2016 and adds further guidance on identifying performance obligations as well as improving licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The effective dates are the same as those for Topic 606.

FASB ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” was issued in June 2016 and clarifies the objective of the collectability criterion, presentation of taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and how guidance in Topic 606 is retrospectively applied. The amendments do not change the core principle of the guidance in Topic 606. The effective dates are the same as those for Topic 606.

FASB ASU 2014-12, “Compensation - Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” was issued June 2014. This guidance was issued to resolve diversity in accounting for performance targets. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition and should not be reflected in the award’s grant date fair value. Compensation cost should be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for annual periods beginning after December 15, 2015 and interim periods within those annual periods. This update did not have a significant impact on the Company's financial statements upon early adoption.

FASB ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” was issued September 2014. This provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company does not anticipate a significant impact on the financial statements upon adoption.

FASB ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs” was issued in April 2015. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU applies to all entities and is effective for public business entities for annual periods beginning after December 15, 2015, and interim periods thereafter, with early adoption permitted. The guidance should be applied on a retrospective basis. The Company does not anticipate a significant impact on the financial statements upon adoption.

FASB ASU 2015-11, “Simplifying the Measurement of Inventory” was issued in July 2015. This requires entities to measure most inventory “at the lower of cost and net realizable value,” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The ASU will not apply to inventories that are measured by using either the last-in, first-out method or the retail inventory method. For public business entities, the ASU is effective prospectively for annual periods beginning after December 15, 2016, and interim periods therein. Upon transition, entities must disclose the

nature of and reason for the accounting change. The Company does not anticipate a significant impact on the financial statements upon adoption.

FASB ASU 2015-15, “Interest—Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” was issued in August 2015 which permits an entity to report deferred debt issuance costs associated with a line-of-credit arrangement as an asset and to amortize such costs over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings under the credit line. The ASU applies to all entities and is effective for public business entities for annual periods beginning after December 15, 2015, and interim periods thereafter, with early adoption permitted. The guidance should be applied on a retrospective basis. The Company does not anticipate a significant impact on the financial statements upon adoption.

FASB ASU 2015-17, “Income Taxes Balance Sheet Classification of Deferred Taxes” was issued in November 2015. This requires entities to classify deferred tax liabilities and assets as noncurrent in a classified statement of financial position and applies to all entities that present a classified statement of financial position. For public entities, this update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate a significant impact on the financial statements upon adoption.

FASB ASU 2016-02, “Leases" was issued in February 2016. The new guidance establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. For public entities, the new guidance is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted for all entities. The Company is evaluating the impact the ASU will have on the financial statements.

FASB ASU 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting” was issued in March 2016. This simplifies accounting for several aspects of share-based payment including income tax consequences, classification of awards as either equity or liability and classification on the statement of cash flows. For public entities, this update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate a significant impact on the financial statements upon adoption.

FASB ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326)” was issued in June 2016. This ASU amends the Board’s guidance on the impairment of financial instruments. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. This ASU is effective for fiscal years beginning after December 15, 2019. Early adoption will be permitted. The Company does not anticipate a significant impact on the financial statements upon adoption.

Note 2—SCB DIVESTITURE AND DISCONTINUED OPERATIONS

As previously disclosed, SCB, a wholly owned subsidiary of the Company, entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”), effective as of July 9, 2015, by and between SCB and DCX-Chol Enterprises, Inc. (“DCX”), whereby DCX purchased the multi-conductor stranded copper cable and harness assemblies manufacturing and servicing business previously operated by SCB. DCX, a provider of engineered high performance interconnect products, purchased substantially all assets and assumed certain obligations and liabilities of SCB for the agreed upon selling price of $2.5 million , adjusted to $2.4 million due to certain deposits and prorations. DCX paid the adjusted purchase price in cash at closing. The Asset Purchase Agreement contains indemnification provisions of each party with respect to breaches of representations, warranties and covenants and certain other specified matters. Prior to this transaction, there were no material relationships between the Company and DCX or between DCX and any officer, director or affiliate of the Company.

During the third quarter of fiscal 2015, the Company received an offer from DCX to purchase substantially all the assets and assume certain liabilities of SCB for approximately $2.5 million . The Company's willingness to accept the offer was considered to be an indication of fair value and as such, impairment charges of $4.1 million were taken to adjust SCB's assets to fair value as of June 26, 2015.

The pre-tax loss on the sale of SCB for the year ended September 30, 2015 included in Loss on discontinued operations, net in the income statement is calculated as follows:



	July 9, 2015
(in thousands)	(unaudited)
Purchase price	$	2,405
Net book value of assets sold	(2,630		)
Legal fees associated with closing	(114		)
Finder’s fee	(50		)
Sales tax on asset sale	(20		)
Other	(24		)
Loss on sale of SCB	$	(433	)

Carrying amounts of major classes of assets and liabilities that were disposed of follows:



	July 9, 2015
(in thousands)	(unaudited)
Inventories, net	1,803
Other current assets	53
Property, plant and equipment, net	916
Intangible assets, net	—
Customer deposits	(142	)
Net assets sold	2,630

SCB’s revenue and loss before income taxes follows:



	Year Ended
	September 30, 2015
(in thousands)
Net sales	5,407
Loss before income taxes	(5,979	)

The loss on discontinued operations for the twelve months ended September 30, 2015 was comprised of operating losses; there was no provision or benefit from taxes for these periods.

Note 3—ALLOWANCE FOR DOUBTFUL ACCOUNTS

A summary follows of activity in the allowance for doubtful accounts during the years ended September 30, 2016 and 2015 follows:



	Years Ended
Allowance for Doubtful Accounts	September 30, 2016			September 30, 2015
(in thousands)
Allowance, beginning of period	$	423		$	525
Provision for doubtful accounts	96			(38		)
Write-offs	(293		)	(64		)
Allowance, end of period	$	226		$	423

Note 4—INVENTORIES

A summary of inventory by category at period end follows:



Inventories	September 30, 2016			September 30, 2015
(in thousands)
Raw materials	$	9,138		$	17,637
Work-in-process	5,932			8,512
Finished goods	1,939			1,341
Total inventories	17,009			27,490
Reserve for excess/obsolete inventory	(1,625		)	(1,737		)
Inventories, net	$	15,384		$	25,753

Note 5—PROPERTY, PLANT AND EQUIPMENT

A summary of property, plant and equipment and accumulated depreciation at period end follows:



Property, Plant and Equipment	September 30, 2016			September 30, 2015
(in thousands)
Land and improvements	$	788		$	1,601
Buildings and improvements	8,910			14,161
Leasehold improvements	—			—
Machinery and equipment	26,905			26,061
Furniture and fixtures	7,489			7,291
Construction in progress	3,079			1,028
Total property, plant and equipment, at cost	47,171			50,142
Accumulated depreciation	(36,177		)	(34,699		)
Property, plant and equipment, net	$	10,994		$	15,443

Depreciation expense during the years ended September 30, 2016 and 2015 follows:



	Years Ended
	September 30, 2016		September 30, 2015
(in thousands)
Depreciation expense	$	3,050	$	3,809

Note 6—INTANGIBLE ASSETS

IEC’s intangible assets (other than goodwill) were acquired in connection with the purchase of Albuquerque in the fiscal year ended September 30, 2010.

Albuquerque’s building and land were acquired subject to an Industrial Revenue Bond (“IRB”) that exempts the property from real estate taxes for the term of the IRB. The tax abatement was valued at $360 thousand at the date of acquisition, and such value is being amortized over the 9.2 year exemption period that remained as of the acquisition date. No impairment has been taken for this asset since the Albuquerque acquisition.

A summary of intangible assets by category and accumulated amortization at period end follows:



Intangible Assets	September 30, 2016			September 30, 2015
(in thousands)
Property tax abatement - Albuquerque	$	360		$	360
Accumulated amortization	(265		)	(226		)
Intangible assets, net	$	95		$	134

Amortization expense during the years ended September 30, 2016 and 2015 follows:



	Years Ended
Amortization Expense	September 30, 2016		September 30, 2015
(in thousands)
Intangible amortization expense	$	39	$	39

A summary of amortization expense for the next five years follows:



Future Amortization	Estimated future amortization
(in thousands)
Twelve months ended September 30,
2017	$	39
2018	39
2019	18
2020	—
2021 and thereafter	—

Note 7—CREDIT FACILITIES

A summary of borrowings at period end follows:



	Fixed/		September 30, 2016					September 30, 2015
	Variable					Interest					Interest
Debt	Rate	Maturity Date	Balance			Rate		Balance			Rate
(in thousands)
M&T credit facilities:
Revolving Credit Facility	v	1/18/2018	$	3,961		3.28	%	$	12,415		4.50	%
Term Loan A ⁽¹⁾	f	1/1/2020	3,693			3.98		4,804			3.98
Term Loan B	v	2/1/2023	8,983			3.03		10,383			3.45
Albuquerque Mortgage Loan ⁽¹⁾	v	2/1/2018	2,200			3.55		2,467			4.75
Celmet Building Term Loan	f	11/7/2018	932			4.72		1,062			4.72

Other credit facilities:
Albuquerque Industrial Revenue Bond	f	3/1/2019	100			5.63		100			5.63

Total debt			19,869					31,231
Less: current portion			(2,908		)			(2,908		)
Long-term debt			$	16,961				$	28,323

⁽¹⁾ The Albuquerque Mortgage Loan was repaid in connection with the sale-leaseback transaction described in Note 18—Subsequent Events . The proceeds from the transaction were used to repay the Albuquerque Mortgage Loan and pay down Term Loan A.

M&T Bank Credit Facilities

On December 14, 2015, the Company and M&T Bank entered into the Fifth Amended and Restated Credit Facility Agreement dated as of December 14, 2015, as amended by the First Amendment to the Fifth Amended and Restated Credit Facility Agreement dated as of June 20, 2016 (“Fifth Amended Credit Agreement”), which amends and restates in its entirety the Fourth Amended and Restated Credit Facility Agreement dated as of January 18, 2013, as amended (the “2013 Credit Agreement”). Borrowings under the Fifth Amended Credit Agreement are secured by, among other things, the assets of IEC and its subsidiaries. The Fifth Amended Credit Agreement prohibits the Company from paying dividends or repurchasing or redeeming its common stock without first obtaining the consent of M&T Bank.

Except as described below, the terms, conditions, covenants, guarantees and collateral previously in effect under the 2013 Credit Agreement will continue substantially unchanged under the Fifth Amended Credit Agreement. Before entering into the Fifth Amended Credit Agreement, the Company and M&T Bank were performing under the terms of the Sixth Amendment to the 2013 Credit Agreement entered into on May 8, 2015 (the “Sixth Amendment”).

As further described in Note 18—Subsequent Events , on November 28, 2016, the Company and M&T Bank entered into the Second Amendment to the Fifth Amended and Restated Credit Facility Agreement (the “Second Amendment”), that amended the Fifth Amended Credit Agreement.

Individual debt facilities provided under the Fifth Amended Credit Agreement, which remain mostly unchanged from the 2013 Credit Agreement, are described below:


a)	Revolving Credit Facility (“Revolver”) : Up to $20 million is available through January 18, 2018 . The maximum amount the Company may borrow is determined based on a borrowing base calculation described below.


b)	Term Loan A : $10.0 million was borrowed on January 18, 2013. Principal is being repaid in 108 equal monthly installments of $93 thousand .


c)	Term Loan B: $14.0 million was borrowed on January 18, 2013. Principal is being repaid in 120 equal monthly installments of $117 thousand .


d)	Albuquerque Mortgage Loan : $4.0 million was borrowed on December 16, 2009. The loan is secured by real property in Albuquerque, NM, and principal is being repaid in equal monthly installments of $22 thousand plus a balloon payment of $1.8 million due at maturity.


e)	Celmet Building Term Loan: $1.3 million was borrowed on November 8, 2013 pursuant to an amendment to the 2013 Credit Agreement. The proceeds were used to reimburse the Company’s cost of purchasing its Rochester, New York facility. Principal is being repaid in 59 equal monthly installments of $11 thousand plus a balloon payment due at maturity.

Borrowing Base

Under the Fifth Amended Credit Agreement, the maximum amount the Company can borrow under the Revolver is the lesser of (i) 85% of eligible receivables plus 35% of eligible inventories (up to a cap of $3.75 million ) or (ii) $ 20.0 million .

At September 30, 2016 , the upper limit on Revolver borrowings was $16.4 million . Average Revolver balances amounted to $8.3 million and $11.2 million during the years ended September 30, 2016 and September 30, 2015 , respectively.

Interest Rates

Under the Fifth Amended Credit Agreement, variable rate debt accrues interest at LIBOR plus the applicable marginal interest rate that fluctuates based on the Company's Debt to EBITDAS Ratio, as defined below. Under the Fifth Amended Credit Agreement the applicable marginal interest rate was fixed on December 14, 2015 as follows: 4.25% for the Revolver, 4.50% for the Albuquerque Mortgage Loan and 3.25% for the Term Loan B, until the tenth day following the date the Company delivered its quarterly covenant calculation for the first quarter of fiscal 2016. Subsequent to this date, for the variable rate debt, the interest rate is LIBOR plus the applicable margin interest rate that is based on the Company's Debt to EBITDAS Ratio. Changes to applicable margins and unused fees resulting from the Debt to EBITDAS Ratio generally become effective mid-way through the subsequent quarter. The applicable margins based on the third quarter covenant calculations were as follows: 2.75% for the Revolver, 3.00% for the Albuquerque Mortgage Loan and 2.50% for the Term Loan B.

Prior to December 14, 2015, the Sixth Amendment fixed each facility’s applicable margin through March 31, 2016 as follows: 4.25% for the Revolver, 4.50% for the Albuquerque Mortgage Loan and 3.25% for the Term Loan B. The applicable unused line fee of 0.50% also was extended through March 31, 2016, and thereafter if the Company is not in compliance with its financial covenants.

The Company incurs quarterly unused commitment fees ranging from 0.250% to 0.500% of the excess of $20.0 million over average borrowings under the Revolver. Fees incurred amounted to $57.7 thousand and $47.5 thousand during the years ended September 30, 2016 and September 30, 2015 , respectively. The fee percentage varies based on the Company’s Debt to EBITDAS Ratio, as defined below.

Interest Rate Swap

In connection with the 2013 Credit Agreement, on January 18, 2013, the Company and M&T Bank entered into an interest rate swap arrangement (the “Swap Transaction”). The Swap Transaction is for a notional amount of $14.0 million with an effective date of February 1, 2013 and a termination date of February 1, 2023. The Swap Transaction is designed to reduce the variability of future interest payments with respect to Term Loan B by effectively fixing the annual interest rate payable on the loan’s outstanding principal. Pursuant to the Swap Transaction, the Company’s one month LIBOR rate is swapped for a fixed rate of 1.32% . When the swap fixed rate is added to the Term Loan B spread of 3.25% , the Company’s interest rate applicable to Term Loan B is effectively fixed at 4.57% . The Swap Transaction was terminated on September 21, 2016.

Financial Covenants

The Fifth Amended Credit Agreement also contains various affirmative and negative covenants including financial covenants. The Company is required to maintain (i) a minimum level of quarterly EBITDAS, as defined below (“Quarterly EBITDAS”), (ii) a ratio of total debt to twelve month EBITDAS (“Debt to EBITDAS Ratio”) that is below a specified limit, (iii) a minimum fixed charge coverage ratio (“Fixed Charge Coverage Ratio”), (iv) a maximum level of inventory (“Maximum Inventory”), and (v) a maximum amount of capital expenditures (“Maximum Capital Expenditures”). The Debt to EBITDAS Ratio is the ratio of debt to earnings before interest, taxes, depreciation, amortization and non-cash stock compensation expense (“EBITDAS”). The Fixed Charge Coverage Ratio compares (i) 12 month EBITDA plus non-cash stock compensation expense minus unfinanced capital expenditures minus taxes paid, to (ii) the sum of interest expense, principal payments and dividends, if any (fixed charges). The Maximum Inventory covenant allows for specific levels of inventory as defined by the agreement. The Maximum Capital Expenditures covenants allow for a maximum amount of capital expenditures on an annual basis.

Covenant Ratios in effect at September 30, 2016 , pursuant to the Fifth Amended Credit Agreement are as follows:



Debt to EBITDAS Ratio:
7/2/16 through and including 9/30/16	< 3.10 to 1.00

Minimum Quarterly EBITDAS :
Fiscal Quarter ending 9/30/16	$	1,080,000

Fixed Charge Coverage Ratio:
7/2/16 and thereafter	> 1.25 to 1.00

Maximum Inventory:
As of September 30, 2016	$	27,000,000

Maximum Annual Capital Expenditures	$	4,500,000

Other Borrowings

When IEC acquired Albuquerque, the Company assumed responsibility for a $100 thousand Industrial Revenue Bond issued by the City of Albuquerque. Interest on the bond is paid semiannually and principal is due in its entirety at maturity.

Contractual Principal Payments

A summary of contractual principal payments under IEC’s borrowings at September 30, 2016 for the next five years taking into consideration the 2013 Credit Agreement follows:



Debt Repayment Schedule	Contractual Principal Payments
(in thousands)
Twelve months ended September 30,
2017	$	2,908
2018 ⁽¹⁾	8,535
2019 ⁽²⁾	3,283
2020	1,759
2021 and thereafter	3,384
	$	19,869

⁽¹⁾ Includes Revolver balance of 4.0 million at September 30, 2016 and Albuquerque Mortgage Loan balloon payment of $1.8 million as of such date. The Albuquerque Mortgage Loan was repaid in connection with the sale-leaseback transaction described in Note 18—Subsequent Events .

⁽²⁾ Includes Celmet Building Term Loan balloon payment of $0.7 million .

Note 8—DERIVATIVE FINANCIAL INSTRUMENTS

Interest Rate Risk Management

In connection with the 2013 Credit Agreement, on January 18, 2013, the Company and M&T Bank entered into the Swap Transaction. The Swap Transaction is for a notional amount of $14.0 million with an effective date of February 1, 2013 and a termination date of February 1, 2023. The Swap Transaction is designed to reduce the variability of future interest payments with respect to Term Loan B by effectively fixing the annual interest rate payable on outstanding principal of Term Loan B. Pursuant to the interest rate swap, the Company’s one month LIBOR rate is swapped for a fixed rate of 1.32% . As more fully described in Note 7—Credit Facilities , the applicable margin on Term Loan B is fixed at 3.25% until March 27, 2015. When the swap fixed rate is added to the Term Loan B Spread of 3.25% , the Company’s interest rate applicable to Term Loan B is effectively fixed at 4.57% .

The Swap Transaction was terminated on September 21, 2016, and therefore had no value at September 30, 2016 . The fair value of the interest rate swap agreement represented a liability of $46.0 thousand at September 30, 2015 , and was estimated based on Level 2 valuation inputs. The Company did not designate the swap as a cash flow hedge at inception and therefore, the gains or losses from the changes in fair value of the derivative instrument are recognized within interest expense for the periods ended September 30, 2016 and 2015 .

Note 9—FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments Carried at Fair Value

The Company’s Swap Transaction is recorded on the balance sheet as either an asset or a liability measured at fair value. The Company estimates the fair value of the Swap Transaction based on Level 2 valuation inputs, including fixed interest rates, LIBOR implied forward interest rates and the remaining time to maturity. The Swap Transaction was terminated on September 21, 2016. At September 30, 2015 , the Swap Transaction was a liability of $46.0 thousand .

Financial Instruments Carried at Historical Cost

The Company’s long-term debt is not quoted. Fair value was estimated using a discounted cash flow analysis based on Level 2 valuation inputs, including borrowing rates the Company believes are currently available to it for loans with similar terms and maturities.

The Company’s debt is carried at historical cost on the balance sheet. A summary of the fair value and carrying value of fixed rate debt at period end follows:



	September 30, 2016				September 30, 2015
	Fair Value		Carrying Value		Fair Value		Carrying Value
(in thousands)
Term Loan A	$	3,489	$	3,693	$	4,412	$	4,804
Celmet Building Term Loan	864		932		954		1,062

The fair value of the remainder of the Company’s debt approximated carrying value at September 30, 2016 and September 30, 2015 as it is variable rate debt.

Note 10—WARRANTY RESERVES

IEC generally warrants its products and workmanship for up to twelve months from date of sale. As an offset to warranty claims, the Company is sometimes able to obtain reimbursement from suppliers for warranty-related costs or losses. Based on historical warranty claims experience and in consideration of sales trends, a reserve is maintained for estimated future warranty costs to be incurred on products and services sold through the balance sheet date.

A summary of additions to and charges against IEC’s warranty reserves during the period follows:



	Years Ended
Warranty Reserve	September 30, 2016			September 30, 2015
(in thousands)
Reserve, beginning of period	$	399		$	251
Provision	54			436
Warranty costs	(273		)	(288		)
Reserve, end of period	$	180		$	399

Note 11—STOCK-BASED COMPENSATION

The 2010 Omnibus Incentive Compensation Plan (“2010 Plan”) was approved by the Company’s stockholders at the January 2011 Annual Meeting. This plan replaced IEC’s 2001 Stock Option and Incentive Plan (“2001 Plan”), which expired in December 2011. The 2010 Plan, which is administered by the Compensation Committee of the Board of Directors, provides for the following types of awards: incentive stock options, nonqualified options, stock appreciation rights, restricted shares, restricted stock units, performance compensation awards, cash incentive awards, director stock and other equity-based and

equity-related awards. Awards are generally granted to certain members of management and employees, as well as directors. Under the 2010 Plan, up to 2,000,000 common shares may be issued over a term of ten years .

Stock compensation expense recorded under the 2010 and 2001 Plans as well as the ESPP totaled $0.4 million and $2.0 million for the years ended September 30, 2016 and 2015 , respectively. During the year ended September 30, 2016 , incentive compensation shares were returned by the Company's former CEO resulting in a reduction to compensation expense of $60.0 thousand .

At September 30, 2016 , there were 502,582 shares available to be issued under the 2010 Plan.

On February 2, 2015 , the Company announced that its stockholders elected all seven Vintage Opportunity Fund, LP-nominated directors to the Company’s Board of Directors. This change in the Company’s Board of Directors was deemed a change in control event which triggered automatic vesting for all awards outstanding under the 2010 and 2001 Plans. On the change in control date, 390,882 shares of restricted stock and 119,500 stock options vested, which resulted in stock-based compensation expense of $1.8 million .

Expenses relating to stock options that comply with certain U.S. income tax rules are neither deductible by the Company nor taxable to the employee. Further information regarding awards granted under the 2001 Plan, 2010 Plan and employee stock purchase plan is provided below.

Stock Options

When options are granted, IEC estimates fair value using the Black-Scholes option pricing model and recognizes the computed value as compensation cost over the vesting period, which is typically 4 years. The contractual term of options granted under the plan is generally 7 years. The volatility rate is based on the historical volatility of IEC's common stock.

Assumptions used in the Black-Scholes model and the estimated value of options granted during the years ended September 30, 2016 and 2015 follows:



	Years Ended
Valuation of Options	September 30, 2016			September 30, 2015

Assumptions for Black-Scholes:
Risk-free interest rate	1.00		%	1.29		%
Expected term in years	4.0			4.4
Volatility	39		%	40		%
Expected annual dividends	none			none

Value of options granted:
Number of options granted	60,000			577,145
Weighted average fair value per share	$	1.62		$	1.44
Fair value of options granted (000s)	$	97		$	831

A summary of stock option activity, together with other related data, follows:



	Years Ended
	September 30, 2016				September 30, 2015
Stock Options	Number of Options		Wgtd. Avg. Exercise Price		Number of Options		Wgtd. Avg. Exercise Price

Outstanding, beginning of period	717,645		$	4.40	234,000		$	4.48
Granted	60,000		5.15		577,145		4.15
Exercised	(600	)	4.08		(43,932	)	1.86
Shares withheld for payment of taxes upon exercise of stock option	—		—		(16,068	)	1.88
Forfeited	(17,250	)	$	5.82	(8,300	)	6.04
Expired	—		—		(25,200	)	5.02
Outstanding, end of period	759,795		$	4.43	717,645		$	4.40

For options expected to vest
Number expected to vest	735,561		$	4.43	536,334		$	4.51
Weighted average remaining term, in years	5.0				5.6
Intrinsic value (000s)			$	388			$	—

For exercisable options
Number exercisable	270,686		$	4.81	171,500		$	5.39
Weighted average remaining term, in years	3.8				3.6
Intrinsic value (000s)			$	108			$	—

For non-exercisable options
Expense not yet recognized (000s)			$	585			$	710
Weighted average years to be recognized	2.6				3.5

For options exercised
Intrinsic value (000s)			$	1			$	159

Changes in the number of non-vested options outstanding, together with other related data, follows:



	Years Ended
	September 30, 2016				September 30, 2015
Stock Options	Number of Options		Wgtd. Avg. Grant Date Fair Value		Number of Options		Wgtd. Avg. Grant Date Fair Value

Non-vested, beginning of period	546,145		$	1.41	112,350		$	2.15
Granted	60,000		1.62		577,145		1.44
Vested	(117,036	)	1.43		(135,050	)	2.08
Forfeited	—		—		(8,300	)	2.35
Non-vested, end of period	489,109		$	1.43	546,145		$	1.41

Restricted (Non-vested) Stock

Holders of IEC restricted stock have voting and dividend rights as of the date of grant, but until vested the shares may be forfeited and cannot be sold or otherwise transferred. At the end of the vesting period, which is typically four or five years ( three years in the case of directors), holders have all the rights and privileges of any other common stockholder. The fair value of a share of restricted stock is its market value on the date of grant and that value is recognized as stock compensation expense over the vesting period.

A summary of restricted stock activity, together with related data, follows:



	Years Ended
	September 30, 2016				September 30, 2015
Restricted (Non-vested) Stock	Number of Non-vested Shares		Wgtd. Avg. Grant Date Fair Value		Number of Non-vested Shares		Wgtd. Avg. Grant Date Fair Value

Outstanding, beginning of period	54,960		$	4.23	322,873		$	4.97
Granted	187,449		4.43		183,155		4.97
Vested	(13,310	)	4.23		(316,539	)	5.08
Shares withheld for payment of taxes upon vesting of restricted stock	(340	)	4.23		(133,329	)	4.53
Forfeited	—		—		(1,200	)	3.91
Outstanding, end of period	228,759		$	4.40	54,960		$	4.23

For non-vested shares
Expense not yet recognized (000s)			$	762			$	208
Weighted average remaining years for vesting			2.2				2.2

For shares vested
Aggregate fair value on vesting dates (000s)			$	53			$	2,062

Employee Stock Purchase Plan

The Company administers an ESPP that provides for a discounted stock purchase price. On February 13, 2015, the Compensation Committee of the Company’s Board of Directors suspended operation of the ESPP indefinitely in connection with the restatements described in Note 1—Our Business and Summary of Significant Accounting Policies . The Compensation Committee of the Company's Board of Directors reinstated the ESPP on December 2, 2015, however, participants were not able to contribute to the ESPP until January 2016.

Employees currently receive a 10% discount on stock purchases under the ESPP. Employee contributions to the plan, net of withdrawals, were $20.1 thousand and $8.0 thousand for the year ended September 30, 2016 and 2015, respectively. Compensation expense recognized under the ESPP was $2.6 thousand and $1.0 thousand for the year ended September 30, 2016 and 2015, respectively.

Stock Issued to Board Members

In addition to annual grants of restricted stock, included in the table above, board members may elect to have their meeting fees paid in the form of shares of the Company’s common stock. In connection with the Prior Restatement of the Company’s financial statements, the Company determined not to pay, and has not paid, any meeting fees in stock since May 21, 2013.

Note 12—RETIREMENT PLAN

The Company administers a retirement savings plan for the benefit of its eligible employees and their beneficiaries under the provisions of Sections 401(a) and (k) of the Internal Revenue Code. Eligible employees may contribute a portion of their compensation to the plan, and the Company is permitted to make discretionary contributions as determined by the Board of Directors. The Company contributes 25% of the first 6% contributed by all employees at all locations. Contributions totaled $258 thousand and $263 thousand during the year ended September 30, 2016 and 2015, respectively.

Note 13—INCOME TAXES

Provision for/(benefit from) income taxes for continuing operations during the years ended September 30, 2016 and 2015 follows:



	Years Ended
Income Tax Provision	September 30, 2016		September 30, 2015
(in thousands)
Current tax:
State	$	4	$	1
Federal	66		—

Deferred tax:
State	—		—
Federal	—		—
Provision for/(benefit from) income taxes	$	70	$	1

Differences between the federal statutory rate and IEC’s effective tax rates for 2016 and 2015 are explained by the following reconciliation.



	Years Ended
Taxes as Percent of Pretax Income	September 30, 2016		September 30, 2015

Federal statutory rate	34.0	%	(34.0	)%

Increase/(decrease) in valuation allowance/Usage of NOL	(36.5	)%	28.0	%
Decrease in state deferred tax rate	1.2	%	5.0	%
State income taxes, net of federal benefit	0.1	%	—	%
Decrease/(increase) in tax credits	1.4	%	—	%
Other	1.3	%	1	%

Income tax provision/(benefit) as percent of pretax income	1.5	%	—	%

The following table displays deferred tax assets by category:



	Years Ended
(in thousands)	September 30, 2016			September 30, 2015

Deferred tax assets:
Net operating loss carryforward	$	10,973		$	12,174
Alternative minimum tax credit carryforward	1,010			943
Depreciation and fixed assets	999			1,133
Amortization and impairment of intangibles	14			—
New York State investment tax & other credits	1,186			1,186
Inventories	602			640
Other	599			764
Total before allowance	15,383			16,840
Valuation allowance	(15,383		)	(16,840		)
Deferred tax assets, net	—			—

Net deferred income taxes (current and deferred)	$	—		$	—

IEC has federal net operating loss carryforwards (“NOLs”) for income tax purposes of approximately $31.7 million at September 30, 2016 , expiring mainly in years 2022 through 2025 and 2034 through 2035. The Company also has additional state NOLs available in several jurisdictions in which it files state tax returns.

Recent New York state corporate tax reform has resulted in the reduction of the business income base rate for qualified manufactures in New York state to 0% beginning in fiscal 2015 for IEC. At September 30, 2016 , the Company has $1.2 million of New York State investment tax and other credit carryforwards, expiring in various years through 2030. The credits cannot be utilized unless the New York state tax rate is no longer 0%.

Note 14—MARKET SECTORS AND MAJOR CUSTOMERS

A summary of sales, according to the market sector within which IEC’s customers operate, follows:



	Years Ended
% of Sales by Sector	September 30, 2016	September 30, 2015

Aerospace and Defense	40%	38%
Medical	42%	34%
Industrial	16%	26%
Other	2%	2%
	100%	100%

Two individual customers represented 10% or more of sales for the year ended September 30, 2016 . Both customers in the Medical market sector totaled 30% ; each representing 15% . In the prior fiscal year, one customer in the Industrial sector represented 17% of sales while two customers in the Medical sector represented 14% of sales each.

Three individual customers represented 10% or more of receivables and accounted for 40% of outstanding balances at September 30, 2016 . At September 30, 2015 , three individual customers represented 10% or more of receivables and accounted for 44% of such outstanding balances.

Credit risk associated with individual customers is periodically evaluated by analyzing the entity’s financial condition and payment history. Customers generally are not required to post collateral.

Note 15—LITIGATION

Note 16—COMMITMENTS AND CONTINGENCIES

Loss Contingencies

On June 28, 2016, the Company consented to the entry of a settled administrative order by the SEC. The settled administrative order included settled charges and sanctions against two individuals who are no longer associated with the Company. The Company has insurance that covers the Company and certain individuals (including the two former employees discussed above) for certain expenses incurred in connection with the SEC investigation. Through September 30, 2016 , the Company has received aggregate reimbursements from its primary carrier of approximately $9.2 million . The Company’s insurance policy contains exclusion provisions that are triggered when “a final, non-appealable adjudication” in an underlying proceeding or action “establishes” certain conduct, including “any deliberately fraudulent act or omission or any willful violation of any statute or regulation.” The Company's resolution of the SEC investigation was on a “no admit or deny” basis and, as such, does not “establish” any conduct as part of any “final, non-appealable adjudication.” Accordingly, the Company has concluded it is not probable that the insurance carrier would (i) seek to recoup the reimbursement of expenses it has made to the Company or (ii) be successful in the event that recoupment were sought.

Leases

A summary of minimum lease obligations through the remainder of the lease terms follows:



Future Rental Obligations	Contractual Lease Payments
(in thousands)
Twelve months ended September 30,
2017	$	11
2018	4
2019	3

Rent expense during the years ended September 30, 2016 and 2015 follows:



	Years Ended
Rent Expense	September 30, 2016		September 30, 2015
(in thousands)
Rent expense	$	52	$	71

In November 2016, Albuquerque entered into a lease with respect to property in Albuquerque, New Mexico, the terms of which are described generally in Note 18—Subsequent Events .

Note 17—QUARTERLY FINANCIAL DATA (UNAUDITED)

The accompanying unaudited financial information for the three month periods specified below have been prepared in accordance with GAAP for interim financia1 information. In the opinion of management, all adjustments required for a fair presentation of the information have been made.

Note that quarterly amounts are rounded separately and as a result the sum of the quarterly amounts may not equal the computed amount for the full year.



	Net Sales		Gross Profit		Net Income/(Loss)			Basic Earnings/ (Loss) Per Share			Diluted Earnings/ (Loss) Per Share
(Unaudited; in thousands, except per share data)
Fiscal Quarters
Fourth 2016	$	28,420	$	3,270	$	176		$	0.02		$	0.02
Third 2016	32,508		5,463		1,605			0.16			0.16
Second 2016	33,148		5,736		1,461			0.14			0.14
First 2016	32,933		5,817		1,543			0.15			0.15

Fourth 2015	$	33,938	$	5,178	$	161		$	0.02		$	0.02
Third 2015	32,577		4,689		(4,017		)	(0.39		)	(0.39		)
Second 2015	31,655		2,973		(5,536		)	(0.55		)	(0.55		)
First 2015	28,829		3,455		(795		)	(0.08		)	(0.08		)

Note 18—SUBSEQUENT EVENTS

Albuquerque Sale-Leaseback

On November 18, 2016, the company entered into a sale-leaseback agreement, pursuant to the terms of the Purchase and Sale Agreement (the “PSA”), with Store Capital Acquisitions, LLC, a Delaware limited liability company (the “Purchaser”), for the sale of certain property, including the manufacturing facility located in Albuquerque, New Mexico (the “Property”). Albuquerque (the “Seller”) completed the sale of the Property to the Purchaser for an aggregate purchase price of approximately $5.8 million including a $120.0 thousand holdback held subject to a holdback of funds agreement. The net book value of assets sold was $4.6 million . The proceeds from the transaction were used to payoff the Albuquerque Mortgage Loan and pay down Term Loan A. As part of the transaction, a Lease Agreement dated as of November 18, 2016 was entered into between the Seller and the Purchaser (the “Lease”). Pursuant to the Lease, Seller is leasing the Property for an initial term of 15 years , with two renewal options of five years each. The initial base annual rental is approximately $474.0 thousand and is subject to an annual increase equal to the lesser of two percent or 1.25 times the change in the Consumer Price Index. Late payments incur a charge of 5% and bear interest at a rate of 18% or the highest rate permitted by law. If an event of default occurs under the terms of the Lease, among other things, all rental amounts accelerate and become due and owing, subject to certain adjustments. In addition, the Company entered into a separate payment and performance guaranty with the Purchaser with respect to the Lease.

Amendment to Credit Facility

On November 28, 2016 , the Company and M&T Bank entered into the Second Amendment to Fifth Amended and Restated Credit Facility Agreement (the “Second Amendment”), that amended the Fifth Amended Credit Agreement. The Second Amendment reduced M&T Bank’s Revolving Credit Commitment to $16.0 million and modified the trigger for maintenance of the Cash Management System. The Second Amendment also modified the level adjustment dates for the Applicable Margin and the Applicable Unused Fee. In addition, the Second Amendment amended the covenants regarding the Company's Debt to EBITDAS Ratio, Minimum Quarterly EBITDAS amounts and the Fixed Charge Coverage Ratio.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.


Item 9A.	CONTROLS AND PROCEDURES

Conclusion regarding the effectiveness of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2016 , the end of the period covered by this Form 10-K. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2016 , our disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control over Financial Reporting

Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. The Company’s internal control over financial reporting includes those policies and procedures that:


(i)	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and asset dispositions of the Company;


(ii)	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and


(iii)	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on financial statements.

IEC’s management does not expect that our disclosure controls and internal controls will prevent all errors and fraud. Because of inherent limitations in any such control system (e.g. faulty judgments, human error, information technology system error, or intentional circumvention), there can be no assurance that the objectives of a control system will be met under all circumstances. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The benefits of a control system also must be considered relative to the costs of the system and management’s judgments regarding the likelihood of potential events. In summary, there can be no assurance that any control system will succeed in achieving its goals under all possible future conditions, and as a result of these inherent limitations, misstatements due to error or fraud may occur and may or may not be detected.

As discussed in greater detail in Item 9A of our Annual Report on Form 10-K for the year ended September 30, 2015, during fiscal 2015, management identified a material weakness in our internal control over financial reporting related to user access reviews and to reconciliation of accounts receivable. Controls in place did not prevent or detect conflicting access rights with regard to accounts receivable and accounts payable. Accounts receivable reconciliations were not performed with a level of precision appropriate to identify the nature of the reconciling items. In addition, manual procedures necessary to compensate for the lack of automated controls were not adequately documented and were not implemented subsequent to turnover in personnel. These deficiencies aggregated to a material weakness. To address this material weakness, we implemented certain remedial measures including performing user access reviews, requiring approval of additional types of accounts receivable transactions and review of the subledger compared to the general ledger on a daily basis.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting, as of September 30, 2016, based on the framework entitled “Internal Controls - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, we consider the material weakness related to reconciliations of accounts receivable to be fully remediated as management has concluded, through testing, that the applicable controls have operated effectively for a sufficient

period of time. Also as of September 30, 2016, the deficiency with user access control remains present but does not constitute a material weakness. Our internal control over financial reporting is effective as of September 30, 2016.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting because the Securities and Exchange Commission’s rules regarding such attestations do not apply to smaller reporting companies.

Changes in internal control over financial reporting

Except as described above, during the fiscal year ended September 30, 2016, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Item 9B.	OTHER INFORMATION

None.

PART III

Item 10. DIRECTORS, EXCUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is incorporated herein by reference from the captions entitled “Election of Directors - Nominees for Election as Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Election of Directors - Corporate Governance and Board Matters” contained in our definitive proxy statement for the 2017 Annual Meeting of Stockholders to be filed within 120 days after the September 30, 2016 fiscal year end (the “2017 Proxy Statement”).

The information regarding our Executive Officers is found in Part I of this Form 10-K.

Item 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference from the captions entitled “Compensation of Named Executive Officers” and “Director Compensation” contained in the 2017 Proxy Statement.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Except for the information presented in the table below, the information required by this item is incorporated herein by reference from the captions entitled “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management” contained in the 2017 Proxy Statement.

The following table presents information concerning our equity compensation plans as of September 30, 2016 .

Equity Compensation Plan Information



Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans ⁽²⁾
Equity compensation plans:
Approved by shareholders	759,795	⁽¹⁾	$	4.43	502,582	⁽³⁾
Not approved by shareholders	16,145	⁽⁴⁾	4.10		—
Total	775,940		$	4.43	502,582

⁽¹⁾ Represents shares issuable upon exercise of awards granted under the 2001 Stock Option and Inventive Plan (the “2001 Plan”), which was approved by IEC stockholders in February 2002 and expired in December 2011, as well as awards granted under the 2010 Omnibus Incentive Compensation Plan (the “2010 Plan”), which was approved by IEC stockholders in January 2011 and expires in January 2021.
⁽²⁾ Excludes shares reflected in first column. Includes shares remaining available for issuance under the 2010 Plan.
⁽³⁾ Includes 117,062 shares available for issuance under the Employee Stock Purchase Plan.
⁽⁴⁾ This is an inducement option award granted to our President and Chief Executive Officer, Jeffrey T. Schlarbaum, on March 20, 2015.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated herein by reference from the captions “Certain Relationships and Related Person Transactions” and “Election of Directors - Nominees for Election as Directors,” and “Election of Directors - Corporate Governance and Board Matters” contained in the 2017 Proxy Statement.

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated herein by reference from the caption “Ratification of the Selection of the Company’s Independent Registered Public Accounting Firm For Fiscal 2017” contained in the 2017 Proxy Statement.

PART IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this Form 10-K:

Financial Statements

Reference is made to Item 8, “Financial Statements and Supplementary Data” of Part II of this Form 10-K. No financial statement schedules are required to be filed by Item 8 of Part II of this Form 10-K.

Exhibits

For the exhibits that are filed with this Form 10-K or incorporated herein by reference, see the Index to Exhibits located immediately following the signature page to this Form 10-K. The Index to Exhibits is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		IEC Electronics Corp.
		(Registrant)

Dated: December 16, 2016	By:	/s/ Jeffrey T. Schlarbaum
		Jeffrey T. Schlarbaum
		President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



Signature	Title	Date
/s/ Jeffrey T. Schlarbaum	President and Chief Executive Officer
Jeffrey T. Schlarbaum	Chairman of the Board	December 16, 2016
	(Principal Executive Officer and Director)

/s/ Michael T. Williams	Chief Financial Officer	December 16, 2016
Michael T. Williams	(Principal Financial and Accounting Officer)

/s/ Keith M. Butler	Director	December 16, 2016
Keith M. Butler

/s/ Charles P. Hadeed	Director	December 16, 2016
Charles P. Hadeed

/s/ Lynn J. Hartrick	Director	December 16, 2016
Lynn J. Hartrick

/s/ Andrew M. Laurence	Director	December 16, 2016
Andrew M. Laurence

/s/ Jeremy R. Nowak	Director	December 16, 2016
Jeremy R. Nowak

/s/ Eric Singer	Director	December 16, 2016
Eric Singer

IEC ELECTRONICS CORP.

Form 10-K for Year Ended September 30, 2016

INDEX TO EXHIBITS



Exhibit No.	Title
2.1	Asset Purchase Agreement dated as of December 17, 2010 among CSCB, Inc., Southern California Braiding Co., Inc., Leo P. McIntyre, Trustee of the Exemption Trust created under The McIntyre Family Trust dated October 4, 1993 as Amended and Restated in its entirety dated July 12, 2005, Leo P. McIntyre, Trustee of the McIntyre Survivor’s Trust, Restatement dated June 13, 2006, created under The McIntyre Family Trust dated October 4, 1993, Leo P. McIntyre and Craig Pfefferman, and executed by IEC Electronics Corp. solely as guarantor of certain obligations thereunder (incorporated herein by reference from Exhibit 2.1 to the Company’s Current Report on Form 8-K filed December 23, 2010)
2.2	Asset Purchase Agreement dated as of July 9, 2015 between Southern California Braiding, Inc. and DCX-Chol Enterprises, Inc. (incorporated herein by reference from Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 26, 2015)
3.1	Amended and Restated Certificate of Incorporation of DFT Holdings Corp. (incorporated herein by reference from Exhibit 3.1 to the Company’s Registration Statement on Form S-1, Registration No. 33-56498)
3.2	Certificate of Ownership and Merger merging IEC Electronics Corp. into DFT Holdings Corp. (incorporated herein by reference from Exhibit 3.5 to the Company’s Registration Statement on Form S-1, Registration No. 33-56498)
3.3	Certificate of Amendment of the Certificate of Incorporation of IEC Electronics Corp. (incorporated herein by reference from Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 27, 1998)
3.4	Certificate of Designation of Series A Junior Participating Preferred Stock of IEC Electronics Corp. (incorporated herein by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K/A filed August 1, 2014)
3.5	Certificate of Elimination of Series A Junior Participating Preferred Stock (incorporated herein by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 13, 2015)
3.6	Bylaws, as amended through May 12, 2016 (incorporated herein by reference from Exhibit 3.1 to the Company's Current Report on Form 8-K filed May 18, 2016)
4.1	Tax Benefit Preservation Plan Rights Agreement dated as of July 31, 2014 by and between IEC Electronics Corp. and Registrar and Transfer Company, which includes the Form of Certificate of Designation as Exhibit A, the Form of Rights Certificate as Exhibit B, and the Form of Summary of Rights as Exhibit C (incorporated herein by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K filed July 31, 2014)
4.2	First Amendment to Tax Benefit Preservation Plan Rights Agreement dated as of March 4, 2015 and effective as of February 20, 2015 between IEC Electronics Corp. and Computershare Trust Company, N.A. (successor rights agent to Registrar and Transfer Company, as Rights Agent) (incorporated herein by reference from Exhibit 4.2 to the Company’s Current Report on Form 8-K filed March 13, 2015)
10.1	Fourth Amended and Restated Credit Facility Agreement dated as of January 18, 2013 between IEC Electronics Corp. and Manufacturers and Traders Trust Company (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 25, 2013)
10.2	ISDA Master Agreement dated as of January 18, 2013 between IEC Electronics Corp. and Manufacturers and Traders Trust Company (incorporated herein by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed January 25, 2013)
10.3	Schedule to ISDA Master Agreement dated as of January 18, 2013 between IEC Electronics Corp. and Manufacturers and Traders Trust Company (incorporated herein by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed January 25, 2013)
10.4	Confirmation of Swap Transaction between IEC Electronics Corp. and Manufacturers and Traders Trust Company entered into January 18, 2013 (incorporated herein by reference from Exhibit 10.4 to the Company’s Current Report on Form 8-K filed January 25, 2013)
10.5	First Amendment to Fourth Amended and Restated Credit Facility Agreement dated as of May 15, 2013 by and between IEC Electronics Corp. and Manufacturers and Traders Trust Company (incorporated herein by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2013)
10.6	Second Amendment to Fourth Amended and Restated Credit Facility Agreement dated as of August 6, 2013 by and between IEC Electronics Corp. and Manufacturers and Traders Trust Company (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 8, 2013)
10.7	Third Amendment to Fourth Amended and Restated Credit Facility Agreement dated as of November 8, 2013 by and between IEC Electronics Corp. and Manufacturers and Traders Trust Company (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 15, 2013)



10.8	Fourth Amendment to Fourth Amended and Restated Credit Facility Agreement dated as of December 13, 2013 by and between IEC Electronics Corp. and Manufacturers and Traders Trust Company (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 19, 2013)
10.9	Fifth Amendment to Fourth Amended and Restated Credit Facility Agreement dated as of February 4, 2014 by and between IEC Electronics Corp. and Manufacturers and Traders Trust Company (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed February 5, 2014)
10.10	Sixth Amendment to Fourth Amended and Restated Credit Facility Agreement dated as of May 8, 2015 between IEC Electronics Corp. and Manufacturers and Traders Trust Company (incorporated herein by reference from Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 27, 2015)
10.11	Fifth Amended and Restated Credit Facility Agreement dated as of December 14, 2015 between IEC Electronics Corp. and Manufacturers and Traders Trust Company (incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended January 1, 2016)
10.12	First Amendment to Fifth Amended and Restated Credit Facility Agreement dated as of June 20, 2016 by and between IEC Electronics Corp. and Manufacturers and Traders Trust Company (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 24, 2016)
10.13 ^#	Second Amendment to Fifth Amended and Restated Credit Facility Agreement dated as of November 28, 2016 by and between IEC Electronics Corp. and Manufacturers and Traders Trust Company
10.14 ^#	Purchase and Sale Agreement dated as of September 30, 2016 by and between IEC Electronics Corp. - Albuquerque and Store Capital Acquisitions, LLC
10.15 ^#	Lease Agreement dated as of November 18, 2016 by and between Store Capital Acquisitions, LLC and IEC Electronics Corp. - Albuquerque #
10.16 ^#	Securities and Exchange Commission Administrative Order (Release No. 34-78017) issued as of June 8, 2016
10.17	Form of Indemnity Agreement between IEC Electronics Corp. and each of its directors and executive officers (incorporated herein by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 2, 1993)
10.18*	Form of Indemnification Agreement between IEC Electronics Corp. and its directors and executive officers (incorporated herein by reference from Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2015)
10.19*	IEC Electronics Corp. 2001 Stock Option and Incentive Plan, as amended (incorporated herein by reference from Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2009)
10.20*	Form of Incentive Stock Option Agreement pursuant to the 2001 Stock Option and Incentive Plan (incorporated herein by reference from Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2009)
10.21*	IEC Electronics Corp. 2010 Omnibus Incentive Compensation Plan (incorporated herein by reference from Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2011)
10.22*	Form of Incentive Stock Option Agreement pursuant to the 2010 Omnibus Incentive Compensation Plan (incorporated herein by reference from Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2012)
10.23*	Form of Employee Restricted Stock Award Agreement pursuant to the 2010 Omnibus Incentive Compensation Plan (incorporated herein by reference from Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2012)
10.24*	Form of Director Restricted Stock Award Agreement pursuant to the 2010 Omnibus Incentive Compensation Plan (incorporated herein by reference from Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2012)
10.25*	Employee Stock Purchase Plan (incorporated herein by reference from Appendix A to the Company’s Proxy Statement on Schedule 14A filed on December 22, 2011)
10.26*	Employee Stock Purchase Plan Amendment 1 (incorporated herein by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 27, 2014)
10.27*	Amended and Restated Employment Agreement between IEC Electronics Corp. and W. Barry Gilbert dated as of December 16, 2013 (incorporated herein by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed December 19, 2013)
10.28*	Separation Agreement effective March 16, 2016 by and between the Company and W. Barry Gilbert (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 18, 2016)
10.29*	Salary Continuation and Non-Competition Agreement dated as of October 1, 2010 between IEC Electronics Corp. and Donald S. Doody (incorporated herein by reference from Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2010)



10.30*	Resignation from Employment and Consulting Agreement dated January 9, 2014 between IEC Electronics Corp. and Donald S. Doody (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 9, 2014)
10.31*	Engagement Letter dated December 28, 2011 between IEC Electronics Corp. and Insero & Company CPAs, P.C. (incorporated herein by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed December 28, 2011)
10.32*	Letter dated May 25, 2012 amending Engagement Letter dated December 28, 2011 between IEC Electronics Corp. and Insero & Company CPAs, P.C. (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 30, 2012)
10.33*	Letter terminating chief financial officer services, effective as of June 1, 2014, with Insero & Company, CPAs, P.C. (incorporated herein by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 27, 2014)
10.34*	Letter agreement dated February 11, 2014 between IEC Electronics Corp. and Michael T. Williams (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 11, 2014)
10.35*	Employment Agreement dated as of February 11, 2014 between IEC Electronics Corp. and Michael T. Williams (incorporated herein by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed February 11, 2014)
10.36*	Employment Agreement Amendment 1, effective January 27, 2015, between IEC Electronics Corp. and Michael T. Williams (incorporated herein by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 27, 2015)
10.37*	Employment Agreement dated as of September 14, 2015 between IEC Electronics Corp. and Michael T. Williams (incorporated herein by reference from Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2015).
10.38*	Salary Continuation and Non-Competition Agreement between IEC Electronics Corp. and Brett E. Mancini, effective as of January 29, 2014 (incorporated herein by reference from Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 28, 2014)
10.39*	Summary of Compensation Arrangements with Brett E. Mancini (incorporated herein by reference from Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 28, 2014)
10.40*	Salary Continuance and Non-Competition Agreement Amendment 1, effective January 27, 2015, between IEC Electronics Corp. and Brett E. Mancini (incorporated herein by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 27, 2015)
10.41*	Confidential Settlement and Waiver/Release Agreement effective June 23, 2016 by and between the Company and Brett E. Mancini (incorporated by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 1, 2016)
10.42*	Employment Agreement dated as of March 20, 2015 between IEC Electronics Corp. and Jeffrey T. Schlarbaum (incorporated herein by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 27, 2015)
10.43*	Sign-on Option Award Agreement (Inducement Grant) between IEC Electronics Corp. and Jeffrey T. Schlarbaum (incorporated herein by reference from Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 27, 2015)
10.44*	Sign-on Option Award Agreement (Pursuant to 2013 Omnibus Incentive Compensation Plan) between IEC Electronics Corp. and Jeffrey T. Schlarbaum (incorporated herein by reference from Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 27, 2015)
10.45*	Employment Agreement dated as of September 8, 2015 between IEC Electronics Corp. and Jens Hauvn (incorporated herein by reference from Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2015).
10.46*	IEC Electronics Corp. Management Deferred Compensation Plan (incorporated herein by reference from Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2009)
10.47*	IEC Electronics Corp. Management Deferred Compensation Plan, as amended (incorporated herein by reference from Exhibit 10.43 to the Company’s Annual Report on Form 10-K/A for the year ended September 30, 2014)
10.48*	IEC Electronics Corp. Board of Directors Deferred Compensation Plan (incorporated herein by reference from Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2009)
10.49*	Summary of Management Incentive Plan for Fiscal 2014 (incorporated herein by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K/A filed on November 20, 2013)
10.50*	Summary of Long Term Incentive Plan for Fiscal 2014 (incorporated herein by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 20, 2013)
10.51*	Compensation Arrangements with Executive Officers for Fiscal 2015 (incorporated herein by reference from Exhibit 10.52 to the Company’s Annual Report on Form 10-K/A for the year ended September 30, 2014)
21.1 ^#	Subsidiaries of IEC Electronics Corp.



23.1 ^#	Consent of Independent Registered Public Accounting Firm
31.1 ^#	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 ^#	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 ^#	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following items from this Annual Report on Form 10-K formatted in Extensible Business Reporting Language: (i) Consolidated Balance Sheets, (ii) Consolidated Income Statements, (iii) Consolidated Statements of Changes in Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.

* Management contract or compensatory plan or arrangement.

# Filed herewith.

Exhibit 10.13

SECOND AMENDMENT TO

FIFTH AMENDED AND RESTATED CREDIT FACILITY AGREEMENT

THIS SECOND AMENDMENT TO FIFTH AMENDED AND RESTATED CREDIT FACILITY AGREEMENT (this “ Amendment ”) is made as of the 28th day of November, 2016, by and between IEC ELECTRONICS CORP., a corporation formed under the laws of the State of Delaware (“ Borrower ”) and MANUFACTURERS AND TRADERS TRUST COMPANY (“ Lender ”).

W I T N E S S E T H:

WHEREAS, the parties hereto are parties to a Fifth Amended and Restated Credit Facility Agreement dated as of December 14, 2015, as amended by that certain First Amendment to Fifth Amended and Restated Credit Facility Agreement dated as of June 20, 2016 (as amended, and as the same may be further amended, modified, supplemented or restated from time to time, the “ Credit Agreemen t ”); and

WHEREAS, Borrower has requested and the Lender has agreed to make certain amendments to the Credit Agreement, all on the terms and conditions herein set forth.

NOW, THEREFORE, for due consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. DEFINITIONS . All capitalized terms used herein and not defined shall have the meaning given such terms in the Credit Agreement.

2. AMENDMENTS . Except as otherwise set forth below, effective as of the date of this Amendment:

(A) Section 1.1 of the Credit Agreement is hereby amended by amending and restating the following definitions in their entirety to read as follows:

““ Applicable Margin ” means, with respect to the applicable facility, the per annum percentage points shown in the applicable column of the table below based on the applicable Debt to EBITDAS Ratio, calculated for Borrower on a consolidated basis and without duplication in accordance with GAAP:



Pricing Grid - Applicable Margin
	Debt to EBITDAS
Level	Ratio	Revolver	Term Loan B
I	> 2.75:1	4.250%	3.250%
II	> 2.25<2.75	3.000%	2.500%
III	> 1.75<2.25	2.750%	2.500%
IV	> 1.25<1.75	2.500%	2.500%
V	> 0.75<1.25	2.250%	2.500%
VI	<0.75	2.000%	2.500%

provided, however, that commencing on the Second Amendment Effective Date and continuing through and including the Fiscal Quarter ending September 30, 2017, the Applicable Margin shall be fixed at Level I. Effective on the tenth (10th) day following the date on which the Borrower’s QCC Sheet is required to be delivered to the Lender pursuant to Section 12.6 for the Fiscal Quarter ending September 30, 2017, the Applicable Margin will be adjusted based upon the Debt to EBITDAS ratio shown therein. Thereafter, changes, if any, in the Level applicable to Loans will be effective on the tenth (10th) day following each date on which the Borrower’s QCC Sheet is required to be delivered to the

Exhibit 10.13

Lender pursuant to Section 12.6, based upon the Debt to EBITDAS ratio shown therein. In the event that any QCC Sheet is not delivered by the date required, pricing will revert to Level I until the tenth (10th) day following the date of delivery of the delayed QCC Sheet, on which tenth (10th) day pricing will be adjusted to the applicable level shown by the QCC Sheet. Upon the occurrence of a Default or Event of Default, the Applicable Margin shall immediately be adjusted to Level I and no reduction shall occur thereafter unless the Default is cured, or if the Default is also an Event of Default, the Event of Default is waived in writing by the Lender.”

““ Applicable Unused Fee ” means the per annum percentage points shown in the table below based on the applicable Debt to EBITDAS Ratio, calculated for Borrower on a consolidated basis and without duplication in accordance with GAAP:



Level	Debt to EBITDAS	Unused Fee
I	> 2.75:1	0.500%
II	> 2.25<2.75	0.500%
III	> 1.75<2.25	0.375%
IV	> 1.25<1.75	0.250%
V	> 0.75<1.25	0.250%
VI	<0.75	0.250%

provided, however, that commencing on the Second Amendment Effective Date and continuing through and including the Fiscal Quarter ending September 30, 2017, the Applicable Unused Fee shall be fixed at Level I. Effective on the tenth (10th) day following the date on which the Borrower’s QCC Sheet is required to be delivered to the Lender pursuant to Section 12.6 for the Fiscal Quarter ending September 30, 2017, the Applicable Unused Fee will be adjusted based upon the Debt to EBITDAS ratio shown therein. Thereafter, changes, if any, in the Level applicable will be effective on the tenth (10th) day following each date on which the Borrower’s QCC Sheet is required to be delivered to the Lender pursuant to Section 12.6, based upon the Debt to EBITDAS ratio shown therein. In the event that any QCC Sheet is not delivered by the date required, the Applicable Unused Fee will revert to Level I until the tenth (10th) day following the date of delivery of the delayed QCC Sheet, on which tenth (10th) day the Applicable Unused Fee will be adjusted to the applicable level shown by the QCC Sheet. Upon the occurrence of a Default or Event of Default, the Applicable Unused Fee shall immediately be adjusted to Level I and no reduction shall occur thereafter unless the Default is cured, or if the Default is also an Event of Default, the Event of Default is waived in writing by the Lender.”

““ Revolving Credit Note ” means the Fourth Amended and Restated Revolving Credit Note described in Section 2.4, as such note may be amended, modified, supplemented or restated from time to time.”

(B) Section 1.1 of the Credit Agreement is hereby amended by adding the following definition thereto in alphabetical order:

““ Second Amendment Effective Date ” means November 28, 2016.”

“2.1 Revolving Credit Commitment . The Lender agrees, subject to Section 2.2 and the other terms and conditions hereinafter set forth, to make Revolving Credit Loans to the Borrower from time to time during the period from the Closing Date up to but not including the Revolving Credit Termination Date in an aggregate principal amount not to exceed at any time outstanding the amount of $16,000,000 (the “Revolving Credit Commitment”). During the period from the Second Amendment Effective Date to the Revolving Credit Termination Date, within the limits of the Revolving Credit Commitment and subject to Section 2.2, the Borrower may borrow, prepay pursuant to Section 2.5, and reborrow under this Section 2.1. Except as otherwise provided in this Agreement, the Revolving Credit Loans will be outstanding as LIBOR Loans.”

Exhibit 10.13

(D) Section 10.15 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“10.15 Maintenance of Cash Management System . Maintain a cash management system satisfactory to the Lender, pursuant to which all collections of the Credit Parties would be deposited into accounts maintained with the Lender or with third-party institutions, governed by account control agreements to which Lender, the applicable third-party institution and the applicable Credit Party(ies) are parties (“ blocked accounts ”). Such cash management system would permit the Lender to exercise full dominion over any and all blocked accounts, whether maintained with the Lender or any other third-party institution, in the event (i) that an Event of Default occurs and is continuing or (ii)(A) Unused Availability declines below $2,500,000 for a period of three (3) consecutive Business Days, or (B) Unused Availability declines below $2,500,000 on four (4) separate occasions during any consecutive thirty (30) day period (an event under clause (i) or (ii), a “Dominion Trigger Event”). Upon the occurrence of a Dominion Trigger Event, full dominion by the Lender over cash collections of the Credit Parties shall commence and continue and remain in effect (x) if the Dominion Trigger Event arises under clause (i) above, until all Events of Default have been cured or waived, (y) if the Dominion Trigger Event arises under clause (ii) above, until Unused Availability is equal to or greater than $2,500,000 for ninety (90) consecutive days, in which case a Dominion Trigger Event shall no longer be deemed to be continuing and (z) if Dominion Trigger Events occur under both clauses (i) and (ii) above, then until both events set forth in clauses (x) and (y) above have occurred.”

(E) Section 12.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“12.1 Debt to EBITDAS . Maintain at all times a Debt to EBITDAS Ratio, on a consolidated basis, no greater than the following ratios for the following periods, reported at the end of each Fiscal Quarter:

9/30/16 through and including 12/30/16 < 3.00 to 1.00

12/31/16 through and including 3/31/17 < 4.70 to 1.00

4/01/17 through and including 6/30/17 < 5.80 to 1.00

7/01/17 through and including 9/30/17, and thereafter < 3.10 to 1.00”

(F) Effective as of September 30, 2016, Section 12.2 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“12.2 Minimum Quarterly EBITDAS . Maintain at all times minimum EBITDAS for the trailing three months, on a consolidated basis, equal to or greater than (i) for the Fiscal Quarter ending 9/30/16, $1,080,000, (ii) for the Fiscal Quarter ending 12/30/16, negative $500,000, (iii) for the Fiscal Quarter ending 3/31/17, $240,000, (iv) for the Fiscal Quarter ending 6/30/17, $1,500,000, (v) for the Fiscal Quarter ending 9/30/17, $2,190,000 and (vi) thereafter, for each Fiscal Quarter, $2,190,000, in each case reported at each Fiscal Quarter end.”

(F) Section 12.3 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“12.3 Fixed Charge Coverage Ratio . Maintain at all times a Fixed Charge Coverage Ratio, on a consolidated basis, equal to or greater than the following ratios for the following periods, reported at the end of each Fiscal Quarter:

9/30/16 through and including 12/30/16 ≥ 0.72 to 1.00

12/31/16 through and including 3/31/17 ≥ 0.30 to 1.00

4/01/17 through and including 6/30/17 ≥ 0.14 to 1.00

Exhibit 10.13

7/01/17 through and including 9/30/17 ≥ 0.86 to 1.00

10/01/17 and thereafter ≥ 1.00 to 1.00”

3. REPRESENTATIONS AND WARRANTIES. Borrower hereby makes the following representations and warranties to the Lender as of the date hereof, each of which shall survive the effectiveness of this Amendment and continue in effect as of the date hereof so long as any Obligations remain unpaid:

3.1 Authorization . Borrower has full power and authority to borrow under the Credit Agreement, as amended by this Amendment, and to execute, deliver and perform this Amendment and any documents delivered in connection with it and all other related documents and transactions, all of which have been duly authorized by all proper and necessary corporate action. The execution and delivery of this Amendment by Borrower will not violate the provisions of, or cause a default under, Borrower’s Organizational Documents, any law or any agreement to which Borrower is a party or by which it or its assets are bound.

3.2 Binding Effect . This Amendment has been duly executed and delivered by Borrower, and the Credit Agreement, as amended by this Amendment, is the legal, valid and binding obligation of Borrower enforceable against Borrower in accordance with its terms, except to the extent that enforcement of any such obligations of the Borrower may be limited by bankruptcy, insolvency, reorganization or similar laws of general application affecting the rights and remedies of creditors generally.

3.3 Consents; Governmental Approvals . Except as may be specifically identified in a written agreement to which Borrower and Lender are parties, no consent, approval or authorization of, or registration, declaration or filing with, any Governmental Authority or any other Person is required in connection with the valid execution, delivery or performance of this Amendment or any other document executed and delivered by Borrower herewith or in connection with any other transactions contemplated hereby.

3.4 Representations and Warranties . The representations and warranties contained in the Credit Agreement, as amended by this Amendment, are true on and as of the date hereof with the same force and effect as if made on and as of the date hereof, except for those representations and warranties that by their terms are made as of a specific date, which representations and warranties Borrower hereby remakes as of such date.

3.5 No Events of Default . No Default or Event of Default has occurred or is continuing.

3.6 No Material Misstatements . Neither this Amendment nor any document delivered to Lender by Borrower or any Credit Party to induce Lender to enter into this Amendment contains any untrue statement of a material fact or, taken as a whole with the other Loan Documents, omits to state a material fact necessary to make the statements herein or therein not misleading in light of the circumstances in which they were made.

4. CONDITIONS OF AMENDMENT. The Lender shall have no obligation to execute or deliver this Amendment until each of the following conditions shall have been satisfied:

4.1 Authorization . Borrower shall have taken all appropriate corporate action to authorize, and its directors, if and as required by Borrower’s Organizational Documents, shall have adopted resolutions authorizing the execution, delivery and performance of this Amendment and the taking of all other action contemplated by this Amendment, and Lender shall have been furnished with copies of all such

Exhibit 10.13

corporate action, certified by an authorized officer of Borrower as being true and correct and in full force and effect without amendment on the date hereof, and such other corporate documents as Lender may request.

4.2 Consents . Borrower shall have delivered to Lender any and all consents, if any, necessary to permit the transactions contemplated by this Amendment.

4.3 Fees . Borrower shall have paid to the Lender all reasonable fees and disbursements of Lender’s counsel and all recording fees, search fees, charges and taxes in connection with this Amendment and all transactions contemplated hereby or made other arrangements with respect to such payment as are satisfactory to Lender.

4.4 Deliveries . Borrower shall have delivered to Lender, each of the following documents, duly executed by the Borrower or as specified: (i) this Amendment, (ii) the Fourth Amended and Restated Revolving Credit Note, (iii) a Reaffirmation executed by the Borrower and each of the Guarantors and (iv) such additional documents, consents, authorizations, insurance certificates, governmental consents and other instruments and agreements as Lender or its counsel may reasonably require and all documents, instruments and other legal matters in connection with the Loan Documents shall be reasonably satisfactory to Lender and its counsel.

4.5 Representations and Warranties . The representations and warranties set forth in this Amendment and in the Loan Documents shall be true, correct and complete on the date hereof, except those representations and warranties that by their terms are made as of a specific date, which representations and warranties Borrower hereby remakes as of such date.

4.6 No Event of Default . No Event of Default or Default shall have occurred and be continuing on the date hereof.

4.7 No Material Misstatements . Neither this Amendment nor any document delivered to Lender by or on behalf of Borrower to induce Lender to enter into this Amendment contains any untrue statement of a material fact or, taken as a whole with the other Loan Documents, omits to state a material fact necessary to make the statements herein or therein not misleading in light of the circumstances in which they were made.

4.8 No Material Adverse Change . As of the date of this Amendment, no Material Adverse Effect shall have occurred with respect to the Borrower and its Subsidiaries taken as a whole since September 30, 2016, including, without limitation, the Credit Parties’ ability to meet the projections delivered by the Borrower to the Bank prior to the date of this Amendment.

4.9 No Litigation . As of the date of this Amendment, except as set forth on Schedule 8.5 to the Credit Agreement, there shall not be any claim, action, suit, investigation, litigation, or legal proceeding pending or threatened in any court or before any arbitrator or governmental authority which relates to the legality, validity or enforceability of the Credit Agreement (as amended by this Amendment) or the transactions contemplated hereby or that, if adversely determined, is not adequately covered by insurance or would have a Material Adverse Effect on the Borrower or its Subsidiaries.

5. MISCELLANEOUS.

5.1 Reaffirmation of Security Documents . Borrower hereby (a) acknowledges and reaffirms the execution and delivery of the Security Documents, (b) acknowledges, reaffirms and agrees that the security interests granted under the Security Documents continue in full force and effect as security for all indebtedness, obligations and liabilities under the Loan Documents, as may be amended from time to

Exhibit 10.13

time, and (c) remakes the representations and warranties set forth in the Security Documents as of the date hereof, except those representations and warranties that by their terms are made as of a specific date, which representations and warranties Borrower hereby remakes as of such date.

5.2 Entire Agreement; Binding Effect . The Credit Agreement, as amended by this Amendment, represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof. This Amendment supersedes all prior negotiations and any course of dealing between the parties with respect to the subject matter hereof. This Amendment shall be binding upon Borrower and its successors and assigns, and shall inure to the benefit of, and be enforceable by the Lender and its successors and assigns. The Credit Agreement, as amended hereby, is in full force and effect and, as so amended, is hereby ratified and reaffirmed in its entirety.

5.3 Severability . If any provision of this Amendment shall be determined by a court to be invalid, such provision shall be deemed modified to conform to the minimum requirements of applicable law.

5.4 Headings . The section headings inserted in this Amendment are provided for convenience of reference only and shall not be used in the construction or interpretation of this Amendment.

5.5 Counterparts . This Amendment may be executed by the parties hereto in separate counterparts (including those delivered by facsimile or other electronic means), each of which, when so executed and delivered, shall be an original, but all such counterparts shall together constitute one and the same instrument.

[signature page follows]

Exhibit 10.13

[Second Amendment to Fifth Amended and Restated Credit Facility Agreement]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be signed by their duly authorized officers as of the day and year first above written.

MANUFACTURERS AND TRADERS TRUST COMPANY

By: /s/ Deborah Urtz-Gleason

Name: Deborah Urtz-Gleason

Title: Vice President

IEC ELECTRONICS CORP.

By: /s/ Michael T. Williams

Name: Michael T. Williams

Title: Chief Financial Officer

Exhibit 10.14

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “ Agreement ”) is made and entered into as of September 30, 2016 (“ Effective Date ”), by and between STORE CAPITAL ACQUISITIONS, LLC , a Delaware limited liability company (“ Purchaser ”) and IEC Electronics Corp -- Albuquerque (formerly known as General Technology Corporation) , a New Mexico corporation (“ Seller ”). Except as otherwise expressly defined herein, capitalized terms will have the meanings set forth on Exhibit A attached hereto and incorporated herein by this reference. For and in consideration of the mutual covenants and promises hereinafter set forth, the parties hereby mutually covenant and agree as follows:

ARTICLE I

PURCHASE OF PROPERTY

Section 1.01. Agreement to Purchase . Purchaser agrees to purchase, and Seller agrees to sell, in accordance with the terms, conditions and stipulations set forth in this Agreement (the “ Transaction ”), all of Seller’s right, title and interest in and to (a) the Ground Lease with respect to the parcel or parcels of real property, as more particularly described on Exhibit B attached hereto, and any and all improvements thereon and appurtenances thereto (collectively, the “ Real Property ”); (b) all fixtures affixed thereto, but excluding any machinery, equipment and trade fixtures used in connection with Seller’s business operations and other personal property owned or leased by Seller; (c) all plans, specifications and studies pertaining to the Real Property in Seller’s possession or under its control; (d) all mineral, oil and gas rights, water rights, sewer rights and other utility rights allocated to the Real Property; and (e) all easements, licenses, privileges and other property interests belonging or appurtenant to the Real Property (all of the foregoing items in clauses (a) through (e) above, now or hereafter existing, collectively, the “ Property ”).

Section 1.02. Purchase Price . The purchase price to be paid by Purchaser to Seller for the Property is $5,750,000 (the “ Purchase Price ”). The Purchase Price shall be paid by Purchaser in immediately available federal funds at Closing.

Section 1.03. Sublease of Property . On or before the Closing Date, Lessee and Purchaser shall agree upon the Lease Agreement, pursuant to which Purchaser shall sublease the Property to Lessee, at the rent and pursuant to the terms and conditions contained therein (the “ Lease ”).

Section 1.04. Prorations . In view of the subsequent sublease of the Property to Lessee pursuant to the Lease and Lessee’s obligations thereunder, there shall be no proration of insurance, taxes, special assessments, utilities or any other costs related to the Property between Seller and Purchaser at Closing. All real and personal property and other applicable taxes and assessments, utilities and any other charges relating to the Property which are due and payable on or prior to the Closing Date shall be paid by Seller at or prior to Closing, and all other taxes and assessments shall be paid by Lessee in accordance with the terms of the Lease.

Section 1.05. Transaction Costs . Subject to Section 6.02(a) below, whether or not the Transaction closes, (a) Seller shall be responsible for the payment of up to an aggregate amount of $55,000.00 (the “ Seller’s Cap ”) towards the Transaction Costs incurred by Seller and Purchaser in connection with the Transaction, (b) Purchaser shall be responsible for the payment of any Transactions Costs that exceed the Seller’s Cap, and (c) Seller and Purchaser shall each be responsible for the payment of the fees and expenses of their respective legal counsel, accountants and other professional advisers (“ Professional Fees ”). The provisions of this Section shall survive Closing or termination of this Agreement for any reason.

Exhibit 10.14

Section 1.06. Earnest Money Deposit . Within three (3) days after the Effective Date of this Agreement, Purchaser shall deposit with the Title Company the sum of $50,000 (together with all interest accrued thereon, if any, the “ Earnest Money Deposit ”). The Earnest Money Deposit shall be held by the Title Company and shall be applied against the Purchase Price at Closing or disbursed as provided herein; provided, however, at Purchaser’s direction and expense (if any), the Earnest Money Deposit shall be placed in an interest-bearing account by the Title Company. Except as otherwise provided herein, the Earnest Money Deposit shall be non-refundable upon the expiration of the Inspection Period.

Section 1.07. Assignment of Ground Lease . Prior to Closing, Seller shall obtain and deliver:

(a) Written approval and consent from Ground Landlord of: (i) the sale and assignment from Seller to Purchaser or its designee (as determined by Purchaser in its sole discretion) of the Property (including Seller’s interests in the Ground Lease); (ii) the sublease of the Property by Purchaser, or its designee, to Lessee pursuant to the Lease, at the rent and pursuant to the terms and conditions contained therein; and (iii) Purchaser’s, or its designee’s, placement of a mortgage or similar lien on or against (A) Purchaser’s, or its designee’s, ground leasehold interest in the Property, provided, however, Purchaser shall provide Seller with a landlord subordination and consent in favor of M&T Bank or any subsequent lender in a form reasonably acceptable to Purchaser, and (B) Purchaser’s, or its designee’s, interest in the improvements located on the Property (collectively, the “ Ground Lease Consents ”).

(b) An estoppel certificate (or similar certificate or acknowledgment) from Ground Landlord, in form and substance acceptable to Purchaser (the “ Estoppel Certificate ”).

(c) An assignment and assumption of the Ground Lease in form acceptable to Seller and Purchaser (the “ Ground Lease Assignment ”).

(d) An opinion of bond counsel in form and substance acceptable to Ground Landlord (as required pursuant to Section 6.10 of the Ground Lease) (the “ Bond Counsel Opinion ”).

The Estoppel Certificate, the Ground Lease Consents, the Ground Lease Assignment, and the Bond Counsel Opinion, are collectively referred to herein as the “ Ground Lease Documents .”

ARTICLE II

DUE DILIGENCE

Section 2.01. Title Insurance .

(a) Title Commitment and Title Policy . Purchaser has ordered a leasehold interest title insurance commitment (the “ Title Commitment ”) with respect to the Property issued by the Title Company, for an ALTA Leasehold Interest Extended Coverage Title Insurance Policy in an amount not to exceed the appraised value set forth in the Valuation (the “ Title Policy ”). Purchaser shall cause a copy of the Title Commitment to be delivered to Seller. All costs related to the Title Policy, escrow fees and other closing costs shall be included in Transaction Costs, payable as set forth in Section 1.05.

(b) Title Company . The Title Company is hereby employed by the parties to act as escrow agent in connection with this Transaction. This Agreement shall be used as instructions to the Title Company, as escrow agent, which may provide its standard conditions of acceptance of escrow; provided, however, that in the event of any inconsistency between such standard conditions of acceptance and the terms of this Agreement, the terms of this Agreement shall prevail. The Title Company’s receipt of this Agreement and the opening of an escrow pursuant to this Agreement shall

Exhibit 10.14

be deemed to constitute conclusive evidence of the Title Company’s agreement to be bound by the terms and conditions of this Agreement pertaining to the Title Company.

(c) Title Company Actions . The Title Company is authorized to pay, from any funds held by it for each party’s respective credit, all amounts necessary to procure the delivery of any documents and to pay, on behalf of Purchaser and Seller, all charges and obligations payable by them hereunder, respectively. Seller and Purchaser will pay all charges payable by them to the Title Company. The Title Company shall not cause the Transaction to close unless and until it has received written instructions from Purchaser and Seller to do so. The Title Company is authorized, in the event any conflicting demand is made upon it concerning these instructions or the escrow, at its election, to hold any documents and/or funds deposited hereunder until an action shall be brought in a court of competent jurisdiction to determine the rights of Seller and Purchaser or to interplead such documents and/or funds in an action brought in any such court. Deposit by the Title Company of such documents and funds, after deducting therefrom its reasonable charges, expenses and attorneys’ fees incurred in connection with any such court action, shall relieve the Title Company of all further liability and responsibility for such documents and funds.

(d) Title Objections .

(i) Within seven (7) days after the Purchaser’s receipt of both the Title Commitment and the Survey, Purchaser shall notify Seller in writing of Purchaser’s objection to any exceptions or other title matters shown on the Title Commitment or the Survey (each, a “ Title Objection ”). If any Title Objection is not removed or resolved by Seller to Purchaser’s satisfaction at least five (5) days prior to the Closing Date, then Purchaser shall have the option, as its sole remedy, upon written notice to Seller on or before the Closing Date, to terminate this Agreement, in which event the Earnest Money Deposit shall be promptly returned to Purchaser and neither party will have any further obligations or liability hereunder, except for those obligations expressly stated to survive such termination.

(ii) If any supplement to the Title Commitment or the Survey discloses any additional title defects which were not created by or with the consent of Purchaser, and which are not acceptable to Purchaser, Purchaser shall notify Seller in writing of its objection thereto (each, an “ Additional Title Objection ”) within five (5) days following receipt of such supplement or revision. If any Additional Title Objection is not removed or resolved by Seller to Purchaser’s satisfaction at least five (5) days prior to the Closing Date, then Purchaser shall have the option, as its sole remedy, to terminate this Agreement upon written notice to Seller on or before the Closing Date, in which event the Earnest Money Deposit shall be promptly returned to Purchaser and neither party will have any further obligations or liability hereunder, except for those obligations expressly stated to survive such termination.

(iii) Purchaser’s failure to timely deliver a Title Objection or an Additional Title Objection shall be deemed Purchaser’s acceptance of the matters disclosed by the Title Commitment and the Survey. If Purchaser does not terminate this Agreement by reason of any Title Objection or Additional Title Objection, as provided in this Section 2.01, then such Title Objection or Additional Title Objection shall be deemed waived and approved by Purchaser and shall thereafter be deemed a Permitted Encumbrance.

Section 2.02. Seller Documents . With reasonable promptness, but in no event later than three (3) Business Days following the Effective Date, Seller shall deliver to Purchaser the following items to the extent the same exist and are in Seller’s possession or under its control (collectively, the “ Seller Documents ”): (a) “as‑built” plans and specifications for the Property; (b) a certificate of occupancy (or its jurisdictional equivalent) for the Property; (c) all surveys related to the Property; (d) all environmental reports related to the Property (including without limitation, Phase I and Phase II environmental investigation reports); (e) all appraisals or valuations related to the Property; (f) all guaranties and warranties in effect with respect to the Property; (g) full and complete copies of any existing leases and current rent rolls related thereto and all

Exhibit 10.14

other agreements related to the Property, together with all amendments and modifications thereof; (h) financial statements of the Seller and unit-level financial statements for the Seller for the previous three years; (i) all property condition reports related to the Property; and (j) all other documents related to the ownership, lease and operation of the Property, and reasonably requested by Purchaser. Purchaser acknowledges and agrees that, as of the Effective Date and except as expressly set forth in this Agreement, (a) neither Seller nor Sellers’ agents, advisor, employees or contractors has made any warranty or representation regarding the truth, accuracy or completeness of the Seller Documents, (b) Seller expressly disclaims any such representation or warranty, and (c) Seller has not undertaken any independent investigation as to the truth, accuracy or completeness of the Seller Documents and Seller is providing the Seller Documents or making the Seller Documents available to Purchaser solely as an accommodation to Purchaser. Purchaser acknowledges and understands that all the Seller Documents made available by Seller are only for Purchaser’s convenience in making its own examination and determination prior to the expiration of the Inspection Period as to whether it wishes to purchase the Property, and, in so doing, Purchaser shall rely exclusively upon Seller’s representations and warranties expressly set forth in this Agreement and on its own independent investigation and evaluation of every aspect of the Property and not on any materials supplied by Seller.

Section 2.03. Survey . Purchaser has ordered a current ALTA/ACSM “as built” survey as required for the Property from a surveyor selected by Purchaser (the “ Survey ”), together with (a) evidence reasonably satisfactory to Purchaser that the Property fully complies with all zoning ordinances of the Governmental Authority having jurisdiction over the Property (“ Zoning Evidence ”), and (b) evidence reasonably satisfactory to Purchaser that the Property is not within a 100-year flood plain or a “Special Flood Hazard Area” as designated by the Federal Emergency Management Agency. The Survey shall show all improvements and shall plot all exceptions shown on the Title Commitment (to the extent plottable), certified in favor of Purchaser, any requested Affiliate of Purchaser and Title Company in a manner reasonably acceptable to Purchaser and prepared in accordance with the appropriate “ALTA/ACSM” minimum standards. The cost of the Survey shall be included in Transaction Costs, payable as set forth in Section 1.05.

Section 2.04. Environmental .

(a) Purchaser has ordered a current complete Phase I environmental investigation report for the Property (the “Environmental Report”), from an environmental inspection company selected by Purchaser, detailing and analyzing certain aspects of the Property. Purchaser shall promptly provide Seller with a copy of the final Environmental Report. The cost of the Environmental Report shall be included in Transaction Costs, payable as set forth in Section 1.05.

(b) Purchaser agrees to: (i) treat as confidential and maintain the confidentiality of the findings and results of the Environmental Report, (ii) refrain from disclosing the existence or content of the Environmental Report to any third party, except to Purchaser’s lenders, insurers, attorneys, professional consultants, agents and contractors, including its and their employees, officers, members, representatives, and/or subcontractors, who have a legitimate need to review the Environmental Report (collectively, “Purchaser’s Representatives”), without first obtaining the express written consent of Seller, which consent shall not be unreasonably withheld, conditioned or delayed, but which may include the requirement for the execution of a confidentiality agreement, in form and substance satisfactory to Seller, by such third party; and (iii) cause Purchaser’s Representatives to treat as confidential, and maintain the confidentiality of, the Environmental Report.

Section 2.05. Valuation . Purchaser has ordered a current site inspection and valuation of the Property, separately stating values for the Real Property and improvements, from a party selected by Purchaser (the “ Valuation ”). The Valuation shall be in form and substance reasonably acceptable to Purchaser, and shall be certified to Purchaser and any requested Affiliate of Purchaser. The cost of the Valuation shall be included in Transaction Costs, payable as set forth in Section 1.05.

Exhibit 10.14

Section 2.06. Property Condition Report . Purchaser has ordered a current property condition assessment and limited compliance audit as required for the Property from an inspection company selected by Purchaser (the “ Property Condition Report ”). The Property Condition Report shall be in form and substance reasonably acceptable to Purchaser, and shall be certified to Purchaser and any requested Affiliate of Purchaser. The cost of the Property Condition Report shall be included in Transaction Costs, payable as set forth in Section 1.05.

Section 2.07. Inspections . From the Effective Date and for a period of thirty (30) days thereafter (the “ Inspection Period ”) and subject to the limitations in Section 2.04 and in this Section 2.07, (a) Purchaser may perform the investigations, tests and inspections (collectively, the “ Inspections ”) with respect to the Property that Purchaser deems reasonably appropriate, provided that Purchaser provides Seller with twenty four (24) hours prior written notice of each onsite Inspection of the Property; and (b) Seller shall, at all reasonable times, (i) provide Purchaser and Purchaser’s officers, employees, agents, advisors, attorneys, accountants, architects, and engineers with access to the Property, all drawings, plans, specifications and all engineering reports for and relating to the Property in the possession or under the control of Seller, the files and correspondence relating to the Property, and the financial books and records relating to the ownership, lease (if applicable), operation, and maintenance of the Property, and (ii) allow such Persons to make such inspections, tests, copies, and verifications as Purchaser considers necessary.

Purchaser agrees that in conducting any of the Inspections, Purchaser and/or its agents and representatives (as applicable) will (i) use commercially reasonable efforts to not unreasonably interfere with the operation and maintenance of the Property; (ii) not damage any part of the Property or any personal property owned or held by any third party; (iii) not injure or otherwise cause bodily harm to Seller or its tenants, agents, invitees, contractors and employees; (iv) maintain commercial general liability insurance of $1,000,000.00 combined single limit for bodily injury, death, or property damage, covering any accident arising in connection with the presence of Purchaser, its agents or representatives, on the Property; (v) not permit any liens to attach to the Property or any part thereof by reason of the exercise of Purchaser’s rights hereunder; (vi) not conduct any intrusive sampling, testing or soil borings of any kind (including, without limitation, any Phase II environmental tests) without Seller’s prior written consent, which consent may be withheld, limited or conditioned in Seller’s sole discretion; (vii) fully restore the Property to the condition in which the same were found before any such inspections or tests were undertaken; and (viii) notify Seller of its Inspections such that Seller and its agents and representatives may be present during any such inspection, investigation or test.

Section 2.08. Purchaser’s Right to Terminate . Notwithstanding any provision contained herein, in addition to its right to terminate this Agreement as set forth in Section 2.01(d), if (a) Purchaser determines, in its sole discretion, that the Property is not satisfactory, and Purchaser provides written notice thereof to Seller on or before expiration of the Inspection Period, or (b) Purchaser and Lessee are unable to agree upon the terms and conditions of the Lease as provided in Section 1.03, or (c) Purchaser fails to obtain the approval of any material change to the terms of the Transaction from Purchaser’s Investment Committee prior to Closing, or (d) Sellers fails to obtain the Ground Lease Consents or Purchaser, Seller and Ground Landlord are unable to agree upon the terms and conditions of the Ground Lease Documents as provided in Section 1.07, then Purchaser shall have the option to terminate this Agreement, in which event the Earnest Money Deposit shall be promptly returned to Purchaser and neither party will have any further obligations or liability hereunder, except for those obligations expressly stated to survive such termination.

Section 2.09. Seller’s Right to Terminate: Seller shall have the right to terminate this Agreement if (a) Seller and Purchaser are unable to agree upon the terms and conditions of the Lease as provided in Section 1.03, or (b) Seller fails to obtain the Ground Lease Consents or Seller and Ground Landlord are unable to agree upon the terms and conditions of the Ground Lease Documents as provided in Section 1.07, and in either which event the Earnest Money Deposit shall be promptly returned to Purchaser and neither party will have any further obligations or liability hereunder, except for those obligations expressly stated to survive such termination.

Exhibit 10.14

ARTICLE III

CLOSING

Section 3.01. Closing Date . Subject to the provisions of Article V of this Agreement, the closing date of the Transaction contemplated by this Agreement (the “ Closing ”) shall be set by mutual agreement of Seller and Purchaser (the “ Closing Date ”); provided, however, that the Closing Date shall not extend beyond the Closing Deadline. The parties shall deposit with the Title Company all documents (including without limitation, the executed Transaction Documents) as necessary to comply with the parties’ respective obligations hereunder on or before the Closing Date or as otherwise mutually agreed upon by the parties. The parties shall deposit all funds required hereunder with the Title Company on or before the Closing Date.

Section 3.02. Funding . Notwithstanding any provision contained in this Agreement, funding of the Transaction by Purchaser shall be contingent upon the delivery of the executed Transaction Documents, satisfaction of the conditions precedent set forth herein and in the other Transaction Documents, and confirmation by Purchaser’s counsel that it or the Title Company has possession of all Transaction Documents required by Purchaser.

Section 3.03. Possession . Possession of the Property, free and clear of all tenants or other parties in possession, except in accordance with the Ground Lease and the Lease, shall be delivered to Purchaser on the Closing Date.

ARTICLE IV

REPRESENTATIONS WARRANTIES AND COVENANTS

Section 4.01. Seller . Seller represents and warrants to, and covenants with, Purchaser as follows:

(a) Organization and Authority . Seller is duly organized or formed, validly existing and in good standing under the laws of its state of incorporation, and is qualified as a foreign corporation to do business in any jurisdiction where such qualification is required. Seller has all requisite corporate power and authority to own and operate the Property, to execute, deliver and perform its obligations under this Agreement and all of the other Transaction Documents, and to carry out the Transaction. The Person who has executed this Agreement on behalf of Seller has been duly authorized to do so.

(b) Enforceability of Documents . Upon execution by Seller, this Agreement and the other Transaction Documents to which it is a party, shall constitute the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium, or other similar laws relating to or affecting the rights of creditors generally, or by general equitable principles.

(c) No Other Agreements and Options . To the best of Seller’s knowledge, other than the Ground Lease (and related documents), neither the Seller or the Property is subject to any commitment, obligation, or agreement, including, without limitation, any right of first refusal, option to purchase or lease granted to a third party, which could or would (i) prevent Seller from completing, or impair Seller’s ability to complete, the sale of the Property under this Agreement or the subsequent lease of the Property pursuant to the Lease, or (ii) bind Purchaser subsequent to consummation of the Transaction. Except as otherwise disclosed by Seller in writing to Purchaser, there is no lease in place, nor has there been any lease in place within the last twelve (12) months of the Effective Date, related to all or any part of any Property, even if any such lease will be terminated upon Closing.

Exhibit 10.14

(d) No Violations . To the best of Seller’s knowledge, the authorization, execution, delivery and performance of this Agreement and the other Transaction Documents will not (i) violate any provisions of the articles of incorporation or other charter documents of Seller, (ii) result in a violation of or a conflict with, or constitute a default (or an event which, with or without due notice or lapse of time, or both, would constitute a default) under any other document, instrument or agreement to which Seller is a party or by which Seller, the Property or any of the property of Seller are subject or bound, (iii) result in the creation or imposition of any Lien, restriction, charge or limitation of any kind, upon Seller or the Property, or (iv) violate any law, statute, regulation, rule, ordinance, code, rule or order of any court or Governmental Authority applicable to Seller or the Property.

(e) Compliance . Seller has not received any written notice alleging any violation of (i) applicable statutes, regulations, rules, ordinances, codes, licenses, permits, orders and approvals of each Governmental Authority having jurisdiction over the Property, including, without limitation, all health, building, fire, safety and other codes, ordinances and requirements, the Americans With Disabilities Act of 1990, and all policies or rules of common law, in each case, as amended, and any judicial or administrative interpretation thereof, including any judicial order, consent, decree or judgment applicable to the Property or the Seller (collectively, the “Legal Requirements”), (ii) restrictions, covenants and encumbrances of record with respect to the Property, and (iii) agreements, contracts, insurance policies (including, without limitation, to the extent necessary to prevent cancellation thereof and to insure full payment of any claims made under such policies), agreements and conditions applicable to the Property or the ownership, operation, use or possession thereof.

(f) Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws . Without in any way limiting the provisions of Section 4.01(e), Seller, and to the best of Seller’s knowledge, the Seller is not currently identified on the OFAC List, and is not a Person with whom a citizen of the United States is prohibited from engaging in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or executive order of the President of the United States.

(g) Litigation . Seller has not received notice of a legal, administrative, arbitration or other proceeding, claim or action of any nature or investigation pending or involving or, to the best of Seller’s knowledge, threatened against, Seller or the Property before any Governmental Authority, except as has been disclosed in writing by Seller, which in any way materially adversely affects or would be expected to materially adversely affect the Property, the business performed and to be performed on the Property, the condition, worth or operations of the Seller, or the ability of the Seller or the Lessee to perform under this Agreement or any other Transaction Documents, or which questions or challenges any of the Seller’s participation in the Transaction contemplated by this Agreement or any other Transaction Document.

(h) No Mechanics’ Liens . To the best of Seller’s knowledge, there are no outstanding accounts payable, mechanics’ liens, or rights to claim a mechanics’ lien in favor of any materialman, laborer, or any other Person in connection with labor or materials furnished to or performed on any portion of the Property, which will not have been fully paid for on or before the Closing Date or, to Seller’s knowledge, which might provide the basis for the filing of such liens against the Property or any portion thereof. No work has been performed or is in progress nor have materials been supplied to the Property or agreements entered into for work to be performed or materials to be supplied to the Property prior to the date hereof, which will not have been fully paid for on or before the Closing Date or which might provide the basis for the filing of such liens against the Property or any portion thereof. Seller shall be responsible for any and all claims for mechanics’ liens and accounts payable that have arisen or may subsequently arise due to agreements entered into for and/or any work performed on, or materials supplied to the Property prior and subsequent to the Closing Date, and Seller shall and does hereby agree to defend, indemnify and forever hold Purchaser and Purchaser’s

Exhibit 10.14

designees harmless from and against any and all such mechanics’ lien claims, accounts payable or other commitments relating to the Property.

(i) Condemnation . Seller has not received notice of a condemnation or eminent domain proceedings affecting the Property or, to the best of Seller’s knowledge, are contemplated.

(j) Licenses and Permits. Seller possesses, and upon Closing, Lessee will possess, all required licenses, permits and other authorizations, both governmental and private, presently required by applicable provisions of law, including statutes, regulations and existing judicial decisions, and by the property and contract rights of third persons, necessary to permit the operation of the business in the manner in which it presently is conducted at the Property.

(k) Intellectual Property . Seller possesses, and upon Closing, Lessee will possess and have the right to use all intellectual property, licenses and other rights as are material and necessary for the conduct of business in the manner in which it presently is conducted at the Property.

(l) Environmental .

(i) To Seller’s knowledge, the Property is not in violation of any Hazardous Materials Laws and/or any permits issued pursuant thereto (“Environmental Permits”) and there are no unresolved prior violations of Hazardous Materials Laws or Environmental Permits in connection with the Property.

(ii) The Seller has not received any written or oral notice or other communication from any Person (including but not limited to a Governmental Authority) relating to (A) liability for Hazardous Materials contamination or USTs at the Property, or remediation thereof, pursuant to any Hazardous Materials Law relating to the Property, (B) liability for other environmental conditions in connection with the Property, or (C) any actual or potential administrative or judicial proceedings in connection with any of the foregoing.

(iii) The representations and warranties in this Section 4.01(l) are the sole and exclusive representations and warranties of Seller with respect to Hazardous Materials, Hazardous Materials Laws, Environmental Permits, and all other environmental conditions and/or environmental matters.

(m) Financial Statements . The financial statements concerning the Seller delivered by or on behalf of Seller to Purchaser are true, correct and complete in all respects, and no materially adverse change has occurred with respect to such financial statements, since the date such financial statements were prepared or delivered to Purchaser. Seller understands that Purchaser is relying upon such financial statements and Seller represents that such reliance is reasonable. All such financial statements were prepared in accordance with generally accepted accounting principles consistently applied and accurately reflect, as of the date of this Agreement and the Closing Date, the financial condition of each individual or entity to which they pertain.

(n) Solvency . There is no contemplated, pending or threatened Insolvency Event or similar proceedings, whether voluntary or involuntary, pending against the Seller, or to Seller’s knowledge, any of their respective Affiliates.

(o) Satisfaction of Conditions Precedent . From the Effective Date through the Closing Date, Seller shall use its best efforts to satisfy all conditions set forth in Section 5.01 of this Agreement on or prior to the Closing Date.

Exhibit 10.14

(p) No Bankruptcy Petition . Seller hereby agrees that it shall not institute against, or join any other Person in instituting against, Purchaser, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or any other proceeding under any federal or state bankruptcy or similar law. The provisions of this Section shall survive the Closing or termination of this Agreement. Notwithstanding the foregoing, the provisions of this Section shall in no way limit any other rights Seller may have with respect to this Agreement, either at law or in equity.

(q) State Bulk Sales Statutes . Seller represents and warrants to Purchaser that no bulk sales statutes promulgated by any Governmental Authority (“Bulk Sales Statutes”) apply as a result of the sale of the Property. Seller agrees to indemnify, defend and hold Purchaser harmless from and against any and all losses, costs, damages, expenses (including without limitation, court costs and reasonable attorney’s fees) and liabilities which may be sustained or incurred by Purchaser, and/or any and all claims, demands, suits, proceedings and causes of action which may be brought or raised against Seller or Purchaser, as a result of or arising from (i) any claim that Purchaser has any liability or obligations under the Bulk Sales Statutes (including without limitation, any tax obligations or liabilities (or interest or penalties connected therewith) of Seller) by reason of the transactions provided for herein; or (ii) the failure of Purchaser to withhold any of Seller’s unpaid tax obligations, liabilities, interest or penalties thereon from the Purchase Price or otherwise as required under any Bulk Sales Statutes.

All representations and warranties of Seller made in this Agreement shall be true in all material respects as of the date of this Agreement, shall be deemed to have been made again at and as of the Closing Date, shall be true in all material respects at and as of the Closing Date and, together with the covenants made by Seller herein, shall survive Closing for a period of eighteen (18) months.

Section 4.02. Purchaser . Purchaser represents and warrants to, and covenants with, Seller as follows:

(a) Organization and Authority . Purchaser is duly organized, validly existing and in good standing under the laws of its state of formation. Purchaser has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and all of the other Transaction Documents to which it is a party and to carry out the Transaction. The Person who has executed this Agreement on behalf of Purchaser has been duly authorized to do so.

(b) Enforceability of Documents . Upon execution by Purchaser, this Agreement and the other Transaction Documents to which it is a party, shall constitute the legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium, or other similar laws relating to or affecting the rights of creditors generally, or by general equitable principles.

(c) Litigation . There are no actions or proceedings pending against or involving Purchaser before any Governmental Authority which in any way materially adversely affect or would be expected to materially adversely affect Purchaser or Purchaser’s ability to perform under this Agreement and the other Transaction Documents to which it is a party.

(d) Satisfaction of Conditions Precedent . From the Effective Date through the Closing Date, Purchaser agrees to use its best efforts to satisfy all conditions set forth in Section 5.02 of this Agreement on or prior to the Closing Date.

All representations and warranties of Purchaser made in this Agreement shall be true in all material respects as of the date of this Agreement, shall be deemed to have been made again at and as of the Closing Date, shall be true in all material respects at and as of the Closing Date, and, together with the covenants made by Purchaser herein, shall survive Closing for a period of eighteen (18) months.

Exhibit 10.14

ARTICLE V

CONDITIONS PRECEDENT TO CLOSING

Section 5.01. Purchaser’s Conditions to Closing . Purchaser shall not be obligated to close and fund the Transaction until the fulfillment (or written waiver by Purchaser) of all of the following conditions:

(a) Seller, Lessee, Guarantor and Ground Landlord, as appropriate, shall have delivered to Purchaser or the Title Company, as applicable, the following items:

(i) The Ground Lease Documents;

(ii) Such documents evidencing the legal status and good standing of Seller that may be required by Purchaser and/or the Title Company for issuance of the Title Policy, including, without limitation, certificates of good standing;

(iii) Fully executed originals of (A) the Lease, together with a fully executed original of a memorandum thereof for the Property (the “ Memorandum of Lease ”), (B) an Assignment of Warranties in the form of Exhibit D , attached hereto, or if not assignable, evidence satisfactory to Purchaser that it will receive coverage or protection acceptable to Purchaser for the matters covered by such warranties, in either case, to the extent required by Purchaser (the “ Assignment of Warranties ”), and all of the other Transaction Documents (including, without limitation, the Guaranty);

(iv) Certificates evidencing the insurance coverage, limits and policies to be carried by Lessee under and pursuant to the terms of the Lease, on the forms and containing the information required by Purchaser, as landlord (“ Lease Proof of Insurance ”);

(v) A certificate of an officer, manager or general partner, as applicable, of each of Seller, Guarantor and Lessee, together with copies of each entity’s (A) articles of organization or certificate of formation, as applicable, amended to date; (B) operating agreement, bylaws or partnership agreement, as applicable, amended to date; (C) resolutions authorizing the Transaction and the execution of this Agreement and the other Transaction Documents, and identifying the Person(s) authorized to execute this Agreement and the other Transaction Documents; and (D) original certificates of good standing or similar documents from the states in which each entity was organized or formed, and original certificates of qualification or similar documents from the state where the Property is located;

(vi) A duly executed affidavit from Seller stating that Seller is not a “foreign person” as defined in the Federal Foreign Investment in Real Property Tax Act of 1980 and 1984 Tax Reform Act, in the form attached hereto as Exhibit C (“ Non‑Foreign Seller Certificate ”);

(vii) Closing settlement statements approved by Seller and Purchaser to reflect (A) the credits, prorations, and adjustments contemplated by or specifically provided for in this Agreement, and (B) a holdback of the Purchase Price, to be held by Purchaser in escrow, equal to $120,000.00 (the “ Holdback ”);

(viii) To the extent not previously provided, the most recent financial statements available for the Seller;

Exhibit 10.14

(ix) Fully executed original of an escrow agreement with respect to the Holdback (the “ Escrow Agreement ”); and

(x) All documents required to be delivered by this Agreement and the other Transaction Documents and as may otherwise be required in order to fully and legally close this Transaction.

(b) Purchaser shall have received the Title Commitment and the Title Company’s irrevocable commitment to insure title by means of the Title Policy.

(c) Purchaser shall have determined, in its sole discretion in the good faith exercise of its business judgment that there shall have been no materially adverse change in the financial condition of Seller, Lessee, Guarantor or the Property from the Effective Date.

(d) All representations and warranties of Seller set forth herein shall have been true and correct in all respects when made, and all covenants, agreements and conditions required to be performed or complied with by Seller prior to or at the time of Closing in connection with the Transaction shall have been duly performed or complied with by Seller prior to or at such time or waived in writing by Purchaser.

(e) No event shall have occurred or condition shall exist which would, upon the Closing Date, or, upon the giving of notice and/or passage of time, constitute a breach or default hereunder or under any other Transaction Document, or any other agreements between or among Purchaser, Seller, Guarantor or Lessee.

(f) Seller and Lessee shall have caused all leases and, unless otherwise agreed to in writing by Purchaser, all subleases of the Property and any other documents affecting the Property existing at Closing, at Purchaser’s sole option, to be cancelled as of the Closing Date or subordinated to the Lease pursuant to subordination agreements in form and substance satisfactory to Purchaser.

Upon the fulfillment or Purchaser’s written waiver of all of the above conditions, Purchaser shall deposit funds necessary to close this Transaction with the Title Company and this Transaction shall close in accordance with the terms and conditions of this Agreement. Unless otherwise agreed, all of the documents to be delivered at Closing shall be dated as of the Closing Date.

Section 5.02. Seller’s Conditions Precedent to Closing . Seller shall not be obligated to close the Transaction until the fulfillment (or written waiver by Seller) of all of the following conditions:

(a) Purchaser shall have delivered to the Title Company the Purchase Price, as adjusted pursuant to the requirements of this Agreement;

(b) Purchaser shall have caused to be executed and delivered to the appropriate Persons fully executed originals of all Transaction Documents, including without limitation, the Lease, together with the Memorandum of Lease, the Escrow Agreement, the Ground Lease Documents, and the Assignment of Warranties;

(c) Purchaser and Seller shall have approved the Title Company settlement statements that reflect the credits, prorations, and adjustments contemplated by or specifically provided for in this Agreement;

(d) Purchaser shall have delivered to Seller and/or the Title Company such other documents as may reasonably be required in order to fully and legally close this Transaction; and

Exhibit 10.14

(e) All covenants, agreements and conditions required to be performed or complied with by Purchaser prior to or at the time of Closing in connection with the Transaction shall have been duly performed or complied with by Purchaser or waived in writing by Seller prior to or at such time.

ARTICLE VI

DEFAULTS; REMEDIES

Section 6.01. Default . Each of the following shall be deemed an event of default (each, an “ Event of Default ”):

(a) If any representation or warranty of Seller or Purchaser set forth in this Agreement or any other Transaction Document is false in any material respect or if Seller or Purchaser renders any materially false statement;

(b) If Seller or Purchaser fails to perform any of its obligations under this Agreement after five (5) days’ notice and opportunity to cure; or

(c) If any Insolvency Event shall occur with respect to any Seller or Lessee, on the one hand, or Purchaser, on the other hand.

Section 6.02. Remedies . Upon any Event of Default, the non-defaulting party shall be entitled to exercise, at its option and as its sole and exclusive remedy, one of the following remedies:

(a) The non-defaulting party may terminate this Agreement by giving written notice to the defaulting party and (i) the non-defaulting party may recover from the defaulting party all reasonable and verified out-of-pocket costs and expenses incurred by the non-defaulting party hereunder (including without limitation, the Transaction Costs, any other due diligence costs, and the reasonable and verified fees and costs of legal counsel or other advisors), (ii) the Earnest Money Deposit shall be promptly disbursed to the non-defaulting party, and (iii) neither party will have any further obligations or liability hereunder, except for those obligations expressly stated to survive such termination; or

(b) The non-defaulting party may waive the Event of Default and proceed with the Closing.

ARTICLE VII

MISCELLANEOUS

Section 7.01. Transaction Characterization .

(a) The parties intend that (i) all components of the Transaction shall be considered a single integrated transaction and shall not be severable; and (ii) the Lease shall constitute a lease of all, but not less than all, of the Property.

(b) The parties intend that the conveyance of the Property to Purchaser be an absolute conveyance in effect as well as form, and that the instruments of conveyance to be delivered at Closing shall not serve or operate as a mortgage, equitable mortgage, deed of trust, security agreement, trust conveyance or financing or trust arrangement of any kind, nor as a preference or fraudulent conveyance against any creditors of Seller. After the execution and delivery of the Ground Lease Assignment, Seller will have no legal or equitable interest or any other claim or interest in the Property, other than the interest, if any, set forth in the Lease. The parties also intend for the Lease to be a true lease and not a transaction creating a financing lease, capital lease, equitable mortgage,

Exhibit 10.14

mortgage, deed of trust, security interest or other financing arrangement, and the economic realities of the Lease are those of a true lease. Notwithstanding the existence of the Lease, neither party shall contest the validity, enforceability or characterization of the sale and purchase of the Property by Purchaser pursuant to this Agreement as an absolute conveyance, and both parties shall support the intent expressed herein that the purchase of the Property by Purchaser pursuant to this Agreement provides for an absolute conveyance and does not create a joint venture, partnership, equitable mortgage, trust, financing device or arrangement, security interest or the like, if, and to the extent that, any challenge occurs.

(c) Each of the parties hereto agrees that it will not, nor will it permit any Affiliate to, at any time, take any action or fail to take any action with respect to the preparation or filing of any statement or disclosure to Governmental Authority, including without limitation, any income tax return (including an amended income tax return), to the extent that such action or such failure to take action would be inconsistent with the intention of the parties expressed in this Section 7.01.

Section 7.02. Risk of Loss .

(a) Condemnation . If, prior to Closing, action is initiated to take the Property, or any portion thereof, by eminent domain proceedings or by deed in lieu thereof, Purchaser may elect at or prior to Closing, to (i) terminate this Agreement, in which event the Earnest Money Deposit shall be promptly returned to Purchaser and neither party will have any further obligations or liability hereunder, except for those obligations expressly stated to survive such termination, or (ii) proceed to close, in which event all of Seller’s assignable right, title and interest in and to the award of the condemning authority shall be assigned to Purchaser at the Closing and there shall be no reduction in the Purchase Price.

(b) Casualty . Seller assumes all risks and liability for damage to or injury occurring to the Property by fire, storm, accident, or any other casualty or cause until the Closing has been consummated. If the Property, or any part thereof, suffers any damage prior to the Closing from fire or other casualty, which Seller, at its sole option, does not elect to fully repair, Purchaser may elect at or prior to Closing, to (i) terminate this Agreement, in which event the Earnest Money Deposit shall be promptly returned to Purchaser and neither party will have any further obligations or liability hereunder, except for those obligations expressly stated to survive such termination, or (ii) consummate the Closing, in which event all of Seller’s right, title and interest in and to the proceeds of any insurance covering such damage (less an amount equal to any expense and costs reasonably incurred by Seller to repair or restore the Property, which shall be payable to Seller upon Seller’s delivery to Purchaser of satisfactory evidence thereof), to the extent that the amount of such insurance does not exceed the Purchase Price, shall be assigned to Purchaser at Closing, and Purchaser shall be entitled to a credit in the amount of Seller’s deductible at Closing. Seller shall not be obligated to repair or restore the damage to such Property on account of such casualty.

(c) Maintenance of the Property and Insurance . From the Effective Date until Closing, Seller shall continue to maintain the Property or cause the Property to be maintained in good condition and repair, and shall continue to maintain or cause to be maintained all insurance for the Property in the same or greater amounts, with the same or greater coverage, and subject to the same or lower deductibles as in existence as of the Effective Date.

Section 7.03. Notices . All notices, demands, designations, certificates, requests, offers, consents, approvals, appointments and other instruments given pursuant to this Agreement (collectively called “ Notices ”) shall be in writing and given by (a) hand delivery, (b) express overnight delivery service, (c) email transmission, or (d) certified or registered mail, return receipt requested, and shall be deemed to have been delivered upon (i) receipt, if hand delivered, (ii) the next Business Day, if delivered by a reputable express overnight delivery service, (iii) receipt of confirmation of email, if delivered by email, or (iv) the third Business

Exhibit 10.14

Day following the day of deposit of such notice with the United States Postal Service, if sent by certified or registered mail, return receipt requested. Notices shall be provided to the parties and addresses (or email addresses, as applicable) specified below:



If to Seller:	IEC Electronics Corp - Albuquerque 105 Norton Street Newark, NY 14513 Attention: Michael T. Williams Email: mwilliams@iec-electronics.com

With a copy to:	Harter Secrest & Emery LLP 1600 Bausch & Lomb Place Rochester, New York 14604 Attention: Kelly A. Pronti, Esq. Email: kpronti@hselaw.com

If to Purchaser:	STORE Capital Acquisitions, LLC 8501 E. Princess Drive, Suite 190 Scottsdale, AZ 85255 Attention: Michael T. Bennett Executive Vice President - General Counsel Email: mbennett@storecapital.com

With a copy to:	Kutak Rock LLP 1801 California Street, Suite 3000 Denver, CO 80202 Attention: Kristine Poston, Esq. Email: kristine.poston@kutakrock.com

or to such other address or such other Person as either party may from time to time hereafter specify to the other party in a notice delivered in the manner provided above. Whenever in this Agreement the giving of Notice is required, the giving thereof may be waived in writing at any time by the Person or Persons entitled to receive such Notice.

A copy of any Notice delivered pursuant to this Section shall also contemporaneously be delivered in the manner herein specified to any mortgagee or assignee of Purchaser’s interest which shall have duly notified Seller in writing of its name and address.

Section 7.04. Assignment . Purchaser may assign its rights under this Agreement in whole or in part at any time to an Affiliate of Purchaser. Upon any unconditional assignment of Purchaser’s entire right and interest hereunder to an Affiliate of Purchaser, Purchaser shall automatically be relieved, from and after the date of such assignment, of liability for the performance of any obligation of Purchaser contained herein. Seller shall not, without the prior written consent of Purchaser, which consent may be withheld in Purchaser’s sole discretion, sell, assign, transfer, mortgage, convey, encumber or grant any easements or other rights or interests of any kind in the Property, any of Seller’s rights under this Agreement or any interest in Seller, whether voluntarily, involuntarily or by operation of law or otherwise, including, without limitation, by merger, consolidation, dissolution or otherwise.

Exhibit 10.14

Section 7.05. Indemnity .

(a) Seller’s Indemnity . Seller shall indemnify, defend and hold harmless Purchaser and its Affiliates, and their respective officers, directors, shareholders, managers, members, employees, representatives, successors and assigns, as applicable (collectively, the “Indemnified Parties”), from and against any and all Losses of any nature arising from or connected with (i) breach of any of the representations, warranties, covenants, agreements or obligations of Seller set forth in this Agreement, and (ii) claims brought by third parties and based on events occurring prior to the Closing Date that are related to the ownership and operation of the Property prior to the Closing Date, provided that the third party claims are not solicited, instigated, or encouraged by the Indemnified Parties. Seller acknowledges and agrees that the indemnification provisions of this Section 7.05(a) along with any and all Purchaser remedies under the Lease (including, without limitation, remedies related to Lessee’s remediation and indemnification responsibilities in the Lease) and/or the Guaranty, shall be the sole and exclusive remedy of Indemnified Parties against Seller, Lessee, and their Affiliates with respect to Losses related to or arising from any failure or breach of any representation or warranty set forth in Section 4.01(l), any environmental condition at the Property and/or all other Losses related to, arising under, and/or that could be the subject of a claim pursuant to. Hazardous Materials Laws. The obligations under this Section 7.05(a) shall survive Closing.

(b) Purchaser’s Indemnity . Purchaser shall indemnify, defend and hold harmless Seller and its Affiliates, and their respective officers, directors, shareholders, managers, members, employees, representatives, successors and assigns, as applicable, from and against any and all Losses of any nature arising from or connected with (i) breach of any of the representations, warranties, covenants, agreements or obligations of Purchaser set forth in this Agreement, and (ii) the Inspections. The obligations under this Section 7.05(b) shall survive Closing.

Section 7.06. Brokerage Commission . Each of the parties represents and warrants to the other that neither party has dealt with, negotiated through or communicated with any broker in connection with this Transaction. Each party shall indemnify, defend and hold harmless the other party from and against any and all claims, loss, costs and expenses, including reasonable attorneys’ fees, resulting from any claims that may be made against the indemnified party by any broker claiming a commission or fee by, through or under such indemnifying party. The parties’ respective obligations under this Section 7.06 shall survive Closing or termination of this Agreement.

Section 7.07. Reporting Requirements . The parties agree to comply with any and all reporting requirements applicable to the Transaction which are set forth in any law, statute, ordinance, rule, regulation, order or determination of any Governmental Authority, and further agree upon request, to furnish the other party with evidence of such compliance.

Section 7.08. Disclosures . Except as expressly set forth in Sections 7.07 and 7.16 and this Section 7.08 and as required by law or judicial action, prior to Closing neither Seller nor Purchaser will make any public disclosure of this Agreement or the other Transaction Documents, the Transaction or the provisions of the Transaction Documents without the prior consent of the other party hereto. The parties further agree that, notwithstanding any provision contained in this Agreement, any party (and each employee, representative or other agent of any party) may disclose to any and all Persons, without limitation of any kind, any matter required under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Section 7.09. Time is of the Essence . The parties hereto expressly agree that time is of the essence with respect to this Agreement.

Section 7.10. Non-Business Days . If the Closing Date or the date for delivery of a notice or performance of some other obligation of a party falls on a Saturday, Sunday or legal holiday in the state in

Exhibit 10.14

which the Property is located, then the Closing Date or such notice or performance shall be postponed until the next Business Day.

Section 7.11. Waiver and Amendment . No provision of this Agreement shall be deemed waived or amended except by a written instrument unambiguously setting forth the matter waived or amended and signed by the party against which enforcement of such waiver or amendment is sought. Waiver of any matter shall not be deemed a waiver of the same or any other matter on any future occasion.

Section 7.12. Limitation on Liability . Notwithstanding anything to the contrary provided in this Agreement, it is specifically understood and agreed, such agreement being a primary consideration for the execution of this Agreement and the Lease, that (a) there shall be absolutely no personal liability on the part of any director, officer, manager, member, employee or agent of either party with respect to any of the terms, covenants and conditions of this Agreement, (b) each party waives all claims, demands and causes of action against the other party’s directors, officers, managers, members, employees and agents in the event of any breach by such other party of any of the terms, covenants and conditions of this Agreement, and (c) each party shall look solely to the assets of the other party for the satisfaction of each and every remedy in the event of any breach of any of the terms, covenants and conditions of this Agreement, such exculpation of liability to be absolute and without any exception whatsoever.

Section 7.13. Headings; Internal References . The headings of the various sections and exhibits of this Agreement have been inserted for reference only and shall not to any extent have the effect of modifying the express terms and provisions of this Agreement. Unless stated to the contrary, any references to any section, subsection, exhibit and the like contained herein are to the respective section, subsection, exhibit and the like of this Agreement.

Section 7.14. Construction Generally . This is an agreement between parties who are experienced in sophisticated and complex matters similar to the Transaction and the other Transaction Documents, is entered into by both parties in reliance upon the economic and legal bargains contained herein and therein, and shall be interpreted and construed in a fair and impartial manner without regard to such factors as the party which prepared the instrument, the relative bargaining powers of the parties or the domicile of any party. Seller and Purchaser were each represented by legal counsel competent in advising them of their obligations and liabilities hereunder.

Section 7.15. Further Assurances . Each of the parties agrees, whenever and as often as reasonably requested so to do by the other party or the Title Company, to execute, acknowledge, and deliver, or cause to be executed, acknowledged, or delivered, any and all such further conveyances, assignments, confirmations, satisfactions, releases, instruments, or other documents as may be necessary, expedient or proper, in order to complete any and all conveyances, transfers, sales and assignments herein provided and to do any and all other acts and to execute, acknowledge and deliver any and all documents as so requested in order to carry out the intent and purpose of this Agreement.

Section 7.16. Securitizations and Other Transactions . As a material inducement to Purchaser’s willingness to complete the transactions contemplated by this Agreement and the other Transaction Documents, Seller hereby acknowledges and agrees that Purchaser may, after the Closing Date, from time to time, (a) advertise, issue press releases, send direct mail or otherwise disclose information regarding the Transaction for marketing purposes; and (b) engage in all or any combination of the following, or enter into agreements in connection with any of the following or in accordance with requirements that may be imposed by applicable securities, tax or other laws: (i) the sale, assignment, grant, conveyance, transfer, financing, re-financing, purchase or re-acquisition of the Property, the Lease or any other Transaction Document, Purchaser’s right, title and interest in the Property, the Lease or any other Transaction Document, the servicing rights with respect to any of the foregoing, or participations in any of the foregoing, or (ii) a securitization and related transactions. Seller agrees to use all reasonable efforts and to cooperate fully with Purchaser with respect to all reasonable requests of Purchaser relating to the foregoing, which includes

Exhibit 10.14

without limitation, with respect to the activities described in subsection (b), providing financial information, financial and other data, and other information and materials which would customarily be required by a purchaser, transferee, assignee, servicer, participant, investor or rating agency involved with respect to any of the foregoing. The provisions of this Section 7.16 shall survive the Closing.

Section 7.17. Attorneys’ Fees . In the event of any controversy, claim, dispute or proceeding between the parties concerning this Agreement, the prevailing party shall be entitled to recover all of its reasonable attorneys’ fees and other costs in addition to any other relief to which it may be entitled.

Section 7.18. Entire Agreement . This Agreement and all other Transaction Documents, and all other certificates, instruments or agreements to be delivered hereunder and thereunder constitute the entire agreement between the parties with respect to the subject matter hereof, and there are no other representations, warranties or agreements, written or oral, between Seller and Purchaser with respect to the subject matter of this Agreement. Notwithstanding anything in this Agreement to the contrary, upon the execution and delivery of this Agreement by Seller and Purchaser, (a) this Agreement shall supersede any previous discussions, letters of intent, agreements and/or term or commitment letters relating to the Transaction, including without limitation, the Letter of Intent and any and all agreements related to confidentiality, exclusivity, non-competition, non-solicitation of employees, non-solicitation or pursuit of any business opportunity represented by the Transaction, or any other term or condition which restricts any business activity of Purchaser or its affiliates, (b) the terms and conditions of this Agreement shall control notwithstanding that such terms are inconsistent with or vary from those set forth in any of the foregoing agreements, and (c) this Agreement may only be amended by a written agreement executed by Purchaser and Seller. The provisions of this Section shall survive the Closing.

Section 7.19. Forum Selection; Jurisdiction; Venue . For purposes of any action or proceeding arising out of this Agreement, the parties hereto expressly submit to the jurisdiction of all federal and state courts located in the State of Arizona. Seller consents that it may be served with any process or paper by registered mail or by personal service within or without the State of Arizona in accordance with applicable law. Furthermore, Seller waives and agrees not to assert in any such action, suit or proceeding that it is not personally subject to the jurisdiction of such courts, that the action, suit or proceeding is brought in an inconvenient forum or that venue of the action, suit or proceeding is improper. Nothing contained in this Section shall limit or restrict the right of Purchaser to commence any proceeding in the federal or state courts located in the state in which the Property is located to the extent Purchaser deems such proceeding necessary or advisable to exercise remedies available under this Agreement.

Section 7.20. Separability; Binding Effect; Governing Law . Each provision hereof shall be separate and independent, and the breach of any provision by Purchaser shall not discharge or relieve Seller from any of its obligations hereunder. Each provision hereof shall be valid and shall be enforceable to the extent not prohibited by law. If any provision hereof or the application thereof to any Person or circumstance shall to any extent be invalid or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby. Subject to the provisions of Section 7.04, all provisions contained in this Agreement shall be binding upon, inure to the benefit of and be enforceable by the successors and assigns of each party hereto, including, without limitation, any United States trustee, any debtor-in-possession or any trustee appointed from a private panel, in each case to the same extent as if each successor and assign were named as a party hereto. This Agreement shall be governed by, and construed with, the laws of the state in which the Property is located, without giving effect to any state’s conflict of laws principles.

Section 7.21. Survival . Except for the conditions of Closing set forth in Article V, which shall be satisfied or waived in writing as of the Closing Date, all representations, warranties, agreements, obligations and indemnities of Seller and Purchaser set forth in this Agreement shall survive the Closing.

Exhibit 10.14

Section 7.22. Waiver of Jury Trial and Certain Damages . THE PARTIES HERETO SHALL AND THEY HEREBY DO INTENTIONALLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT AND/OR ANY CLAIM OR INJURY OR DAMAGE RELATED THERETO. SELLER FURTHER WAIVES THE RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM PURCHASER IN ANY ACTION, PROCEEDING OR COUNTERCLAIM WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND/OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO.

Section 7.23. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all such counterparts shall be deemed to constitute one and the same instrument.

Section 7.24. “As Is, Where Is” . PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT AND SUBJECT TO PURCHASER’S RIGHTS TO TERMINATE THIS AGREEMENT HEREIN, (A) PURCHASER SHALL ACCEPT THE PROPERTIES IN “AS IS, WHERE IS CONDITION, WITH ALL FAULTS” AND PURCHASER EXPRESSLY ACKNOWLEDGES AND AGREES THAT SELLER HEREBY SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, ORAL OR WRITTEN, EXPRESS, IMPLIED OR STATUTORY, PAST, PRESENT OR FUTURE, OF, AS TO OR CONCERNING THE PROPERTIES AND THE PHYSICAL CONDITION OF THE PROPERTIES; (B) PURCHASER IS RELYING UPON ITS OWN DUE DILIGENCE REVIEW IN PURCHASING THE PROPERTIES; AND (C) SELLER SHALL HAVE NO RESPONSIBILITY OR LIABILITY AND IS HEREBY RELEASED BY PURCHASER FOR ANY CLAIMS WITH RESPECT TO THE CONDITION OF THE PROPERTIES. THE PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE CLOSING.

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Exhibit 10.14

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed and delivered as of the date first set forth above.

PURCHASER:

STORE CAPITAL ACQUISITIONS, LLC ,

a Delaware limited liability company

By: _________________________

Name: _________________________

Title: _________________________



		PURCHASER:

		STORE CAPITAL ACQUISITIONS, LLC,
		a Delaware limited liability company

	By:	/s/ Christopher K. Burbach
	Name:	Christopher K. Burbach
	Title:	Executive Vice President

Exhibit 10.14

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed and delivered as of the date first set forth above.



		SELLER:

		IEC Electronics Corp - Albuquerque,
		a New Mexico corporation

	By:	/s/ Michael T. Williams
	Name:	Michael T. Williams
	Title:	Chief Financial Officer

Exhibits :


A.	Defined Terms


B.	Property Address / Legal Description


C.	Non-Foreign Seller Certificate


D.	Assignment of Warranties

Exhibit 10.14

EXHIBIT A

DEFINED TERMS

The following terms shall have the following meanings for all purposes of this Agreement:

“ Additional Title Objection ” has the meaning set forth in Section 2.01(d)(ii).

“ Affiliate ” or any derivation thereof, means any Person which directly or indirectly controls, is under common control with, or is controlled by any other Person. For purposes of this definition, “controls”, “under common control with” and “controlled by” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or otherwise.

“ Assignment of Warranties ” has the meaning set forth in Section 5.01(a)(iii).

“ Bond Counsel Opinion ” has the meaning set forth in Section 1.07(d).

“ Bulk Sales Statutes ” has the meaning set forth in Section 4.01(q).

“ Business Day ” means a day on which banks located in Scottsdale, Arizona are not required or authorized to remain closed.

“ Closing ” shall have the meaning set forth in Section 3.01.

“ Closing Date ” shall have the meaning set forth in Section 3.01.

“ Closing Deadline ” means the later of (i) five (5) Business Days following the expiration of the Inspection Period, or (ii) satisfaction of the contingencies set forth in Section 1.07.

“ Earnest Money Deposit ” has the meaning set forth in Section 1.05.

“ Effective Date ” has the meaning set forth in the introductory paragraph of this Agreement.

“ Environmental Liens ” means all liens and other encumbrances imposed pursuant to any Hazardous Materials Law.

“ Environmental Permit ” has the meaning set forth in Section 4.01(l)(i).

“ Environmental Report ” has the meaning set forth in Section 2.04.

“ Escrow Agreement ” has the meaning set forth in Section 5.01(a)(ix).

“ Estoppel Certificate ” has the meaning set forth in Section 1.07(b).

“ Event of Default ” has the meaning set forth in Section 6.01.

“ Governmental Authority ” means the United States of America, any state or other political subdivision thereof, any other entity exercising executive, judicial, regulatory or administrative functions of or pertaining to government and any corporation or other entity owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing.

“ Ground Landlord ” the City of Albuquerque, New Mexico, a political subdivision of the State of New Mexico.

Exhibit 10.14

“ Ground Lease ” means that certain Lease Agreement between Ground Landlord and Seller dated as of March 1, 1999.

“ Ground Lease Assignment ” has the meaning set forth in Section 1.07(c).

“ Ground Lease Consents ” has the meaning set forth in Section 1.07(a).

“ Ground Lease Documents ” has the meaning set forth in Section 1.07.

“ Guarantor ” means IEC Electronics Corp., a Delaware corporation.

“ Guaranty ” means an unconditional guaranty of payment and performance in form and substance acceptable to Lessor and Guarantor.

“ Hazardous Materials ” includes: (a) oil, petroleum products, flammable substances, explosives, radioactive materials, hazardous wastes or substances, toxic wastes or substances or any other materials, contaminants or pollutants, the presence of which causes the Property to be in violation of any local, state or federal law or regulation, (including without limitation, any Hazardous Materials Law), or are defined as or included in the definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”, “toxic substances”, “contaminants”, “pollutants”, or words of similar import under any applicable local, state or federal law or under the regulations adopted, and/or orders issued pursuant thereto, including, but not limited to: (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §9601, et seq .; (ii) the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §1801, et seq .; (iii) the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §6901, et seq .; and (iv) regulations adopted pursuant to the aforesaid laws; (b) asbestos in any form which is friable, urea formaldehyde foam insulation, transformers or other equipment which contain dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty (50) parts per million; (c) underground storage tanks; and (d) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Authority.

“ Hazardous Materials Laws ” includes any and all federal, state and local laws, rules, regulations, statutes, and binding legal requirements pertaining or relating to the environmental condition of the Property or to Hazardous Materials.

“ Holdback ” has the meaning set forth in Section 5.01(a)(vii).

“ Indemnified Parties ” has the meaning set forth in Section 7.05.

“ Insolvency Event ” means (a) a Person’s (i) failure to generally pay its debts as such debts become due; (ii) admitting in writing its inability to pay its debts generally; or (iii) making a general assignment for the benefit of creditors; (b) any proceeding being instituted by or against any Person (i) seeking to adjudicate it a bankrupt or insolvent; (ii) seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency, or reorganization or relief of debtors; or (iii) seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property, and in the case of any such proceeding instituted against any such Person, either such proceeding shall remain undismissed for a period of 120 days or any of the actions sought in such proceeding shall occur; or (c) any Person taking any corporate or other formal action to authorize any of the actions set forth above in this definition.

“ Inspection Period ” has the meaning set forth in Section 2.07.

“ Inspections ” has the meaning set forth in Section 2.07.

Exhibit 10.14

“ Lease ” has the meaning set forth in Section 1.03.

“ Lease Proof of Insurance ” has the meaning set forth in Section 5.01(a)(iv).

“ Legal Requirements ” has the meaning set forth in Section 4.01(e).

“ Lessee ” means Seller.

“ Letter of Intent ” means that certain Letter of Intent dated July 25, 2016 between STORE Capital Corporation, on behalf of Purchaser, and Seller with respect to the Transaction, and any amendments or supplements thereto.

“ Lien ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction).

“ Losses ” means any and all claims, lawsuits, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, diminutions in value, fines, penalties, interest, charges, fees, expenses, judgments, decrees, awards, amounts paid in settlement and damages of whatever kind or nature (including, without limitation, attorneys’ fees, court costs and costs incurred in the investigation, defense and settlement of claims).

“ Memorandum of Lease ” has the meaning set forth in Section 5.01(a)(iii).

“ Non-Foreign Seller Certificate ” has the meaning set forth in Section 5.01(a)(vi).

“ Notices ” has the meaning set forth in Section 7.03.

“ OFAC List ” means the list of specially designated nationals and blocked Persons subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of Foreign Assets Control and any other similar list maintained by the U.S. Treasury Department, Office of Foreign Assets Control pursuant to any Legal Requirements, including, without limitation, trade embargo, economic sanctions, or other prohibitions imposed by Executive Order of the President of the United States. The OFAC List currently is accessible through the internet website www.treas.gov/ofac/t11sdn.pdf.

“ Permitted Encumbrances ” means (a) the lien of any real estate taxes, water and sewer charges, not yet due and payable; (b) those recorded easements, restrictions, liens and encumbrances set forth as exceptions in the Title Commitment and in the Title Policy to be issued by Title Company to Purchaser and approved by Purchaser in its sole discretion in connection with this Agreement; and (c) the Lease.

“ Person ” means any natural person, firm, corporation, partnership, limited liability company, other entity, state, political subdivision of any state, the United States of America, any agency or instrumentality of the United States of America, any other public body or other organization or association.

“Professional Fees” has the meaning set forth in Section 1.05.

“ Property ” has the meaning set forth in Section 1.01.

“Property Condition Report” has the meaning set forth in Section 2.06.

Exhibit 10.14

“ Purchase Price ” means the amount specified in Section 1.02.

“ Real Property ” has the meaning set forth in Section 1.01.

“ Seller Documents ” has the meaning set forth in Section 2.02.

“Seller Entity” or “ Seller Entities ” means individually or collectively, as the context may require, Seller, Guarantor and Lessee and any Affiliate of Seller, Guarantor and Lessee.

“ Seller’s Cap ” has the meaning set forth in Section 1.05.

“ Survey ” has the meaning set forth in Section 2.03.

“ Title Commitment ” has the meaning set forth in Section 2.01(a).

“ Title Company ” means First American Title Insurance Company located at 2425 E. Camelback Road, Suite 300, Phoenix, Arizona 85016, Attention: Kristin Brown, National Commercial Services, or an alternative title insurance company selected by Purchaser.

“ Title Objection ” has the meaning set forth in Section 2.01(d)(i).

“ Title Policy ” has the meaning set forth in Section 2.01(a).

“ Transaction ” has the meaning set forth in Section 1.01.

“ Transaction Costs ” means all out‑of‑pocket costs and reasonable expenses incurred in connection with the Transaction, including but not limited to (a) the procurement, or if the same is provided by Seller, the update of, the Property Condition Report, Environmental Report, Survey, Title Commitment, Title Policy, any title policy and all endorsements required by Purchaser and its lender, (b) the Valuation, (c) any mortgagee’s title insurance policies required by Purchaser’s lender, (d) all taxes (including stamp taxes and transfer taxes), escrow, closing, transfer and recording fees. Transaction Costs expressly exclude Professional Fees.

“ Transaction Documents ” means this Agreement, the Lease, the Guaranty, the Memorandum of Lease, the Ground Lease Documents, the Escrow Agreement, the Lease Proof of Insurance, the Non-Foreign Seller Certificate, the Assignment of Warranties any and all documents referenced herein and therein, and such other documents, payments, instruments and certificates as are reasonably required by Purchaser and/or the Title Company.

“ USTs ” means any one or combination of underground tanks and associated product piping systems used in connection with storage, dispensing and general use of Hazardous Materials.

“ Valuation ” has the meaning set forth in Section 2.05.

“ Zoning Evidence ” has the meaning set forth in Section 2.03.

Exhibit 10.15

LEASE AGREEMENT

THIS LEASE AGREEMENT (this “ Lease ”) is made as of November 18, 2016 (the “ Effective Date ”), by and between STORE CAPITAL ACQUISITIONS, LLC , a Delaware limited liability company (“ Lessor ”), whose address is 8501 E. Princess Drive, Suite 190, Scottsdale, Arizona 85255, and IEC Electronics Corp -- Albuquerque , a New Mexico corporation (“ Lessee ”), whose address is 105 Norton Street, Newark, New York 14573. Capitalized terms not defined herein shall have the meanings set forth in Exhibit A hereto.

In consideration of the mutual covenants and agreements herein contained, Lessor and Lessee hereby covenant and agree as follows:

ARTICLE I

Basic Lease Terms

Section 1.01. Property . The street address of the Property is 1450 Mission Avenue NE, Albuquerque, NM 87107-4925.

Section 1.02. Initial Term Expiration Date . November 30, 2031.

Section 1.03. Extension Options . Two (2) extensions of five (5) years each, as described in Section 3.02.

Section 1.04. Term Expiration Date (if fully extended) . November 30, 2041.

Section 1.05. Initial Base Annual Rental . $474,375, as described in Article IV.

Section 1.06. Rental Adjustment . The lesser of (i) 2%, or (ii) 1.25 times the change in the Price Index, as described in Section 4.02.

Section 1.07. Adjustment Date . December 1, 2017 and annually thereafter during the Lease Term (including any Extension Term).

Section 1.08. Guarantor . IEC ELECTRONICS CORP., a Delaware corporation.

Section 1.09. Lessee Tax Identification No . 85-0295303.

Section 1.10. Lessor Tax Identification No . 45-2674893.

ARTICLE II

Lease of Property

Section 2.01. Lease . In consideration of Lessee’s payment of the Rental and other Monetary Obligations and, except as otherwise provided herein, Lessee’s performance of all other obligations hereunder, Lessor hereby leases to Lessee, and Lessee hereby takes and hires, the Property, “AS IS” and “WHERE IS” without representation or warranty by Lessor, and subject to the existing state of title, the parties in possession, any statement of facts which an accurate survey or physical inspection might reveal, and all Legal Requirements now or hereafter in effect.

Section 2.02. Quiet Enjoyment . So long as Lessee shall pay the Rental and other Monetary Obligations provided in this Lease and shall keep and perform all of the terms, covenants and conditions on its part contained herein and subject to the rights of Lessor under Section 12.02, Lessee shall have,subject

Exhibit 10.15

to the terms and conditions set forth herein, the right to the peaceful and quiet enjoyment and occupancy of the Property.

Section 2.03. Ground Lease . Lessee hereby expressly acknowledges and agrees that unless and until the Ground Lease has been terminated and a fee interest in the Property has been conveyed to Lessor, this Lease constitutes a sublease of Lessor’s interest in the Ground Lease. Further, unless and until the Ground Lease is terminated and a fee interest in the Property has been conveyed to Lessor, and in the event of a conflict among this Section 2.03 and any other provision of this Lease, this Section 2.03 shall govern. Lessee hereby represents, covenants and agrees as follows:

(a) The Property shall not be used or occupied, or permitted or suffered to be used or occupied, by Lessee or any party for any use, purpose or activity that is not permitted by the Ground Lease.

(b) Lessee acknowledges that this Lease, and Lessee’s occupancy of the Property, are subject to and subordinate to the Ground Lease. Lessee agrees that the terms, covenants, provisions and conditions of the Ground Lease applying to Lessor as the tenant thereunder shall apply directly to Lessee, and Lessee hereby does and shall assume and directly perform fully all the duties, obligations, liabilities and undertakings of Lessor as the tenant under the Ground Lease, including as Rental under this Lease, direct payment to Ground Lessor of all the fixed, basic rents and additional rents and any and all other payments or monetary obligations to be made pursuant to the Ground Lease (or any related documents), whether arising before, on or after the Effective Date. While the Ground Lease is in effect, and in the event of any inconsistency between the terms, covenants, provisions and conditions of the Ground Lease, and the terms, covenants, provisions and conditions of this Lease, the terms, covenants, provisions and conditions of the Ground Lease with respect to such obligation or liability shall control and be complied with by Lessee. Lessee agrees that it will not do, or cause or suffer to be done, any act (whether of commission or omission) which would result in a breach of or default under any term, covenant, provision or condition of the Ground Lease.

(c) Lessor shall have no responsibility or liability to provide any services to Lessee with respect to the Property, or for performing any of the duties, obligations, liabilities or undertakings of tenant or Ground Lessor under the Ground Lease. Lessor agrees, however, that in any case where Lessor’s cooperation is necessary to enforce rights of the tenant under the Ground Lease, Lessor will use its commercially reasonable efforts to cause Ground Lessor, as landlord under the Ground Lease, to perform its duties, obligations, liabilities and undertakings thereunder, provided Lessee agrees to and does bear the expense and reimburses Lessor (promptly upon demand) for any and all reasonable out-of-pocket expenses including reasonable attorneys’ fees incurred by Lessor in connection therewith.

(d) In addition to other indemnification provisions by Lessee in this Lease, and not in limitation thereof, Lessee hereby agrees to indemnify, save, protect, defend and hold harmless the Indemnified Parties from and against any and all liabilities, suits, obligations, fines, damages, penalties, claims, costs, charges and expenses (including experts’ and reasonable attorney’s fees) imposed upon or incurred by the Indemnified Parties, that may be based on or asserted or alleged to be based on any term, covenant, provision or condition of the Ground Lease.

(e) In the event of any Casualty, or in the event of any Condemnation of all or part of the Property, the terms, covenants, provisions and conditions of the Ground Lease shall be controlling with regard to the rights of the Ground Lessor, as landlord under the Ground Lease, but shall not be the controlling instrument as between Lessor and Lessee, and the provisions of this Lease relating to such event shall control exclusively between Lessor and Lessee.

Exhibit 10.15

(f) Simultaneously and automatically upon both the termination of the Ground Lease and the conveyance of the fee interest in the Property from Ground Landlord to Lessor (or an affiliate of Lessor), this Section 2.03 and all references in this Lease to the “Ground Lease” and “Ground Landlord” shall be deemed terminated and of no further force or effect.

ARTICLE III

LEASE TERM; EXTENSION

Section 3.01. Initial Term . The initial term of this Lease (“ Initial Term ”) shall commence as of the Effective Date and shall expire at midnight on November 30, 2031, unless terminated sooner as provided in this Lease and as may be extended as provided herein. The time period during which this Lease shall actually be in effect, including any Extension Term, is referred to as the “ Lease Term .”

Section 3.02. Extensions . Unless this Lease has expired or has been sooner terminated, or an Event of Default has occurred and is continuing at the time any extension option is exercised, Lessee shall have the right and option (each, an “ Extension Option ”) to extend the Initial Term for the Property for two (2) additional successive periods of five (5) years each (each, an “ Extension Term ”), pursuant to the terms and conditions of this Lease then in effect.

Section 3.03. Notice of Exercise . Lessee may only exercise the Extension Options by giving written notice thereof to Lessor of its election to do so no later than one hundred twenty (120) days prior to the expiration of the then-current Lease Term. If written notice of the exercise of any Extension Option is not received by Lessor by the applicable dates described above, then this Lease shall terminate on the last day of the Initial Term or, if applicable, the last day of the Extension Term then in effect. Upon the request of Lessor or Lessee, the parties hereto will, at the expense of Lessee, execute and exchange an instrument in recordable form setting forth the extension of the Lease Term in accordance with this Section 3.03.

Section 3.04. Removal of Personalty . Upon the expiration of the Lease Term, Lessee may remove from the Property all personal property belonging to Lessee. Lessee shall repair any damage caused by such removal and shall leave the Property clean and in good and working condition and repair inside and out, subject to normal wear and tear, casualty and condemnation. Any property of Lessee left on the Property on the tenth day following the expiration of the Lease Term shall, at Lessor’s option, automatically and immediately become the property of Lessor.

ARTICLE IV

RENTAL AND OTHER MONETARY OBLIGATIONS

Section 4.01. Base Monthly Rental . During the Lease Term, on or before the first day of each calendar month, Lessee shall pay in advance the Base Monthly Rental then in effect. If the Effective Date is a date other than the first day of the month, Lessee shall pay to Lessor on the Effective Date the Base Monthly Rental prorated by multiplying the Base Monthly Rental by a fraction, the numerator of which is the number of days remaining in the month (including the Effective Date) for which Rental is being paid, and the denominator of which is the total number of days in such month.

Section 4.02. Adjustments . During the Lease Term (including any Extension Term), on the first Adjustment Date and on each Adjustment Date thereafter, the Base Annual Rental shall increase by an amount equal to the Rental Adjustment; provided, however , that in no event shall Base Annual Rental be reduced as a result of the application of the Rental Adjustment.

Section 4.03. Additional Rental . Lessee shall pay and discharge, as additional rental (“ Additional Rental ”), all sums of money required to be paid by Lessee under this Lease which are not specifically referred

Exhibit 10.15

to as Rental. Lessee shall pay and discharge any Additional Rental when the same shall become due, provided that amounts which are billed to Lessor or any third party, but not to Lessee, shall be paid within fifteen (15) days after Lessor’s written demand for payment thereof or, if earlier, when the same are due. In no event shall Lessee be required to pay to Lessor any item of Additional Rental that Lessee is obligated to pay and has paid to any third party pursuant to any provision of this Lease.

Section 4.04. Rentals to be Net to Lessor . The Base Annual Rental payable hereunder shall be net to Lessor, so that this Lease shall yield to Lessor the Rentals specified during the Lease Term, and all Costs and obligations of every kind and nature whatsoever relating to the Property shall be performed and paid by Lessee. Lessee shall perform all of its obligations under this Lease at its sole cost and expense. All Rental and other Monetary Obligations which Lessee is required to pay hereunder shall be the unconditional obligation of Lessee and shall be payable in full when due and payable and without any setoff, abatement, deferment, deduction or counterclaim whatsoever.

Section 4.05. ACH Authorization . Upon execution of this Lease, Lessee shall deliver to Lessor a complete Authorization Agreement - Pre‑Arranged Payments in the form of Exhibit C attached hereto and incorporated herein by this reference, together with a voided check for account verification, establishing arrangements whereby payments of the Base Monthly Rental are transferred by Automated Clearing House Debit initiated by Lessor from an account established by Lessee at a United States bank or other financial institution to such account as Lessor may designate. Lessee shall continue to pay all Rental by Automated Clearing House Debit unless otherwise directed by Lessor.

Section 4.06. Late Charges; Default Interest . Any delinquent payment shall, in addition to any other remedy of Lessor, incur a late charge of five percent (5%) (which late charge is intended to compensate Lessor for the cost of handling and processing such delinquent payment and should not be considered interest) and bear interest at the Default Rate, such interest to be computed from and including the date such payment was due through and including the date of the payment; provided, however , in no event shall Lessee be obligated to pay a sum of late charge and interest higher than the maximum legal rate then in effect.

Section 4.07. Holdover . If Lessee remains in possession of the Property after the expiration of the term hereof, Lessee, at Lessor’s option and within Lessor’s sole discretion, may be deemed a tenant on a month‑to‑month basis and shall continue to pay Rentals and other Monetary Obligations in the amounts herein provided, except that the Base Monthly Rental shall be automatically increased to one hundred fifty percent (150%) of the last Base Monthly Rental payable under this Lease, and Lessee shall comply with all the terms of this Lease; provided that nothing herein nor the acceptance of Rental by Lessor shall be deemed a consent to such holding over. Lessee shall defend, indemnify, protect and hold the Indemnified Parties harmless from and against any and all Losses resulting from Lessee’s failure to surrender possession upon the expiration of the Lease Term.

Section 4.08. Guaranty . On or before the execution of this Lease, Lessee shall cause Guarantor to execute and deliver to Lessor the Guaranty.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

Section 5.01. Representations and Warranties of Lessee . The representations and warranties of Lessee contained in this Article V are being made to induce Lessor to enter into this Lease, and Lessor has relied, and will continue to rely, upon such representations and warranties. Lessee represents and warrants to Lessor as follows:

Exhibit 10.15

(a) Organization, Authority and Status of Lessee . Lessee has been duly organized or formed, is validly existing and in good standing under the laws of its state of formation and is qualified as a foreign corporation to do business in any jurisdiction where such qualification is required. All necessary and appropriate action has been taken to authorize the execution, delivery and performance by Lessee of this Lease and of the other documents, instruments and agreements provided for herein. Lessee is not, and if Lessee is a “disregarded entity,” the owner of such disregarded entity is not, a “nonresident alien,” “foreign corporation,” “foreign partnership,” “foreign trust,” “foreign estate,” or any other “person” that is not a “United States Person” as those terms are defined in the Code and the regulations promulgated thereunder. The Person who has executed this Lease on behalf of Lessee is duly authorized to do so.

(b) Enforceability . This Lease constitutes the legal, valid and binding obligation of Lessee, enforceable against Lessee in accordance with its terms.

(c) Litigation . Lessee has not received notice of any suits, actions, proceedings or investigations pending involving Lessee or Guarantor, or to the best of its knowledge, threatened against or involving Lessee, Guarantor or the Property before any arbitrator or Governmental Authority which might reasonably result in any Material Adverse Effect.

(d) Absence of Breaches or Defaults . To Lessee’s knowledge, Lessee is not in default under any document, instrument or agreement to which Lessee is a party or by which Lessee, the Property or any of Lessee’s property is subject or bound, which has had, or could reasonably be expected to result in, a Material Adverse Effect. To Lessee’s knowledge, the authorization, execution, delivery and performance of this Lease and the documents, instruments and agreements provided for herein will not result in any breach of or default under any document, instrument or agreement to which Lessee is a party or by which Lessee, the Property or any of Lessee’s property is subject or bound.

(e) Compliance with OFAC Laws . To Lessee’s knowledge, Lessee, Guarantor, and no individual or entity owning directly or indirectly any interest in Lessee or Guarantor, is an individual or entity whose property or interests are subject to being blocked under any of the OFAC Laws or is otherwise in violation of any of the OFAC Laws; provided, however , that the representation contained in this sentence shall not apply to any Person to the extent such Person’s interest is in or through a U.S. Publicly Traded Entity.

(f) Solvency . There is no contemplated, pending or threatened Insolvency Event or similar proceedings, whether voluntary or involuntary, affecting Lessee or Guarantor. Lessee does not have unreasonably small capital to conduct its business.

(g) Ownership . None of (i) Lessee, (ii) any Affiliate of Lessee, or (iii) any Person owning ten percent (10%) or more of Lessee, owns, directly or indirectly, ten percent (10%) or more of the total voting power or total value of capital stock in STORE Capital Corporation.

Section 5.02. Representations and Warranties of Lessor . The representations and warranties of Lessor contained in this Article V are being made to induce Lessee to enter into this Lease, and Lessee has relied, and will continue to rely, upon such representations and warranties. Lessor represents and warrants to Lessee as follows:

(a) Organization, Authority and Status of Lessor . Lessor has been duly organized or formed, is validly existing and in good standing under the laws of its state of formation and is qualified as a foreign corporation to do business in any jurisdiction where such qualification is required. All necessary and appropriate action has been taken to authorize the execution, delivery and performance by Lessor of this Lease and of the other documents, instruments and agreements

Exhibit 10.15

provided for herein. Lessor is not, and if Lessor is a “disregarded entity,” the owner of such disregarded entity is not, a “nonresident alien,” “foreign corporation,” “foreign partnership,” “foreign trust,” “foreign estate,” or any other “person” that is not a “United States Person” as those terms are defined in the Code and the regulations promulgated thereunder. The Person who has executed this Lease on behalf of Lessor is duly authorized to do so.

(b) Enforceability . This Lease constitutes the legal, valid and binding obligation of Lessor, enforceable against Lessor in accordance with its terms.

(c) Litigation . Lessor has not received notice of any suits, actions, proceedings or investigations pending involving Lessor, or to the best of its knowledge, threatened against or involving Lessor, or the Property before any arbitrator or Governmental Authority which might reasonably result in any Material Adverse Effect.

(d) Absence of Breaches or Defaults . To Lessor’s knowledge, Lessor is not in default under any document, instrument or agreement to which Lessor is a party or by which Lessor, the Property or any of Lessor’s property is subject or bound, which has had, or could reasonably be expected to result in, a Material Adverse Effect. To Lessor’s knowledge, the authorization, execution, delivery and performance of this Lease and the documents, instruments and agreements provided for herein will not result in any breach of or default under any document, instrument or agreement to which Lessor is a party or by which Lessor, the Property or any of Lessor’s property is subject or bound.

(e) Compliance with OFAC Laws . To Lessor’s knowledge, Lessor, and no individual or entity owning directly or indirectly any interest in Lessor, is an individual or entity whose property or interests are subject to being blocked under any of the OFAC Laws or is otherwise in violation of any of the OFAC Laws; provided, however , that the representation contained in this sentence shall not apply to any Person to the extent such Person’s interest is in or through a U.S. Publicly Traded Entity.

(f) Solvency . There is no contemplated, pending or threatened Insolvency Event or similar proceedings, whether voluntary or involuntary, affecting Lessor. Lessor does not have unreasonably small capital to conduct its business.

ARTICLE VI

TAXES ND ASSESSMENTS; UTILITIES; INSURANCE

Section 6.01. Taxes .

(a) Payment . Subject to the provisions of Section 6.01(b) below, Lessee shall pay, prior to the earlier of delinquency or the accrual of interest on the unpaid balance, all taxes and assessments of every type or nature assessed against or imposed upon the Property, Lessee or Lessor during the Lease Term related to or arising out of this Lease and the activities of the parties hereunder, including without limitation, (i) all taxes or assessments upon the Property or any part thereof and upon any personal property, trade fixtures and improvements located on the Property, whether belonging to Lessor or Lessee, or any tax or charge levied in lieu of such taxes and assessments; (ii) all taxes, charges, license fees and or similar fees imposed by reason of the use of the Property by Lessee; (iii) all excise, franchise, transaction, privilege, license, sales, use and other taxes upon the Rental or other Monetary Obligations hereunder, the leasehold estate of either party or the activities of either party pursuant to this Lease; and (iv) all franchise, privilege or similar taxes of Lessor calculated on the value of the Property or on the amount of capital apportioned to

Exhibit 10.15

the Property. Notwithstanding anything in clauses (i) through (iv) to the contrary, Lessee shall not be obligated to pay or reimburse Lessor for any taxes based on the net income of Lessor.

Lessee shall not be liable for taxes in respect of the improvements and/or the land comprising the Property which are applicable to the fractional portion of such year from and after such expiration or termination of the Lease, and if Lessee shall have previously paid any such taxes for which is it not so liable, Lessor shall refund the excess to Lessee within thirty (30) days of the expiration of the Term. Lessee hereby acknowledges that it (or an Affiliate of Lessee) is liable for any and all taxes with respect to the Property accruing before the Effective Date. The term “Lease Year” shall mean a period of twelve consecutive full calendar months. The first Lease Year shall begin on the Effective Date. Each succeeding Lease Year shall begin on the first day of the first month of the first Lease Year. If Lessee should extend the Lease Term pursuant to any extension option granted herein, the first day of the Extension Option shall also be deemed to be the first day of a Lease Year for all purposes of this Lease.

(b) Right to Contest . Within thirty (30) days after each tax and assessment payment is required by this Section 6.01 to be paid, Lessee shall provide Lessor with evidence reasonably satisfactory to Lessor that taxes and assessments have been timely paid by Lessee. In the event Lessor receives a tax bill, Lessor shall use commercially reasonable efforts to forward said bill to Lessee within fifteen (15) days of Lessor’s receipt thereof. Lessee may, at its own expense, contest or cause to be contested (in the case of any item involving more than $10,000, after prior written notice to Lessor, which shall be given within fifteen (15) days of Lessee’s determination to contest any matter as permitted herein), by appropriate legal proceedings conducted in good faith and with due diligence, any above‑described item or lien with respect thereto, provided that (i) neither the Property nor any interest therein would be in any danger of being sold, forfeited or lost by reason of such proceedings; (ii) no Event of Default has occurred and is continuing; (iii) if and to the extent required by the applicable taxing authority and/or Lessor, Lessee posts a bond or takes other steps acceptable to such taxing authority and/or Lessor that removes such lien or stays enforcement thereof; (iv) Lessee shall promptly provide Lessor with copies of all notices received or delivered by Lessee and filings made by Lessee in connection with such proceeding; and (v) upon termination of such proceedings, it shall be the obligation of Lessee to pay the amount of any such tax and assessment or part thereof as finally determined in such proceedings, the payment of which may have been deferred during the prosecution of such proceedings, together with any costs, fees (including attorneys’ fees and disbursements), interest, penalties or other liabilities in connection therewith. Lessor shall at the request of Lessee, execute or join in the execution of any instruments or documents necessary in connection with such contest or proceedings, but Lessor shall incur no cost or obligation thereby.

Section 6.02. Utilities . Lessee shall contract, in its own name, for and pay when due all charges for the connection and use of water, gas, electricity, telephone, garbage collection, sewer use and other utility services supplied to the Property during the Lease Term. Under no circumstances shall Lessor be responsible for any interruption of any utility service.

Section 6.03. Insurance .

(a) Coverage . Throughout the Lease Term, Lessee shall maintain, with respect to the Property, at its sole expense, the following types and amounts of insurance:

(i) Insurance against loss or damage to real property and personal property under an “all risk” or “special form” insurance policy, which shall include coverage against all risks of direct physical loss, including but not limited to loss by fire, lightning, wind, terrorism, and other risks normally included in the standard ISO special form (and shall also include National Flood and Excess Flood insurance if the Property is located in Flood Zone A or Flood Zone V, as designated by FEMA, or otherwise located in a flood zone area identified by FEMA as

Exhibit 10.15

a 100-year flood zone or special hazard area, and earthquake insurance if the Property is located within a moderate to high earthquake hazard zone as determined by an approved insurance company set forth in Section 6.03(b)(x) below). Such policy shall also include soft costs, a joint loss agreement, coverage for ordinance or law covering the loss of value of the undamaged portion of the Property, costs to demolish and the increased costs of construction if any of the improvements located on, or the use of, the Property shall at any time constitute legal non-conforming structures or uses. Ordinance or law limits shall be in an amount equal to the full replacement cost for the loss of value of the undamaged portion of the Property and no less than 25% of the replacement cost for costs to demolish and the increased cost of construction, or in an amount otherwise specified by Lessor. Such insurance shall be in amounts not less than 100% of the full insurable replacement cost values (without deduction for depreciation), with an agreed amount endorsement or without any coinsurance provision, and with sublimits satisfactory to Lessor, as determined from time to time at Lessor’s request but not more frequently than once in any 12-month period.

(ii) Commercial general liability insurance, including products and completed operation liability, covering Lessee as a named insured and Lessor as an additional insured against bodily injury liability, property damage liability and personal and advertising injury, including liability arising out of the ownership, maintenance, repair, condition or operation of the Property or adjoining ways, streets, parking lots or sidewalks. Such insurance policy or policies shall include a broad form contractual liability t under which the insurer agrees to insure Lessee’s obligations under Article X hereof to the extent insurable, and a “severability of interest” clause, shall be in amounts of not less than $10,000,000 per occurrence for bodily injury and property damage, and $10,000,000 general aggregate per location, or such higher limits as Lessor may reasonably require from time to time, and shall be of form and substance satisfactory to Lessor. Such limits of insurance can be acquired through Commercial General liability and Umbrella liability policies.

(iii) Statutory Workers’ compensation and Employers Liability insurance in the amount of $1,000,000 covering all persons employed by Lessee on the Property in connection with any work done on or about the Property for which claims for death or bodily injury could be asserted against Lessor, Lessee or the Property.

(iv) Business interruption insurance including Rental Value Insurance payable to Lessor at all locations for a period of not less than twelve (12) months. Such insurance is to follow the form of the real property “all risk” or “special form” coverage and is not to contain a co‑insurance clause. Such insurance is to have a minimum of 180 days of extended period of indemnity.

(v) Automobile liability insurance, including owned, non-owned and hired car liability insurance for combined limits of liability of $5,000,000 per occurrence. The limits of liability can be provided in a combination of an automobile liability policy and an umbrella liability policy.

(vi) Comprehensive Boiler and Machinery or Equipment Breakdown Insurance against loss or damage from explosion of any steam or pressure boilers or similar apparatus, if any, and other building equipment including HVAC units located in or about the Property and in an amount equal to the lesser of 25% of the 100% replacement cost of the Property or $5,000,000.

(vii) Such additional and/or other insurance and in such amounts as at the time is customarily carried by prudent owners or tenants with respect to improvements and personal

Exhibit 10.15

property similar in character, location and use and occupancy to the Property, provided there is an increase in hazard on the premises or a change of operation by Lessee.

(b) Insurance Provisions . All insurance policies shall, except as otherwise noted herein:

(i) provide for a waiver of subrogation except the Workers Compensation by the insurer as to claims against Lessor, its employees and agents;

(ii) be primary and non-contributory with respect to any policies of insurance maintained by Lessor;

(iii) contain deductibles not to exceed $25,000;

(iv) contain a standard non‑contributory mortgagee clause or endorsement in favor of any Lender designated by Lessor;

(v) provide that the policy of insurance shall not be terminated, cancelled or amended without at least thirty (30) days’ prior written notice to Lessor and to any Lender covered by any standard mortgagee clause or endorsement;

(vi) be in amounts sufficient at all times to satisfy any coinsurance requirements thereof;

(vii) except for workers’ compensation insurance referred to in Section 6.03(a)(iii) above, name Lessor and any Lessor Affiliate or Lender requested by Lessor, as an “additional insured” with respect to liability insurance, and as an “additional named insured” or “additional insured” with respect to real property and rental value insurance, as appropriate and as their interests may appear;

(viii) be evidenced by delivery to Lessor and any Lender designated by Lessor of an Acord Form 28 for property, business interruption and boiler & machinery coverage (or any other form requested by Lessor) and an Acord Form 25 for commercial general liability, automobile liability, workers’ compensation and umbrella coverage (or any other form requested by Lessor); provided that in the event that either such form is no longer available, such evidence of insurance shall be in a form reasonably satisfactory to Lessor and any Lender designated by Lessor; and

(ix) be issued by insurance companies licensed to do business in the states where the Property is located and which are rated no less than A-X by Best’s Insurance Guide or are otherwise approved by Lessor.

(b) Additional Obligations . It is expressly understood and agreed that (i) if any insurance required hereunder, or any part thereof, shall expire, be withdrawn, become void by breach of any condition thereof by Lessee, or become void or in jeopardy by reason of the failure or impairment of the capital of any insurer, Lessee shall immediately obtain new or additional insurance reasonably satisfactory to Lessor and any Lender designated by Lessor; (ii) the minimum limits of insurance coverage set forth in this Section 6.03 shall not limit the liability of Lessee for its acts or omissions as provided in this Lease; (iii) Lessee shall procure policies for all insurance for periods of not less than one year and shall provide to Lessor and any servicer or Lender of Lessor certificates of insurance or, upon Lessor’s request, duplicate originals of insurance policies evidencing that insurance satisfying the requirements of this Lease is in effect at all times; (iv) Lessee shall pay as they become due all premiums for the insurance required by this Section 6.03; (v) in the event that Lessee fails to comply with any of the requirements set forth in this Section 6.03, within ten (10)

Exhibit 10.15

days of the giving of written notice by Lessor to Lessee, (A) Lessor shall be entitled to procure such insurance; and (B) any sums expended by Lessor in procuring such insurance shall be Additional Rental and shall be repaid by Lessee, together with interest thereon at the Default Rate, from the time of payment by Lessor until fully paid by Lessee immediately upon written demand therefor by Lessor; and (vi) Lessee shall maintain all insurance policies required in this Section 6.03 not to be cancelled, invalidated or suspended on account of the conduct of Lessee, its officers, directors, managers, members, employees or agents, or anyone acting for Lessee or any subtenant or other occupant of the Property, and shall comply with all policy conditions and warranties at all times to avoid a forfeiture of all or a part of any insurance payment.

(d) Blanket Policies . Notwithstanding anything to the contrary in this Section 6.03, any insurance which Lessee is required to obtain pursuant to this Section 6.03 may be carried under a “blanket” policy or policies covering other properties or liabilities of Lessee provided that such “blanket” policy or policies otherwise comply with the provisions of this Section 6.03.

Section 6.04. Tax Impound . Upon the occurrence of an Event of Default and with respect to each Event of Default, in addition to any other remedies, Lessor may require Lessee to pay to Lessor on the first day of each month the amount that Lessor reasonably estimates will be necessary in order to accumulate with Lessor sufficient funds in an impound account (which shall not be deemed a trust fund) (the “ Reserve ”) for Lessor to pay any and all real estate taxes (“ Real Estate Taxes ”) for the Property for the ensuing twelve (12) months, or, if due sooner, Lessee shall pay the required amount immediately upon Lessor’s demand therefor. Lessor shall, upon prior written request of Lessee, provide Lessee with evidence reasonably satisfactory to Lessee that payment of the Real Estate Taxes was made in a timely fashion. In the event that the Reserve does not contain sufficient funds to timely pay any Real Estate Taxes, upon Lessor’s written notification thereof, Lessee shall, within five (5) Business Days of such notice, provide funds to Lessor in the amount of such deficiency. Lessor shall pay or cause to be paid directly to the applicable taxing authorities any Real Estate Taxes then due and payable for which there are funds in the Reserve; provided, however, that in no event shall Lessor be obligated to pay any Real Estate Taxes in excess of the funds held in the Reserve, and Lessee shall remain liable for any and all Real Estate Taxes, including fines, penalties, interest or additional costs imposed by any taxing authority (unless incurred as a result of Lessor’s failure to timely pay Real Estate Taxes for which it had funds in the Reserve). Lessee shall cooperate fully with Lessor in assuring that the Real Estate Taxes are timely paid. Lessor may deposit all Reserve funds in accounts insured by any federal or state agency and may commingle such funds with other funds and accounts of Lessor. Interest or other gains from such funds, if any, shall be the sole property of Lessor. Upon an Event of Default, in addition to any other remedies, Lessor may apply all impounded funds in the Reserve against any sums due from Lessee to Lessor. Lessor shall give to Lessee an annual accounting showing all credits and debits to and from such impounded funds received from Lessee.

ARTICLE VII

MAINTENANCE; ALTERATIONS

Section 7.01. Condition of Property; Maintenance . Lessee hereby accepts the Property “AS IS” and “WHERE IS” with no representation or warranty of Lessor as to the condition thereof. Lessee shall, at its sole cost and expense, be responsible for (a) keeping all of the building, structures and improvements erected on the Property in good order and repair, free from actual or constructive waste, as determined by Lessee in its commercially reasonable discretion; (b) the repair or reconstruction of any building, structures or improvements erected on the Property damaged or destroyed by a Casualty; (c) subject to Section 7.02, making all necessary structural, non-structural, exterior and interior repairs and replacements to any building, structures or improvements erected on the Property, as determined by Lessee in its commercially reasonable discretion; (d) (i) protecting, defending, indemnifying, releasing and holding the Indemnified Parties harmless from and against any and all claims and Losses arising out of or in any way relating to any encroachments and/or activities upon the Property caused by any Person provided that such Losses result from claims

Exhibit 10.15

brought by third parties and provided that such claims are not solicited or instigated by Lessor; and (ii) prosecuting any claims that Lessee seeks to bring against any Person relating to Lessee’s use and possession of the Property; and (e) paying all operating costs of the Property in the ordinary course of business. Lessee waives any right to require Lessor to maintain, repair or rebuild all or any part of the Property or make repairs at the expense of Lessor pursuant to any Legal Requirements at any time in effect.

Section 7.02. Alterations and Improvements . During the Lease Term, Lessee shall not alter the exterior, structural, plumbing or electrical elements of the Property in any manner without the consent of Lessor, which consent shall not be unreasonably withheld or conditioned; provided, however , Lessee may undertake nonstructural alterations to the Property, individually, costing less than $100,000 without Lessor’s prior written consent. If Lessor’s consent is required hereunder and Lessor consents to the making of any such alterations, the same shall be made by Lessee at Lessee’s sole expense by a licensed contractor and according to plans and specifications approved by Lessor and subject to such other conditions as Lessor shall reasonably require. Any work at any time commenced by Lessee on the Property shall be prosecuted diligently to completion, shall be of good workmanship and materials and shall comply fully with all the terms of this Lease and all Legal Requirements. Upon completion of any alterations individually costing $100,000 or more, Lessee shall promptly provide Lessor with evidence of full payment to all laborers and materialmen contributing to the alterations. Additionally, upon completion of any alterations, Lessee shall promptly provide Lessor with (a) an architect’s certificate certifying the alterations to have been completed in conformity with the plans and specifications (if the alterations are of such a nature as would require the issuance of such a certificate from the architect); (b) a certificate of occupancy (if the alterations are of such a nature as would require the issuance of a certificate of occupancy); and (c) any other documents or information reasonably requested by Lessor. Lessee shall keep the Property free from any liens arising out of any work performed on, or materials furnished to, the Property. Lessee shall execute and file or record, as appropriate, a “Notice of Non‑Responsibility,” or any equivalent notice permitted under applicable Law in the state where the Property is located which provides that Lessor is not responsible for the payment of any costs or expenses relating to the additions or alterations. Any addition to or alteration of the Property shall be deemed a part of the Property and belong to Lessor, and Lessee shall execute and deliver to Lessor such instruments as Lessor may require to evidence the ownership by Lessor of such addition or alteration.

Section 7.03. Encumbrances . During the Lease Term, Lessor shall have the right to grant easements on, over, under and above the Property without the prior consent of Lessee, provided that such easements will not have a Material Adverse Effect. Lessee shall comply with and perform all obligations of Lessor under the Ground Lease, all easements, declarations, covenants, restrictions and other items of record now or hereafter encumbering the Property. Without Lessor’s prior written consent, Lessee shall not grant any easements on, over, under or above the Property.

ARTICLE I

USE OF THE PROPERTY; COMPLIANCE

Section 8.01. Use and “Go Dark Rights.”

(a) Use . During the Lease Term, the Property shall be used solely for the operation of a Permitted Facility. Except during periods when the Property is untenantable due to Casualty or Condemnation (and provided that Lessee continues to strictly comply with the other terms and conditions of this Lease), Lessee shall at all times during the Lease Term occupy the Property and shall diligently operate its business on the Property. In the event that Lessee shall change the use of the Property or the concept or brand operated on the Property, only as may be expressly permitted herein or consented to by Lessor in writing, Lessee shall provide Lessor with written notice of any such change and a copy of the franchise agreement(s) related to such new concept or brand, if any.

Exhibit 10.15

(b) “Go Dark Rights . ” Notwithstanding any provision contained herein, Lessee shall not be in default under this Section 8.01 unless and until Lessee fails to continue to operate its business at the Property (i.e., “go dark”) for more than three hundred and sixty five (365) consecutive days (except due to a Casualty or Condemnation event or during a period of alterations); provided, however, Lessee shall provide Lessor with written notice of its intent to “go dark” at least sixty (60) days prior to the Property going dark, and Lessee can only exercise its right to temporarily “go dark” once in any five (5) year period. The up to three hundred and sixty five (365)-day “go dark” period may only be extended with the prior written consent of Lessor. Notwithstanding the foregoing, the terms and provisions of this Lease and Lessee’s obligations hereunder shall remain in full force and effect during any “go dark” period (including without limitation, payment of all Monetary Obligations without reduction, maintenance of insurance as required under Article VI and continuation of Tenant’s maintenance obligations). Furthermore, in no event shall Lessee “go dark” in any manner that would violate the Ground Lease or any Permitted Encumbrances in any material respect or give a third party any right to acquire title to the Property.

Section 8.02. Compliance . Lessee’s use and occupation of the Property, and the condition thereof, shall, at Lessee’s sole cost and expense, comply fully with all Legal Requirements and all restrictions, covenants and encumbrances of record, and any owner obligations under such Legal Requirements, or restrictions, covenants and encumbrances of record, with respect to the Property, in either event, the failure with which to comply could have a Material Adverse Effect. Without in any way limiting the foregoing provisions, Lessee shall comply with all Legal Requirements relating to anti‑terrorism, trade embargos, economic sanctions, Anti-Money Laundering Laws, and the Americans with Disabilities Act of 1990, as such act may be amended from time to time, and all regulations promulgated thereunder, as it affects the Property now or hereafter in effect, provided that, notwithstanding anything to the contrary contained in this Lease, Lessee shall have no obligation to repair, alter or modify the Premises to comply with the Americans with Disabilities Act of 1990, as such act may be amended from time to time (or similar Laws related to accessibility to, usability by, and discrimination against, disabled individuals) unless Lessee has received a notice of violation from the governmental agency authorized to enforce the Americans with Disabilities Act of 1990, as such act may be amended from time to time (or similar Laws related to accessibility to, usability by, and discrimination against, disabled individuals), and provided such notice of violation is not solicited or instigated by Lessor. Notwithstanding the foregoing, in the event Lessor were to make improvements or alterations to the Premises that would trigger compliance with the American with Disabilities Act of 1990, as such act may be amended from time to time (or similar Laws related to accessibility to, usability by, and discrimination against, disabled individuals), then Lessee shall comply therewith. Lessee shall obtain, maintain and comply with all required licenses and permits, both governmental and private, to use and operate the Properties as Permitted Facilities. Upon Lessor’s written request from time to time during the Lease Term, Lessee shall certify in writing to Lessor that Lessee’s representations, warranties and obligations under Section 5.05 and this Section 8.02 remain true and correct and have not been breached. Lessee shall immediately notify Lessor in writing if any of such representations, warranties or covenants are no longer true or have been breached or if Lessee has a reasonable basis to believe that they may no longer be true or have been breached. In connection with such an event, Lessee shall comply with all Legal Requirements and directives of Governmental Authorities and, at Lessor’s request, provide to Lessor copies of all notices, reports and other communications exchanged with, or received from, Governmental Authorities relating to such an event. Lessee shall also reimburse Lessor for all Costs incurred by Lessor in evaluating the effect of such an event on the Property and this Lease, in obtaining any necessary license from Governmental Authorities as may be necessary for Lessor to enforce its rights under the Transaction Documents, and in complying with all Legal Requirements applicable to Lessor as the result of the existence of such an event and for any penalties or fines imposed upon Lessor as a result thereof. Lessee will use its best efforts to prevent any act or condition to exist on or about the Property that will materially increase any insurance rate thereon, except when such acts are required in the normal course of its business and Lessee shall pay for such increase. Lessee agrees that it will defend, indemnify and hold harmless the Indemnified Parties from and against any and all Losses caused by, incurred or resulting from Lessee’s failure to comply with its obligations under this Section.

Exhibit 10.15

Section 8.03. Environmental .

(a) Covenants .

(i) Lessee covenants to Lessor during the Lease Term, subject to the limitations of subsection (ii) below, as follows:

(A) All uses and operations on or of the Property, including the use, handling, and Release of Hazardous Materials, whether by Lessee or any other Person, shall be in material compliance with all Environmental Laws and permits issued pursuant thereto.

(B) There shall be no Releases in, on, under or from the Property, except in Permitted Amounts.

(D) Lessee shall keep the Property or cause the Property to be kept free and clear of all Environmental Liens, whether due to any act or omission of Lessee or any other Person.

(E) Lessee shall not act or fail to act or allow any other tenant, occupant, guest, customer or other user of the Property to act or fail to act in any way that (1) materially increases a risk to human health or the environment, (2) poses an unreasonable or unacceptable risk of harm to any Person or the environment (whether on or off the Property), (3) has a Material Adverse Effect, (4) is contrary to any material requirement set forth in the insurance policies maintained by Lessee or Lessor, (5) constitutes a public or private nuisance or constitutes waste, (6) materially violates any covenant, condition, agreement or easement applicable to the Property, or (7) results in any reopening or reconsideration of any prior investigation or results in a new investigation by a Governmental Authority having jurisdiction over the Property.

(F) Lessee shall, at its sole cost and expense, fully and expeditiously cooperate in all activities pursuant to this Section 8.03, including but not limited to providing all relevant information and making knowledgeable persons available for interviews.

(ii) Notwithstanding any provision of this Lease to the contrary, an Event of Default shall not be deemed to have occurred as a result of the failure of Lessee to satisfy any one or more of the covenants set forth in subsections (A) through (E) above provided that Lessee shall be in material compliance with the legally-binding requirements, if any, of any Governmental Authority with respect to Remediation or any relevant covenant.

(b) Notification Requirements . Lessee shall immediately notify Lessor in writing upon Lessee obtaining actual knowledge of (i) any Releases in, on, under or from the Property in violation of Environmental Law, or Hazardous Materials migrating from other properties towards the Property; (ii) any material non‑compliance with any Environmental Laws related in any way to the Property; (iii) any actual or pending Environmental Lien or activity use limitation; (iv) any Remediation of environmental conditions relating to the Property required or proposed by applicable Governmental Authorities; and (v) any written or oral notice or other communication of which Lessee becomes aware from any source whatsoever (including but not limited to a Governmental Authority) relating in any way to liability for Hazardous Materials, above ground storage tanks, USTs, and/or Remediation

Exhibit 10.15

thereof at or on the Property and/or any actual or potential administrative or judicial proceedings with respect to the environmental conditions of the Property. Lessee shall, upon Lessor’s written request, deliver to Lessor a certificate stating that Lessee is and has been in full compliance with all of the environmental representations, warranties and covenants in this Lease.

(c) Remediation . During the Lease Term, Lessee shall, at its sole cost and expense, and without limiting any other provision of this Lease, effectuate any Remediation, pursuant to a legally-binding requirement of any Governmental Authority, of any condition (including, but not limited to, a Release or Threatened Release) in, on, under or from the Property and take any other reasonable action deemed necessary by any Governmental Authority for protection of human health or the environment with respect to such conditions. Should Lessee fail to undertake any such required Remediation in accordance with the preceding sentence (after Lessee has exhausted any valid and lawful challenges to any requests for Remediation by Governmental Authorities if Lessee chooses to challenge any such requests), Lessor, after written notice to Lessee and Lessee’s failure to promptly undertake such Remediation, shall be permitted to complete such Remediation, and all Costs incurred in connection therewith shall be paid by Lessee. Any Cost so paid by Lessor, together with interest at the Default Rate, shall be deemed to be Additional Rental hereunder and shall be immediately due from Lessee to Lessor. Notwithstanding the foregoing, Lessee shall not have any obligations with respect to any Remediation and/or any other requirements of Governmental Authorities that are solicited or instigated by the Indemnified Parties; provided, however , that Remediation and/or other requirements of Governmental Authorities that result from Lessor’s exercise of its rights pursuant to Section 8.03(e) shall be subject to Lessee’s Remediation obligation pursuant to this Section 8.03(c).

(d) Indemnification .

(i) Lessee shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless each of the Indemnified Parties from and against any and all Losses, including, but not limited to, all Costs of Remediation, arising out of or in any way relating to the environmental condition of the Property existing prior to and/or during the Lease Term (including, but not limited to, Releases, Hazardous Materials, Regulated Materials, above ground storage tanks, USTs, or other environmental matters in violation of Environmental Laws concerning the Property), provided that such Losses result from claims brought by third parties or legally-binding requirements of Governmental Authorities and provided that such third party claims or legally-binding requirements of Governmental Authorities are not solicited or instigated by the Indemnified Parties; provided, however , that Losses resulting from (A) claims or legally-binding requirements by Governmental Authorities that result from Lessor’s exercise of its rights pursuant to Section 8.03(e) during the term of the Lease and/or (B) following expiration or earlier termination of this Lease, Lessor’s compliance with Remediation obligations that are affirmatively required under Environmental Laws, shall be subject to Lessee’s indemnity obligation pursuant to this Section 8.03(d)(i). It is expressly understood and agreed that Lessee’s obligations under this Section shall survive the expiration or earlier termination of this Lease for any reason as set forth in Section 8.03(f).

(ii) It is expressly understood and agreed that:

(A) Notwithstanding any other provisions in this Lease, the provisions in this Section 8.03 shall be the sole and exclusive provisions in this Lease with respect to indemnity claims and/or Losses by the Indemnified Parties related to or arising from Hazardous Materials, Regulated Materials, Releases, Remediation, Environmental Laws, and all other environmental conditions and/or environmental matters.

Exhibit 10.15

(B) The provisions in this Section 8.03 and in Section 12.02 of this Lease, and the remedies pursuant to the Purchase and Sale Agreement between Lessor and IEC Electronics Corp. − Albuquerque, dated September 30, 2016, shall be the sole and exclusive remedies of the Indemnified Parties against Lessee and its Affiliates with respect to Losses related to or arising from Hazardous Materials, Regulated Materials, Releases, Remediation, Environmental Laws, and all other environmental conditions and/or environmental matters and/or all other Losses related to, arising under, and/or that could be the subject of a claim pursuant to, Environmental Laws.

(e) Right of Entry . In the event that Lessor has a reasonable basis to believe that a Release in material violation of any Environmental Law or any other material violation of any Environmental Law has occurred, Lessor and any other Person designated by Lessor, including but not limited to any receiver, any representative of a Governmental Authority, and any environmental consultant, shall have the right, but not the obligation, to enter upon the Property at all reasonable times to assess any and all aspects of the environmental condition of the Property and its use, including but not limited to conducting any environmental assessment or audit (the scope of which shall be determined in Lessor’s sole and absolute discretion) and taking reasonable and appropriate samples of soil, groundwater or other water, air, or building materials, and conducting other invasive testing. Lessee shall cooperate with and provide access to Lessor and any other Person designated by Lessor. Lessee shall pay the Costs of any such assessment or investigation.

(f) Survival . Notwithstanding anything to the contrary contained in Section 8.03, the obligations of Lessee and the rights and remedies of Lessor under this Section 8.03 shall survive the termination, expiration and/or release of this Lease; provided, however , if Lessee provides Lessor with a Phase I environmental report with respect to the Property from a vendor approved by Lessor in its reasonable discretion, dated within thirty (30) days of the expiration or sooner termination of this Lease, which report is in all respects acceptable to Lessor (in its reasonable discretion), then in such event Lessee’s obligations under this Section 8.03 with respect to such Property shall survive the expiration or earlier termination of this Lease for a period of five (5) years.

ARTICLE IX

ADDITIONAL COVENANTS

Section 9.01. Performance at Lessee’s Expense . Lessee acknowledges and confirms that Lessor may impose reasonable administrative, processing or servicing fees, and collect its reasonable attorneys’ fees, costs and expenses in connection with (a) any extension, renewal, modification, amendment and termination of this Lease requested by Lessee; (b) any release or substitution of Property requested by Lessee; (c) the procurement of consents, waivers and approvals with respect to the Property or any matter related to this Lease requested by Lessee; (d) the review of any assignment or sublease or proposed assignment or sublease or the preparation or review of any subordination or non‑disturbance agreement requested by Lessee; (e) the collection, maintenance and/or disbursement of reserves created under this Lease or the other Transaction Documents (following an Event of Default); and (f) inspections required to make certain determinations under this Lease or the other Transaction Documents following Lessor’s reasonable belief of a breach under this Lease or any other Transaction Documents.

Section 9.02. Inspection . Lessor and its authorized representatives shall have the right, at all reasonable times and upon giving reasonable prior written notice (except in the event of an emergency, in which case no prior notice shall be required), to enter the Property or any part thereof and inspect the same. Lessee hereby waives any claim for damages for any injury or inconvenience to or interference with Lessee’s business, any loss of occupancy or quiet enjoyment of the Property and any other loss occasioned by such

Exhibit 10.15

entry, but, subject to Section 10.01, excluding damages arising as a result of the negligence or willful misconduct of Lessor.

Section 9.03. Financial Information .

(a) Financial Statements . Within forty five (45) days after the end of each fiscal quarter and within one hundred twenty (120) days after the end of each fiscal year of Lessee and Lessee Reporting Entities, Lessee shall deliver to Lessor (i) complete consolidated financial statements that consolidate Lessee and Lessee Reporting Entities, including a balance sheet, profit and loss statement, statement of stockholders’ equity and statement of cash flows and all other related schedules for the fiscal period then ended, such statements to detail separately interest expense, income taxes, non-cash expenses, non-recurring expenses, operating lease expense and current portion of long-term debt - capital leases; and (ii) income statements for the business at the Property. All such financial statements shall be prepared in accordance with GAAP, and shall be certified to be accurate and complete by an officer or director of each Lessee Reporting Entity. The financial statements delivered to Lessor need not be audited, but Lessee shall deliver to Lessor copies of any audited financial statements of the Lessee Reporting Entities which may be prepared, as soon as they are available.

(b) Other Information . Notwithstanding any provision contained herein, upon request at any time, Lessee will provide to Lessor, at no additional cost or expense to Lessee, any and all financial information and/or financial statements of Lessee Reporting Entities (and in the form or forms) as reasonably requested by Lessor including, but not limited to, as requested by Lessor in connection with Lessor’s filings with or disclosures to the Securities and Exchange Commission or other Governmental Authority.

Section 9.04. OFAC Laws . Upon receipt of notice or upon actual knowledge thereof, Lessee shall immediately notify Lessor in writing if any Person owning (directly or indirectly) any interest in any of the Lessee Entities, or any director, officer, shareholder, member, manager or partner of any of such holders is a Person whose property or interests are subject to being blocked under any of the OFAC Laws, or is otherwise in violation of any of the OFAC Laws, or is under investigation by any Governmental Authority for, or has been charged with, or convicted of, drug trafficking, terrorist‑related activities or any violation of the Anti‑Money Laundering Laws, has been assessed civil penalties under these or related Laws, or has had funds seized or forfeited in an action under these or related Laws; provided, however , that the covenant in this Section 9.04 shall not apply to any Person to the extent such Person’s interest is in or through a U.S. Publicly Traded Entity.

Section 9.05. Estoppel Certificate . At any time, and from time to time, Lessee shall, promptly and in no event later than ten (10) days after a request from Lessor or any Lender or mortgagee of Lessor, execute, acknowledge and deliver to Lessor or such Lender or mortgagee, as the case may be, a certificate in the form supplied by Lessor, certifying: (a) that Lessee has accepted the Property; (b) that this Lease is in full force and effect and has not been modified (or if modified, setting forth all modifications), or, if this Lease is not in full force and effect, the certificate shall so specify the reasons therefor; (c) the commencement and expiration dates of the Lease Term; (d) the date to which the Rentals have been paid under this Lease and the amount thereof then payable; (e) whether there are then any existing defaults by Lessor in the performance of its obligations under this Lease, and, if there are any such defaults, specifying the nature and extent thereof; (f) that no notice has been received by Lessee of any default under this Lease which has not been cured, except as to defaults specified in the certificate; (g) the capacity of the Person executing such certificate, and that such Person is duly authorized to execute the same on behalf of Lessee; (h) that neither Lessor nor any Lender or mortgagee has actual involvement in the management or control of decision making related to the operational aspects or the day‑to‑day operation of the Property, including any handling or disposal of Hazardous Materials, provided that Lessee determines, in its reasonable discretion, that such statements are true and accurate when any requests for such certifications are made; and (i) any other

Exhibit 10.15

information reasonably requested by Lessor or any Lender or mortgagee, as the case may be. If Lessee shall fail or refuse to sign a certificate in accordance with the provisions of this Section within ten (10) days following a request by Lessor, Lessee irrevocably constitutes and appoints Lessor as its attorney‑in‑fact to execute and deliver the certificate to any such third party, it being stipulated that such power of attorney is coupled with an interest and is irrevocable and binding.

ARTICLE X

RELEASE AND INDEMNIFICATION

Section 10.01. Lessee’s Release and Indemnification . Lessee agrees to use and occupy the Property at its own risk and hereby releases Lessor and Lessor’s agents and employees from all claims for any damage or injury to the full extent permitted by Law, except to the extent caused by Lessor’s gross negligence or willful misconduct. Except to the extent caused by Lessor’s gross negligence or willful misconduct Lessee agrees that Lessor shall not be responsible or liable to Lessee or Lessee’s employees, agents, customers, licensees or invitees for bodily injury, personal injury or property damage occasioned by the acts or omissions of any other lessee or any other Person. Lessee agrees that any employee or agent to whom the Property or any part thereof shall be entrusted by or on behalf of Lessee shall be acting as Lessee’s agent with respect to the Property or any part thereof, except to the extent caused by Lessor’s gross negligence or willful misconduct and neither Lessor nor Lessor’s agents, employees or contractors shall be liable for any loss of or damage to the Property or any part thereof. Lessee shall indemnify, protect, defend and hold harmless each of the Indemnified Parties from and against any and all Losses (excluding Losses suffered by an Indemnified Party arising out of the gross negligence or willful misconduct of such Indemnified Party; provided, however , that the term “gross negligence” shall not include gross negligence imputed as a matter of Law to any of the Indemnified Parties solely by reason of Lessor’s interest in the Property or Lessor’s failure to act in respect of matters which are or were the obligation of Lessee under this Lease) caused by, incurred or resulting from Lessee’s operations or by Lessee’s use and occupancy of the Property, whether relating to its original design or construction, latent defects, alteration, maintenance, use by Lessee or any Person thereon, supervision or otherwise, or from any breach of, default under, or failure to perform, any term or provision of this Lease by Lessee, its officers, employees, agents or other Persons. It is expressly understood and agreed that Lessee’s obligations under this Section shall survive the expiration or earlier termination of this Lease for any reason whatsoever.

Section 10.02. Lessor’s Indemnification . Lessor shall indemnify, protect, defend and hold harmless Lessee from and against any and all Losses suffered by or claimed by Lessee directly based on or arising out of ore resulting from (i) Lessor’s gross negligence or willful misconduct, or (ii) any material breach by Lessor in the performance of observance of its covenants or obligations under this Lease.

ARTICLE X1

Condemnation and Casualty

Section 11.01. Notification . Lessee shall promptly give Lessor written notice of (a) any Condemnation of the Property, (b) the commencement of any proceedings or negotiations which might result in a Condemnation of the Property, and (c) any Casualty to the Property or any part thereof. Such notice shall provide a general description of the nature and extent of such Condemnation, proceedings, negotiations or Casualty, and shall include copies of any documents or notices received in connection therewith. Thereafter, Lessee shall promptly send Lessor copies of all notices, correspondence and pleadings relating to any such Condemnation, proceedings, negotiations or Casualty.

Section 11.02. Total Condemnation . In the event of a Condemnation of all or substantially all of the Property, and if as a result of such Condemnation: (i) access to the Property to and from the publicly dedicated roads adjacent to the Property as of the Effective Date is permanently and materially impaired

Exhibit 10.15

such that Lessee no longer has access to such dedicated road; (ii) there is insufficient parking to operate the Property as a Permitted Facility under applicable Laws; or (iii) the Condemnation includes a portion of the building such that the remaining portion is unsuitable for use as a Permitted Facility, as determined by Lessee in the exercise of good faith business judgment (and Lessee provides to Lessor an officer’s certificate executed by an officer of Lessee certifying to the same) (each such event, a “ Total Condemnation ”), then, in such event:

(a) Termination of Lease . On the date of the Total Condemnation, all obligations of either party hereunder shall cease; provided, however , that Lessee’s obligations to the Indemnified Parties under any indemnification provisions of this Lease and Lessee’s obligation to pay Rental and all other Monetary Obligations (whether payable to Lessor or a third party) accruing under this Lease prior to the date of termination shall survive such termination. If the date of such Total Condemnation is other than the first day of a month, the Base Monthly Rental for the month in which such Total Condemnation occurs shall be apportioned based on the date of the Total Condemnation.

(b) Net Award . Subject to Section 11.07 below, Lessor shall be entitled to receive the entire Net Award in connection with a Total Condemnation without deduction for any estate vested in Lessee by this Lease, and Lessee hereby expressly assigns to Lessor all of its right, title and interest in and to every such Net Award and agrees that Lessee shall not be entitled to any Net Award or other payment for the value of Lessee’s leasehold interest in this Lease.

Section 11.03. Partial Condemnation or Casualty . In the event of a Condemnation which is not a Total Condemnation (each such event, a “ Partial Condemnation ”), or in the event of a Casualty:

(a) Net Awards . All Net Awards shall be paid to Lessor.

(b) Continuance of Lease . This Lease shall continue in full force and effect upon the following terms:

(i) All Rental and other Monetary Obligations due under this Lease shall continue unabated.

(ii) Lessee shall promptly commence and diligently prosecute restoration of the Property to the same condition, as nearly as practicable, as prior to the Partial Condemnation or Casualty as approved by Lessor in its commercially reasonable discretion. Subject to the terms and provisions of the Mortgage and upon the written request of Lessee (accompanied by evidence reasonably satisfactory to Lessor that such amount has been paid or is due and payable and is properly part of such costs, and that Lessee has complied with the terms of Section 7.02 in connection with the restoration), Lessor shall promptly make available in installments, subject to reasonable conditions for disbursement imposed by Lessor, an amount up to but not exceeding the amount of any Net Award received by Lessor with respect to such Partial Condemnation or Casualty. Prior to the disbursement of any portion of the Net Award with respect to a Casualty, Lessee shall provide evidence reasonably satisfactory to Lessor of the payment of restoration expenses by Lessee up to the amount of the insurance deductible applicable to such Casualty. Lessor shall be entitled to keep any portion of the Net Award which may be in excess of the cost of restoration, and Lessee shall bear all additional Costs of such restoration in excess of the Net Award.

(c) Notwithstanding anything contained in this Section 11.03 and Section 7.01 to the contrary, if during the final twelve (12) months of the Initial Term or any Extension Term, the Property is destroyed or damaged by a Casualty to such an extent that (i) the Property is rendered unsuitable for use as a Permitted Facility, and (ii) the estimated time to rebuild the Property exceeds 180 days, and provided that the damage or destruction is a Casualty fully insured by Lessee as required by

Exhibit 10.15

this Lease, Lessee may terminate this Lease with respect to the Property by giving notice to Lessor within thirty (30) days after the date of such Casualty. If Lessee elects to terminate this Lease pursuant to this Section 11.03(c), Lessor shall be entitled to all insurance proceeds paid or payable under the insurance policies required to be maintained by Lessee under this Lease that are attributable to the Property, and Lessee, as a condition to the effectiveness of such termination, on or before the date of termination, (A) shall pay to Lessor the amount of the deductibles under any such insurance policies (the “ Casualty Termination Payment ”), and (B) execute an agreement, accepted by the insurer, whereby the parties agree that Lessor is the sole party entitled to adjust losses under such insurance policies, that all losses under such insurance policies shall be payable solely to Lessor, and insurer has no defense or offset to the payment of claims under such insurance policies and such insurance policies are in full force and effect. Upon the giving of notice by Lessee to terminate pursuant to this Section 11.03(c), and Lessee's payment of the Casualty Termination Payment (if any), any outstanding Monetary Obligation and the prorated portion of all Rental and Monetary Obligations, this Lease shall automatically terminate with respect to the Property (except that any obligations which expressly survive any termination of this Lease shall survive) as of the date such notice and Casualty Termination Payment (if any) and other Monetary Obligations are paid.

Section 11.04. Temporary Taking . In the event of a Condemnation of all or any part of the Property for a temporary use (a “ Temporary Taking ”), this Lease shall remain in full force and effect without any reduction of Base Annual Rental, Additional Rental or any other Monetary Obligation payable hereunder. Except as provided below, Lessee shall be entitled to the entire Net Award for a Temporary Taking, unless the period of occupation and use by the condemning authorities shall extend beyond the date of expiration of this Lease, in which event the Net Award made for such Temporary Taking shall be apportioned between Lessor and Lessee as of the date of such expiration. At the termination of any such Temporary Taking, Lessee will, at its own cost and expense and pursuant to the provisions of Section 7.02, promptly commence and complete restoration of the Property.

Section 11.05. Adjustment of Losses . Any loss under any property damage insurance required to be maintained by Lessee shall be adjusted by Lessor and Lessee. Any Net Award relating to a Total Condemnation or a Partial Condemnation shall be adjusted by Lessor or, at Lessor’s election, Lessee. Notwithstanding the foregoing or any other provisions of this Section 11.05 to the contrary, if at the time of any Condemnation or any Casualty or at any time thereafter an Event of Default shall have occurred and be continuing, Lessor is hereby authorized and empowered but shall not be obligated, in the name and on behalf of Lessee and otherwise, to file and prosecute Lessee’s claim, if any, for a Net Award on account of such Condemnation or such Casualty and to collect such Net Award and apply the same to the curing of such Event of Default and any other then existing Event of Default under this Lease and/or to the payment of any amounts owed by Lessee to Lessor under this Lease, in such order, priority and proportions as Lessor in its discretion shall deem proper.

Section 11.06. Lessee Obligation in Event of Casualty . During all periods of time following a Casualty, Lessee shall take reasonable steps to ensure that the Property is secure and does not pose any risk of harm to any adjoining property and Persons (including owners or occupants of such adjoining property).

Section 11.07. Lessee Awards and Payments . Notwithstanding any provision contained in this Article XI, Lessee shall be entitled to claim and receive any award or payment from the condemning authority expressly granted for the taking of any personal property owned by Lessee, any insurance proceeds with respect to any personal property owned by Lessee, the interruption of its business and moving expenses (subject, however, to the provisions of Section 6.03(a)(iv) above), but only if such claim or award does not adversely affect or interfere with the prosecution of Lessor’s claim for the Condemnation or Casualty, or otherwise reduce the amount recoverable by Lessor for the Condemnation or Casualty.

Exhibit 10.15

ARTICLE XII

DEFAULT, CONDITIONAL LIMITATIONS,

REMEDIES AND MEASURE OF DAMAGES

Section 12.01. Event of Default . Each of the following shall be an event of default by Lessee under this Lease (each, an “ Event of Default ”):

(a) if any representation or warranty of Lessee set forth in this Lease is false in any material respect when made, or if Lessee renders any materially false statement or account when made;

(b) if any Rental or other Monetary Obligation due under this Lease is not paid within three (3) Business Days after written notice of failure to pay the same; provided, however, that Lessor shall only be obligated to provide such written notice and the three (3) Business Day cure period shall only be available twice in any twelve (12) month period; provided, further, that any delay in the payment of Rental as a result of a technical error in the wiring and/or automated clearinghouse process shall not constitute an Event of Default hereunder so long as the same is corrected within one (1) Business Day of the date Lessee receives notice thereof;

(c) if Lessee fails to pay, prior to delinquency, any taxes, assessments or other charges the failure of which to pay will result in the imposition of a lien against the Property;

(d) subject to Lessee’s rights pursuant to Section 8.01(b), if Lessee vacates or abandons any Property for thirty (30) consecutive days;

(e) if there is an Insolvency Event affecting Lessee or the Guarantor;

(f) if Lessee fails to observe or perform any of the other covenants, conditions or obligations of Lessee in this Lease after Lessor shall have given Lessee notice thereof and a period of thirty (30) days shall have elapsed, during which period Lessee may correct or cure such failure, upon failure of which an Event of Default shall be deemed to have occurred hereunder without further notice or demand of any kind being required. If such failure cannot reasonably be cured within such thirty (30)‑day period, as determined by Lessor in its reasonable discretion, and Lessee is diligently pursuing a cure of such failure, then Lessee shall have a reasonable period to cure such failure beyond such thirty (30)‑day period, which shall in no event exceed ninety (90) days after receiving notice of such failure from Lessor. If Lessee shall fail to correct or cure such failure within such ninety (90)‑day period, an Event of Default shall be deemed to have occurred hereunder without further notice or demand of any kind being required;

(g) if a final, nonappealable judgment is rendered by a court against Lessee which has a Material Adverse Effect, and is not discharged or provision made for such discharge within ninety (90) days from the date of entry thereof;

(h) if Lessee or Guarantor shall be liquidated or dissolved or if Lessee or Guarantor shall begin proceedings towards its respective liquidation or dissolution;

(i) if the estate or interest of Lessee in the Property shall be levied upon or attached in any proceeding and such estate or interest is about to be sold or transferred or such process shall not be vacated or discharged within ninety (90) days after it is made; or

(j) if there is an “Event of Default” or other breach or default by Lessee or Guarantor under any of the other Transaction Documents or any Other Agreement , after the passage of all

Exhibit 10.15

applicable notice and cure or grace periods; provided, however , in the event that this Lease has been the subject of a Securitization and any Other Agreement has not been the subject of the same Securitization or any series relating to such Securitization, an “Event of Default” under such Other Agreement shall not constitute an Event of Default under this Lease.

Section 12.02. Remedies . Upon the occurrence of an Event of Default, with or without notice or demand, except as otherwise expressly provided herein or such other notice as may be required by statute and cannot be waived by Lessee, Lessor shall be entitled to exercise, at its option, concurrently, successively, or in any combination, all remedies available at Law or in equity, including, without limitation, any one or more of the following:

(a) to terminate this Lease, whereupon Lessee’s right to possession of the Property shall cease and this Lease, except as to Lessee’s liability, shall be terminated;

(b) to the extent not prohibited by applicable Law, to (i) re-enter and take possession of the Property (or any part thereof), any permits and other rights or privileges of Lessee pertaining to the use and operation of the Property, and (ii) expel Lessee and those claiming under or through Lessee, without being deemed guilty in any manner of trespass or becoming liable for any loss or damage resulting therefrom, without resort to legal or judicial process, procedure or action. No notice from Lessor hereunder or under a forcible entry and detainer statute or similar Law shall constitute an election by Lessor to terminate this Lease unless such notice specifically so states. If Lessee shall, after default, voluntarily give up possession of the Property to Lessor, deliver to Lessor or its agents the keys to the Property, or both, such actions shall be deemed to be in compliance with Lessor’s rights and the acceptance thereof by Lessor or its agents shall not be deemed to constitute a termination of the Lease. Lessor reserves the right following any re‑entry and/or reletting to exercise its right to terminate this Lease by giving Lessee written notice thereof, in which event this Lease will terminate;

(c) to bring an action against Lessee for any damages sustained by Lessor or any equitable relief available to Lessor and to the extent not prohibited by applicable Law;

(d) to relet the Property or any part thereof for such term or terms (including a term which extends beyond the original Lease Term), at such rentals and upon such other terms as Lessor, in its sole discretion, may determine, with all proceeds received from such reletting being applied to the Rental and other Monetary Obligations due from Lessee in such order as Lessor may, in its sole discretion, determine, which other Monetary Obligations include, without limitation, all repossession costs, brokerage commissions, attorneys’ fees and expenses, alteration, remodeling and repair costs and expenses of preparing for such reletting. Lessor reserves the right following any re‑entry and/or reletting to exercise its right to terminate this Lease by giving Lessee written notice thereof, in which event this Lease will terminate as specified in said notice. Lessor shall have an obligation to mitigate its damages and relet the Property in accordance with applicable law; provided, however , that in no event shall Lessor’s obligation to mitigate its damages be interpreted to require Lessor to lease the Property to any Person other than a Qualified Operator upon terms and conditions reasonably acceptable to Lessor;

(e) except to the extent prohibited by applicable Law to accelerate and recover from Lessee all Rental and other Monetary Obligations due and owing and scheduled to become due and owing under this Lease both before and after the date of such breach for the entire original scheduled Lease Term less the then fair market rental value of the Property for such period (taking into consideration any reasonable reletting period and deducting therefrom all costs and expenses which Lessor would reasonably incur in connection with reletting or subletting, including without limitation, brokerage commissions, legal expenses and expenses of preparing the Property for

Exhibit 10.15

Lessee or subtenant(s) occupancy), which sum shall be discounted to its then present value in accordance with accepted financial practice using a rate equal to seven percent (7.0%) per annum;

(f) to recover from Lessee all Costs paid or incurred by Lessor as a result of such breach, regardless of whether or not legal proceedings are actually commenced;

(g) to immediately or at any time thereafter, and with or without notice, at Lessor’s sole option but without any obligation to do so, correct such breach or default and charge Lessee all Costs incurred by Lessor therein. Any sum or sums so paid by Lessor, together with interest at the Default Rate, shall be deemed to be Additional Rental hereunder and shall be immediately due from Lessee to Lessor. Any such acts by Lessor in correcting Lessee’s breaches or defaults hereunder shall not be deemed to cure said breaches or defaults or constitute any waiver of Lessor’s right to exercise any or all remedies set forth herein;

(h) to immediately or at any time thereafter, and with or without notice, except as required herein, set off any money of Lessee held by Lessor under this Lease or any other Transaction Document or any Other Agreement against any sum owing by Lessee hereunder;

(i) Without limiting the generality of the foregoing or limiting in any way the rights of Lessor under this Lease or otherwise under applicable Laws, at any time after the occurrence, and during the continuance, of an Event of Default, Lessor shall be entitled to apply for and have a receiver appointed under applicable Law by a court of competent jurisdiction (by ex parte motion for appointment without notice) in any action taken by Lessor to enforce its rights and remedies hereunder in order to protect and preserve Lessor’s interest under this Lease or in the Property and the Personalty, and in connection therewith, LESSEE HEREBY IRREVOCABLY CONSENTS TO AND WAIVES ANY RIGHT TO OBJECT TO OR OTHERWISE CONTEST THE APPOINTMENT OF A RECEIVER AFTER THE OCCURRENCE, AND DURING THE CONTINUANCE, OF AN EVENT OF DEFAULT; and/or

(j) to seek any equitable relief available to Lessor, including, without limitation, the right of specific performance.

Section 12.03. Cumulative Remedies . All powers and remedies given by Section 12.02 to Lessor, subject to applicable Law, shall be cumulative and not exclusive of one another or of any other right or remedy or of any other powers and remedies available to Lessor under this Lease, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements of Lessee contained in this Lease, and no delay or omission of Lessor to exercise any right or power accruing upon the occurrence of any Event of Default shall impair any other or subsequent Event of Default or impair any rights or remedies consequent thereto. Every power and remedy given by this Section or by Law to Lessor may be exercised from time to time, and as often as may be deemed expedient, by Lessor, subject at all times to Lessor’s right in its sole judgment to discontinue any work commenced by Lessor or change any course of action undertaken by Lessor.

ARTICLE XIII

MORTGAGE, SUBORDINATION AND ATTORNMENT

Section 13.01. No Liens . Lessor’s interest in this Lease and/or the Property shall not be subordinate to any liens or encumbrances placed upon the Property by or resulting from any act of Lessee, and nothing herein contained shall be construed to require such subordination by Lessor. NOTICE IS HEREBY GIVEN THAT LESSEE IS NOT AUTHORIZED TO PLACE OR ALLOW TO BE PLACED ANY LIEN, MORTGAGE, DEED OF TRUST, DEED TO SECURE DEBT, SECURITY INTEREST OR ENCUMBRANCE OF ANY KIND UPON ALL OR ANY PART OF THE PROPERTY OR LESSEE’S LEASEHOLD INTEREST THEREIN, AND

Exhibit 10.15

ANY SUCH PURPORTED TRANSACTION SHALL BE VOID. Notwithstanding the foregoing, Lessor acknowledges and permits the lien of Manufacturers and Traders Trust Company (“M&T”) in all of the personal property of Lessee securing indebtedness incurred or guaranteed by Lessee as of the date of this Lease.

Section 13.02. Subordination . This Lease at all times shall automatically be subordinate to the lien of any and all ground leases and Mortgages now or hereafter placed upon the Property by Lessor, upon the condition that any such ground lessor or mortgagee shall agree in writing that Lessee shall have the right to remain in possession of the Property under the terms of this Lease, notwithstanding any default in any or all such ground leases or Mortgages, or after the foreclosure of such Mortgages, so long as no Event of Default shall have occurred and be continuing. Lessee covenants and agrees to execute and deliver, upon demand, any reasonably requested further instruments evidencing such subordination. In addition, Lessor agrees to notify any such ground lessor or mortgagee that Lessor (or its successors and/or assigns, as applicable) shall be bound by the terms and conditions of that certain Landlord Lien Subordination dated as of the date hereof by and between Lessor and Manufacturers and Traders Trust Company, as Lessee’s lender, as such agreement may be amended or otherwise modified from time to time.

Section 13.03. Attornment . In the event any purchaser or assignee of any Lender at a foreclosure sale acquires title to the Property, or in the event that any Lender or any purchaser or assignee otherwise succeeds to the rights of Lessor as landlord under this Lease, Lessee shall attorn to Lender or such purchaser or assignee, as the case may be (a “ Successor Lessor ”), and recognize the Successor Lessor as lessor under this Lease, and, subject to the provisions of this Article XIII, this Lease shall continue in full force and effect as a direct lease between the Successor Lessor and Lessee, provided that the Successor Lessor shall only be liable for any obligations of Lessor under this Lease which accrue after the date that such Successor Lessor acquires title. The foregoing provision shall be self‑operative and effective without the execution of any further instruments.

Section 13.04. Execution of Additional Documents . Although the provisions in this Article XIII shall be self‑operative and no future instrument of subordination shall be required, upon request by Lessor, Lessee shall execute and deliver such additional reasonable instruments as may be reasonably required for such purposes.

Section 13.05. Notice to Lender . Lessee shall give written notice to any Lender having a recorded lien upon the Property or any part thereof of which Lessee has been notified of any breach or default by Lessor of any of its obligations under this Lease and give such Lender at least sixty (60) days beyond any notice period to which Lessor might be entitled to cure such default before Lessee may exercise any remedy with respect thereto.

ARTICLE XIV

ASSIGNMENT

Section 14.01. Assignment by Lessor . As a material inducement to Lessor’s willingness to enter into the transactions contemplated by this Lease (the “ Transaction ”) and the other Transaction Documents, Lessee hereby agrees that Lessor may, from time to time and at any time and without the consent of Lessee, engage in all or any combination of the following, or enter into agreements in connection with any of the following or in accordance with requirements that may be imposed by applicable securities, tax or other Laws: (a) the sale, assignment, grant, conveyance, transfer, financing, re‑financing, purchase or re‑acquisition of the Property, this Lease or any other Transaction Document, Lessor’s right, title and interest in this Lease or any other Transaction Document, the servicing rights with respect to any of the foregoing, or participations in any of the foregoing; or (b) a Securitization and related transactions. Without in any way limiting the foregoing, the parties acknowledge and agree that Lessor, in its sole discretion, may assign this Lease or any interest herein to another Person in order to maintain Lessor’s or any of its Affiliates’ status

Exhibit 10.15

as a REIT. In the event of any such sale or assignment other than a security assignment, Lessee shall attorn to such purchaser or assignee (so long as Lessor and such purchaser or assignee notify Lessee in writing of such transfer and such purchaser or assignee expressly assumes in writing the obligations of Lessor hereunder from and after the date of such assignment). At the request of Lessor, Lessee will execute such documents confirming the sale, assignment or other transfer and such other agreements as Lessor may reasonably request, provided that the same do not increase the liabilities and obligations of Lessee hereunder. Lessor shall be relieved, from and after the date of such transfer or conveyance, of liability for the performance of any obligation of Lessor contained herein, except for obligations or liabilities accrued prior to such assignment or sale.

Section 14.02. No Assignment by Lessee .

(a) Lessee acknowledges that Lessor has relied both on the business experience and creditworthiness of Lessee and upon the particular purposes for which Lessee intends to use the Property in entering into this Lease. Lessee shall not assign, transfer, convey, pledge or mortgage this Lease or any interest herein or any interest in Lessee, whether by operation of Law or otherwise, without the prior written consent of Lessor. At the time of any assignment of this Lease which is approved by Lessor, the assignee shall assume all of the obligations of Lessee under this Lease pursuant to a written assumption agreement in form and substance reasonably acceptable to Lessor. Such assignment of this Lease pursuant to this Section 14.02 shall not relieve Lessee of its obligations respecting this Lease unless otherwise agreed to by Lessor. Any assignment, transfer, conveyance, pledge or mortgage in violation of this Section 14.02 shall be voidable at the sole option of Lessor. Any consent to an assignment given by Lessor hereunder shall not be deemed a consent to any subsequent assignment.

(b) Notwithstanding anything to the contrary contained in this Section 14.02 and provided that no Event of Default has occurred and is continuing at the time of the proposed assignment or other transfer, and provided further that any assignee agrees to assume all of Lessee’s obligations under this Lease, Lessee shall have the right to assign or otherwise transfer all, but not less than all, of its interest in, to and under this Lease without Lessor’s consent to (i) an Affiliate of Lessee, (ii) any entity which purchases or otherwise acquires all or substantially all of the assets or equity interest of Lessee in a bona fide sale for fair market value, or (iii) a Qualified Operator (each, a “ Permitted Transfer ”). A “ Qualified Operator ” shall mean a Person who, for two (2) consecutive years immediately prior to the date of the proposed assignment or transfer, (A) has a CFCCR (defined below) of at least 2.0x; (B) generates EBITDA (defined below) of at least $12,500,000.00, and (C) has a Lease Adjusted Leverage (defined below) of no more than 4.0x; provided, however, that Lessee may satisfy the foregoing conditions of a Qualified Operator by providing, or causing to be provided, a guaranty agreement, in form and substance reasonably acceptable to and approved by Lessor, in writing, which guaranty shall be from an entity that meets the requirements of (A), (B) and (C) set forth in this Section 14.02. In the event that Lessee effects a Permitted Transfer pursuant to clause (iii), Lessee shall be released from any liability arising under this Lease from and after the date of such assignment and Guarantor shall be released from any liability arising under the Guaranty from and after the date of such assignment. In the event that Lessee effects a Permitted Transfer pursuant to clauses (i) or (ii), Lessee shall not be released from liability under this Lease nor shall Guarantor be released from liability under the Guaranty.

For purposes hereof:

“ CFCCR ” means with respect to the twelve month period of time immediately preceding the date of determination, the ratio calculated for such period of time, each as determined in accordance with GAAP, of (i) the sum of Consolidated Net Income (excluding non-cash income), Depreciation and Amortization, Interest Expense, income taxes, Operating Lease Expense and non-cash expenses to (ii) the sum of Operating Lease Expense

Exhibit 10.15

(excluding non-cash rent adjustments), scheduled principal payments of long term Debt, scheduled maturities of all Capital Leases, dividends and Interest Expense (excluding non-cash interest expense and amortization of non-cash financing expenses). For purposes of calculating the CFCCR, the following terms shall be defined as set forth below:

“ Capital Lease ” shall mean all leases of any property, whether real, personal or mixed, by a Person, which leases would, in conformity with GAAP, be required to be accounted for as a capital lease on the balance sheet of such Person. The term “Capital Lease” shall not include any operating lease.

“Consolidated Net Income ” shall mean with respect to the period of determination, the net income or net loss of a Person. In determining the amount of Consolidated Net Income, (i) adjustments shall be made for nonrecurring gains and losses or non-cash items allocable to the period of determination, (ii) deductions shall be made for, among other things, Depreciation and Amortization, Interest Expense, Operating Lease Expense, and (iii) no deductions shall be made for income taxes or charges equivalent to income taxes allocable to the period of determination, as determined in accordance with GAAP.

“ Debt ” shall mean with respect to a Person, and for the period of determination (i) indebtedness for borrowed money, (ii) subject to the limitation set forth in sub item (iv) below, obligations evidenced by bonds, indentures, notes or similar instruments, (iii) obligations under leases which should be, in accordance with GAAP, recorded as Capital Leases, and (iv) obligations under direct or indirect guarantees in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (iv) above, except for guaranty obligations of such Person, which, in conformity with GAAP, are not included on the balance sheet of such Person.

“ Depreciation and Amortization ” shall mean the depreciation and amortization accruing during any period of determination with respect to a Person, as determined in accordance with GAAP.

“ Interest Expense ” shall mean for any period of determination, the sum of all interest accrued or which should be accrued in respect of all Debt of a Person, as determined in accordance with GAAP.

“ Operating Lease Expense ” shall mean the sum of all payments and expenses incurred by a Person, under any operating leases during the period of determination, as determined in accordance with GAAP.

“EBITDA” means for the twelve (12) month period ending on the date of determination, the sum of a Person’s net income (loss) for such period plus, in each case to the extent previously deducted in calculating net income (loss): (i) income taxes, (ii) interest payments on all of its debt obligations (including any borrowings under short term credit facilities), (iii) all non-cash charges including depreciation and amortization, and (iv) Non-Recurring Items (defined below).

“EBITDAR” means the sum of a Person’s EBITDA and its total land and building rent for the twelve (12) month period ending on the date of determination.

Exhibit 10.15

“Lease Adjusted Leverage” means with respect to a Person, as of any applicable date, the sum of (i) ten (10) times such Person’s total land and building rent for the twelve (12) month period ending on the date of determination, and (ii) the total current balance of such Person’s total debt obligations (including any borrowings under short term credit facilities) on such date, divided by EBITDAR.

“Non-Recurring Items” shall mean with respect to a Person, items of the sum (whether positive or negative) of revenue minus expenses that, in the judgment of Lessor, are unusual in nature, occur infrequently and are not representative of the ongoing or future earnings or expenses of such Person.

Section 14.03. No Sale of Assets . Subject to Lessee’s rights under Section 14.02(b), without the prior written consent of Lessor, Lessee shall not sell all or substantially all of Lessee’s assets. Any sale of Lessee’s assets in violation of this Section 14.03, shall be voidable at the sole option of Lessor. Any consent to a sale of Lessee’s assets given by Lessor hereunder shall not be deemed a consent to any subsequent sale of Lessee’s assets.

Section 14.04. No Subletting . Lessee shall not sublet any or all of the Property without the prior written consent of Lessor, which may be withheld by Lessor in its sole discretion and any such purported subletting shall be void.

ARTICLE XV

NOTICES

Section 15.01. Notices . All notices, demands, designations, certificates, requests, offers, consents, approvals, appointments and other instruments given pursuant to this Lease shall be in writing and given by any one of the following: (a) hand delivery; (b) express overnight delivery service; (c) certified or registered mail, return receipt requested; or (d) email transmission, and shall be deemed to have been delivered upon (i) receipt, if hand delivered; (ii) the next Business Day, if delivered by a reputable express overnight delivery service; (iii) the third Business Day following the day of deposit of such notice with the United States Postal Service, if sent by certified or registered mail, return receipt requested; or (iv) transmission, if delivered by email transmission. Notices shall be provided to the parties and addresses (or electronic mail addresses) specified below:

Exhibit 10.15



If to Lessee:	IEC Electronics Corp - Albuquerque 105 Norton Street Newark, NY 14513 Attention: Michael T. Williams Email: mwilliams@iec-electronics.com

With a copy to:	Harter Secrest & Emery LLP 1600 Bausch & Lomb Place Rochester, New York 14604 Attention: Kelly A. Pronti, Esq. Email: kpronti@hselaw.com

If to Lessor:	STORE Capital Acquisitions, LLC 8501 E. Princess Drive, Suite 190 Scottsdale, AZ 85255 Attention:Michael T. Bennett Executive Vice President - General Counsel Email: mbennett@storecapital.com rdan Burke

With a copy to:	Kutak Rock LLP 1801 California Street, Suite 3000 Denver, CO 80202 Attention:Kristine Poston, Esq. Email: kristine.poston@kutakrock.com

or to such other address or such other person as either party may from time to time hereafter specify to the other party in a notice delivered in the manner provided above.

ARTICLE XVI

Landlord’s Lien / Security Interest

Section 16.01. Landlord’s Lien and Security Interest . Lessee agrees that Lessor shall have a landlord’s lien, in, on and against all of Lessee’s right, title and interest in, to and under all Personalty, which lien and security interest shall secure the payment of all Rental and other Monetary Obligations payable by Lessee to Lessor under the terms hereof and all other obligations of Lessee to Lessor under this Lease. Lessee agrees that Lessor may file such documents as Lessor then deems appropriate or necessary to perfect and maintain said lien and security interest, and expressly acknowledges and agrees that, in addition to any and all other rights and remedies of Lessor whether hereunder or at Law or in equity, in the Event of Default of Lessee hereunder, Lessor shall have any and all rights and remedies granted a secured party under the Uniform Commercial Code then in effect in the state where the Property is located. Lessee covenants to promptly notify Lessor of any changes in Lessee’s name and/or organizational structure which may necessitate the execution and filing of additional financing statements; provided, however , the foregoing shall not be construed as Lessor’s consent to such changes.

Lessee hereby ratifies its authorization for Lessor or any of its Affiliates to have filed in any Uniform Commercial Code jurisdiction any initial financing statement and any amendments thereto covering the Personalty pledged herein, if filed prior to the Effective Date.

ARTICLE XVII

MISCELLANEOUS

Section 17.01. Force Majeure . Any prevention, delay or stoppage due to strikes, lockouts, acts of God, enemy or hostile governmental action, civil commotion, fire or other casualty beyond the control of the party obligated to perform (each, a “ Force Majeure Event ”) shall excuse the performance by such party

Exhibit 10.15

for a period equal to any such prevention, delay or stoppage, expressly excluding, however, the obligations imposed upon Lessee with respect to Rental and other Monetary Obligations to be paid hereunder.

Section 17.02. No Merger . There shall be no merger of this Lease nor of the leasehold estate created by this Lease with the fee estate in or ownership of the Property by reason of the fact that the same person, corporation, firm or other entity may acquire or hold or own, directly or indirectly, (a) this Lease or the leasehold estate created by this Lease or any interest in this Lease or in such leasehold estate, and (b) the fee estate or ownership of the Property or any interest in such fee estate or ownership. No such merger shall occur unless and until all persons, corporations, firms and other entities having any interest in (i) this Lease or the leasehold estate created by this Lease, and (ii) the fee estate in or ownership of the Property or any part thereof sought to be merged shall join in a written instrument effecting such merger and shall duly record the same.

Section 17.03. Interpretation . Lessor and Lessee acknowledge and warrant to each other that each has been represented by independent counsel and has executed this Lease after being fully advised by said counsel as to its effect and significance. This Lease shall be interpreted and construed in a fair and impartial manner without regard to such factors as the party which prepared the instrument, the relative bargaining powers of the parties or the domicile of any party. Whenever in this Lease any words of obligation or duty are used, such words or expressions shall have the same force and effect as though made in the form of a covenant.

Section 17.04. Characterization. The following expressions of intent, representations, warranties, covenants, agreements, stipulations and waivers are a material inducement to Lessor entering into this Lease:

(a) Lessor and Lessee intend that (i) this Lease is a “true lease,” is not a financing lease, capital lease, mortgage, equitable mortgage, deed of trust, trust agreement, security agreement or other financing or trust arrangement, and the economic realities of this Lease are those of a true lease; and (ii) the business relationship created by this Lease and any related documents is solely that of a long-term commercial lease between Lessor and Lessee, the Lease has been entered into by both parties in reliance upon the economic and legal bargains contained herein, and none of the agreements contained herein is intended, nor shall the same be deemed or construed, to create a partnership ( de facto or de jure ) between Lessor and Lessee, to make them joint venturers, to make Lessee an agent, legal representative, partner, subsidiary or employee of Lessor, nor to make Lessor in any way responsible for the debts, obligations or losses of Lessee.

(b) Lessor and Lessee covenant and agree that: (i) each will treat this Lease as an operating lease pursuant to Statement of Financial Accounting Standards No. 13, as amended, and as a true lease for state Law reporting purposes and for federal income tax purposes; (ii) each party will not, nor will it permit any Affiliate to, at any time, take any action or fail to take any action with respect to the preparation or filing of any statement or disclosure to Governmental Authority, including without limitation, any income tax return (including an amended income tax return), to the extent that such action or such failure to take action would be inconsistent with the intention of the parties expressed in this Section 17.04; (iii) with respect to the Property, the Lease Term is less than seventy-five percent (75%) of the estimated remaining economic life of the Property; and (iv) the Base Annual Rental is the fair market value for the use of the Property and was agreed to by Lessor and Lessee on that basis, and the execution and delivery of, and the performance by Lessee of its obligations under, this Lease do not constitute a transfer of all or any part of the Property.

(c) Lessee waives any claim or defense based upon the characterization of this Lease as anything other than a true lease of the Property. Lessee stipulates and agrees (i) not to challenge the validity, enforceability or characterization of the lease of the Property as a true lease of the Property; and (ii) not to assert or take or omit to take any action inconsistent with the agreements and understandings set forth in this Section 17.04.

Exhibit 10.15

Section 17.05. Disclosures .

(a) Securities Act or Exchange Act . The parties agree that, notwithstanding any provision contained in this Lease, any party (and each employee, representative or other agent of any party) may disclose to any and all persons, without limitation of any kind, any matter required under the Securities Act or the Exchange Act.

(b) Lessor Advertising and Related Publications . Lessee hereby consents to the use by Lessor of, and Lessor is hereby expressly permitted to use, Lessee’s name, trademarks, logos, pictures of stores and signage, and basic Transaction information (collectively “ Lessee’s Information ”) solely in connection with Lessor’s sales, advertising, and press release materials, including on Lessor’s website. Lessee’s consent shall be deemed authorization for the limited use of Lessee’s Information by Lessor under all applicable copyright and trademark laws.

(c) Public Disclosures. Except as required by Law, Lessee shall not make any public disclosure, including press releases or any form of media release, of this Lease Agreement or any transactions relating hereto without the prior written consent of Lessor.

Section 17.06. Attorneys’ Fees . In the event of any judicial or other adversarial proceeding concerning this Lease, to the extent permitted by Law, the prevailing party shall be entitled to recover all of its reasonable attorneys’ fees and other Costs in addition to any other relief to which it may be entitled. In addition, the prevailing party shall, upon demand, be entitled to all attorneys’ fees and all other Costs incurred in the preparation and service of any notice or demand hereunder, whether or not a legal action is subsequently commenced.

Section 17.07. Memorandum of Lease . Concurrently with the execution of this Lease, Lessor and Lessee are executing Lessor’s standard form memorandum of lease in recordable form, indicating the names and addresses of Lessor and Lessee, a description of the Property, the Lease Term, but omitting Rentals and such other terms of this Lease as Lessor may not desire to disclose to the public. Further, upon Lessor’s request, Lessee agrees to execute and acknowledge a termination of lease and/or quitclaim deed in recordable form to be held by Lessor until the expiration or sooner termination of the Lease Term; provided, however, if Lessee shall fail or refuse to sign such a document in accordance with the provisions of this Section within ten (10) days following a request by Lessor, Lessee irrevocably constitutes and appoints Lessor as its attorney‑in‑fact to execute and record such document, it being stipulated that such power of attorney is coupled with an interest and is irrevocable and binding.

Section 17.08. No Brokerage . Lessor and Lessee represent and warrant to each other that they have had no conversation or negotiations with any broker concerning the leasing of the Property. Each of Lessor and Lessee agrees to protect, indemnify, save and keep harmless the other, against and from all liabilities, claims, losses, Costs, damages and expenses, including attorneys’ fees, arising out of, resulting from or in connection with their breach of the foregoing warranty and representation.

Section 17.09. Waiver of Jury Trial and Certain Damages . LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LESSOR AND LESSEE, LESSEE’S USE OR OCCUPANCY OF THE Property, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY

Exhibit 10.15

WAIVE THE RIGHT EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM THE OTHER PARTY AND ANY OF THE AFFILIATES, OFFICERS, DIRECTORS, MEMBERS, MANAGERS OR EMPLOYEES OF LESSOR OR LESSEE, AS APPLICABLE, OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY LESSOR AND LESSEE OF ANY RIGHT EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.

Section 17.10. Securitizations . As a material inducement to Lessor’s willingness to enter into the Transactions contemplated by this Lease and the other Transaction Documents, Lessee hereby acknowledges and agrees that Lessor may, from time to time and at any time (a) advertise, issue press releases, send direct mail or otherwise disclose information regarding the Transaction for marketing purposes; and (b) (i) act or permit another Person to act as sponsor, settler, transferor or depositor of, or a holder of interests in, one or more Persons or other arrangements formed pursuant to a trust agreement, indenture, pooling agreement, participation agreement, sale and servicing agreement, limited liability company agreement, partnership agreement, articles of incorporation or similar agreement or document; and (ii) permit one or more of such Persons or arrangements to offer and sell stock, certificates, bonds, notes, other evidences of indebtedness or securities that are directly or indirectly secured, collateralized or otherwise backed by or represent a direct or indirect interest in whole or in part in any of the assets, rights or properties described in Section 14.01 of this Lease, in one or more Persons or arrangements holding such assets, rights or properties, or any of them (collectively, the “ Securities ”), whether any such Securities are privately or publicly offered and sold, or rated or unrated (any combination of which actions and transactions described in both clauses (i) and (ii) in this paragraph, whether proposed or completed, are referred to in this Lease as a “ Securitization ”). Lessee shall cooperate fully with Lessor and any Affected Party with respect to all reasonable requests and due diligence procedures and use reasonable efforts to facilitate such Securitization, provided that such cooperation shall be at no additional cost or expense to Lessee so long as Lessee is not otherwise required to provide such information to Lessor pursuant to the other provisions of this Lease.

Section 17.11. State‑Specific Provisions . The provisions and/or remedies which are set forth on the attached Exhibit D shall be deemed a part of and included within the terms and conditions of this Lease.

Section 17.12. Time is of the Essence; Computation . Time is of the essence with respect to each and every provision of this Lease. If any deadline provided herein falls on a non-Business Day, such deadline shall be extended to the next day that is a Business Day.

Section 17.13. Waiver and Amendment . No provision of this Lease shall be deemed waived or amended except by a written instrument unambiguously setting forth the matter waived or amended and signed by the party against which enforcement of such waiver or amendment is sought. Waiver of any matter shall not be deemed a waiver of the same or any other matter on any future occasion. No acceptance by Lessor of an amount less than the Rental and other Monetary Obligations stipulated to be due under this Lease shall be deemed to be other than a payment on account of the earliest such Rental or other Monetary Obligations then due or in arrears nor shall any endorsement or statement on any check or letter accompanying any such payment be deemed a waiver of Lessor’s right to collect any unpaid amounts or an accord and satisfaction.

Section 17.14. Successors Bound . Except as otherwise specifically provided herein, the terms, covenants and conditions contained in this Lease shall bind and inure to the benefit of the respective heirs, successors, executors, administrators and assigns of each of the parties hereto.

Exhibit 10.15

Section 17.15. Captions . Captions are used throughout this Lease for convenience of reference only and shall not be considered in any manner in the construction or interpretation hereof.

Section 17.16. Other Documents . Each of the parties agrees to sign such other and further documents as may be necessary or appropriate to carry out the intentions expressed in this Lease.

Section 17.17. Entire Agreement . This Lease and any other instruments or agreements referred to herein, constitute the entire agreement between the parties with respect to the subject matter hereof, and there are no other representations, warranties or agreements except as herein provided.

Section 17.18. Forum Selection; Jurisdiction; Venue; Choice of Law . For purposes of any action or proceeding arising out of this Lease, the parties hereto expressly submit to the jurisdiction of all federal and state courts located in the state where the Property is located. Lessee consents that it may be served with any process or paper by registered mail or by personal service within or without the state where the Property is located in accordance with applicable Law. Furthermore, Lessee waives and agrees not to assert in any such action, suit or proceeding that it is not personally subject to the jurisdiction of such courts, that the action, suit or proceeding is brought in an inconvenient forum or that venue of the action, suit or proceeding is improper. This Lease shall be governed by, and construed with, the Laws of the applicable state in which the Property is located, without giving effect to any state’s conflict of Laws principles.

Section 17.19. Counterparts . This Lease may be executed in one or more counterparts, each of which shall be deemed an original. Furthermore, the undersigned agree that transmission of this Lease via e-mail in a “.pdf” or other electronic format shall be deemed transmission of the original Lease for all purposes.

[Remainder of page intentionally left blank; signature page(s) to follow]

Exhibit 10.15

IN WITNESS WHEREOF , Lessor and Lessee have entered into this Lease as of the date first above written.



	LESSOR: STORE CAPITAL ACQUISITIONS, LLC , a Delaware limited liability company By: /s/ Christopher K. Burbach Printed Name: Christopher K. Burbach Title: Executive Vice President

310

Exhibit 10.15

IN WITNESS WHEREOF , Lessor and Lessee have entered into this Lease as of the date first above written.



	LESSEE: IEC ELECTRONICS CORP - ALBUQUERQUE , a New Mexico corporation By: /s/ Michael T. Williams Printed Name: Michael T. Williams Title: CFO

Exhibit 10.15

EXHIBITS

Exhibit A: Defined Terms

Exhibit B: Legal Description and Street Address of the Property

Exhibit C: Authorization Agreement - Pre‑Arranged Payments

Exhibit D: State‑Specific Provisions

Exhibit 10.15

EXHIBIT A

DEFINED TERMS

The following terms shall have the following meanings for all purposes of this Lease:

“ Additional Rental ” has the meaning set forth in Section 4.03.

“ Adjustment Date ” has the meaning set forth in Section 1.07.

“ Affected Party ” means each direct or indirect participant or investor in a proposed or completed Securitization, including, without limitation, any prospective owner, any rating agency or any party to any agreement executed in connection with the Securitization.

“ Affiliate ” means any Person which directly or indirectly controls, is under common control with or is controlled by any other Person. For purposes of this definition, “controls,” “under common control with,” and “controlled by” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or otherwise.

“ Anti‑Money Laundering Laws ” means all applicable Laws, regulations and government guidance on the prevention and detection of money laundering, including, without limitation, (a) 18 U.S.C. §§ 1956 and 1957; and (b) the Bank Secrecy Act, 31 U.S.C. §§ 5311 et seq., and its implementing regulations, 31 CFR Part 103.

“ Base Annual Rental ” has the meaning set forth in Section 1.05.

“ Base Monthly Rental ” means an amount equal to 1/12 of the applicable Base Annual Rental.

“ Business Day ” means a day on which banks located in Scottsdale, Arizona are not required or authorized to remain closed.

“ Casualty ” means any loss of or damage to any property included within or related to the Property or arising from an adjoining property caused by an Act of God, fire, flood or other catastrophe.

“ Casualty Termination Payment ” has the meaning set forth in Section 11.03(c).

“ Code ” means the Internal Revenue Code of 1986, as the same may be amended from time to time.

“ Condemnation ” means a Taking and/or a Requisition.

“ Costs ” means all reasonable costs and expenses incurred by a Person, including, without limitation, reasonable attorneys’ fees and expenses, court costs, expert witness fees, costs of tests and analyses, travel and accommodation expenses, deposition and trial transcripts, copies and other similar costs and fees, brokerage fees, escrow fees, title insurance premiums, appraisal fees, stamp taxes, recording fees and transfer taxes or fees, as the circumstances require.

“ Default Rate ” means 18% per annum or the highest rate permitted by Law, whichever is less.

“ Effective Date ” has the meaning set forth in the introductory paragraph of this Lease.

“ Environmental Laws ” means federal, state and local Laws, ordinances, common law requirements, regulations, rules, and other governmental requirements, administrative rulings and court judgments and decrees having the effect of Law in effect now or in the future and including all amendments, that relate to

Exhibit 10.15

Hazardous Materials, Regulated Substances, USTs, and/or the protection of human health or the environment, or relating to liability for or Costs of Remediation or prevention of Releases, and apply to Lessee and/or the Property.

“ Environmental Liens ” means any liens and other encumbrances imposed pursuant to any Environmental Law.

“ Event of Default ” has the meaning set forth in Section 12.01.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Extension Option ” has the meaning set forth in Section 3.02.

“ Extension Term ” has the meaning set forth in Section 3.02.

“ Force Majeure Event ” has the meaning set forth in Section 17.01.

“ GAAP ” means generally accepted accounting principles, consistently applied from period to period.

“ Governmental Authority ” means any governmental authority, agency, department, commission, bureau, board, instrumentality, court or quasi‑governmental authority of the United States, any state or any political subdivision thereof with authority to adopt, modify, amend, interpret, give effect to or enforce any federal, state and local Laws, statutes, ordinances, rules or regulations, including common law, or to issue court orders.

“ Ground Landlord ” the City of Albuquerque, New Mexico, a political subdivision of the State of New Mexico.

“ Ground Lease ” means that certain Lease Agreement between Ground Landlord, as ground lessor, and Lessor, as ground lessee (and as successor-in-interest to General Technology Corporation, a New Mexico corporation), dated as of March 1, 1999, together with all assignments thereof and amendments thereto.

“ Guarantor ” means IEC ELECTRONICS CORP., a Delaware corporation, or any additional or replacement guarantor(s) approved by Lessor in its sole and absolute discretion.

“ Guaranty ” means that certain Unconditional Guaranty of Payment and Performance dated as of the date hereof given by Guarantor for the benefit of Lessor, as the same may be amended from time to time.

“ Hazardous Materials ” includes: (a) oil, petroleum products, flammable substances, explosives, radioactive materials, hazardous wastes or substances, toxic wastes or substances or any other materials, contaminants or pollutants, the presence of which causes the Property to be in violation of any local, state or federal Law or regulation, or Environmental Law, or are defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “toxic substances,” “contaminants,” “pollutants,” or words of similar import under any applicable local, state or federal Law or under the regulations adopted or orders issued pursuant thereto, including, but not limited to: (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601, et seq.; (ii) the Hazardous Materials Transportation Act, as amended, 49 U.S.C. § 5101, et seq.; (iii) the Resource Conservation and Recovery Act, as amended, 42 U.S.C. § 6901, et seq.; and (iv) regulations adopted pursuant to the aforesaid Laws; (b) asbestos in any form which is friable, urea formaldehyde foam insulation, transformers or other equipment which contain dielectric fluid containing levels of polychlorinated biphenyls

Exhibit 10.15

in excess of fifty (50) parts per million; (c) underground storage tanks; and (d) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Authority.

“ Indemnified Parties ” means Lessor and its members, managers, officers, directors, shareholders, partners, employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns, including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of the assets and business of Lessor.

“ Initial Term ” has the meaning set forth in Section 3.01.

“ Insolvency Event ” means (a) a Person’s (i) failure to generally pay its debts as such debts become due; (ii) admitting in writing its inability to pay its debts generally; or (iii) making a general assignment for the benefit of creditors; (b) any proceeding being instituted by or against any Person (i) seeking to adjudicate it bankrupt or insolvent; (ii) seeking liquidation, dissolution, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any Law relating to bankruptcy, insolvency, or reorganization or relief of debtors; or (iii) seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property, and in the case of any such proceeding instituted against any Person, either such proceeding shall remain undismissed for a period of one hundred twenty (120) days or any of the actions sought in such proceeding shall occur; or (c) any Person taking any corporate action to authorize any of the actions set forth above in this definition.

“Insurance Premiums” has the meaning in Section 6.04.

“ Law(s) ” means any constitution, statute, rule of law, code, ordinance, order, judgment, decree, injunction, rule, regulation, legal requirement or administrative or judicial determination, even if unforeseen or extraordinary, of every duly constituted Governmental Authority, court or agency, now or hereafter enacted or in effect.

“ Lease Term ” has the meaning described in Section 3.01.

“ Lease Year ” has the meaning set forth in Section 6.01.

“ Legal Requirements ” means the requirements of all present and future Laws (including, without limitation, Environmental Laws), all judicial and administrative interpretations thereof, including any judicial order, consent, decree or judgment, and all covenants, restrictions and conditions now or hereafter of record which may be applicable to Lessee or to the Property, or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or restoration of the Property.

“ Lender ” means any lender in connection with any loan secured by Lessor’s interest in the Property, and any servicer of any loan secured by Lessor’s interest in the Property.

“Lessee Entity” or “ Lessee Entities ” means individually or collectively, as the context may require, Lessee and Guarantor and all Affiliates of Lessee and Guarantor.

“Lessee Reporting Entities” means Lessee and Guarantor.

“Lessee’s Information” has the meaning set forth in Section 17.05(b).

“Lessor Entity” or “ Lessor Entities ” means individually or collectively, as the context may require, Lessor and all Affiliates of Lessor.

“ Losses ” means any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, Costs, diminutions in value, fines, penalties,

Exhibit 10.15

interest, charges, fees, judgments, awards, amounts paid in settlement and damages of whatever kind or nature, inclusive of bodily injury and property damage to third parties (including, without limitation, attorneys’ fees and other Costs of defense).

“ Material Adverse Effect ” means a material adverse effect on (a) the Property, including without limitation, the operation of the Property as a Permitted Facility and/or the value of the Property; (b) the contemplated business, condition, worth or operations of any Lessee Entity; (c) Lessee’s ability to perform its obligations under this Lease; (d) Lessor’s interests in the Property, this Lease or the other Transaction Documents; or (e) any Guarantor’s ability to perform its obligations under the Guaranty.

“ Monetary Obligations ” means all Rental and all other sums payable or reimbursable by Lessee under this Lease to Lessor, to any third party on behalf of Lessor, or to any Indemnified Party.

“ Mortgage ” means, collectively, the mortgages, deeds of trust or deeds to secure debt, assignments of rents and leases, security agreements and fixture filings executed by Lessor for the benefit of Lender with respect to the Property, as such instruments may be amended, modified, restated or supplemented from time to time and any and all replacements or substitutions.

“ Net Award ” means (a) the entire award payable with respect to a Property by reason of a Condemnation whether pursuant to a judgment or by agreement or otherwise; or (b) the entire proceeds of any insurance required under Section 6.03 payable with respect to a Property, as the case may be, and in either case, less any Costs incurred by Lessor in collecting such award or proceeds.

“ OFAC Laws ” means Executive Order 13224 issued by the President of the United States, and all regulations promulgated thereunder, including, without limitation, the Terrorism Sanctions Regulations (31 CFR Part 595), the Terrorism List Governments Sanctions Regulations (31 CFR Part 596), the Foreign Terrorist Organizations Sanctions Regulations (31 CFR Part 597), and the Cuban Assets Control Regulations (31 CFR Part 515), and all other present and future federal, state and local Laws, ordinances, regulations, policies, lists (including, without limitation, the Specially Designated Nationals and Blocked Persons List) and any other requirements of any Governmental Authority (including without limitation, the U.S. Department of the Treasury Office of Foreign Assets Control) addressing, relating to, or attempting to eliminate, terrorist acts and acts of war, each as supplemented, amended or modified from time to time after the Effective Date, and the present and future rules, regulations and guidance documents promulgated under any of the foregoing, or under similar Laws, ordinances, regulations, policies or requirements of other states or localities.

“ Other Agreements ” means, collectively, all agreements and instruments now or hereafter entered into between, among or by (a) any of the Lessee Entities; and, or for the benefit of, (b) any of the Lessor Entities, including, without limitation, leases, promissory notes and guaranties, but excluding this Lease and all other Transaction Documents.

“ Partial Condemnation ” has the meaning set forth in Section 11.03.

“ Permitted Amounts ” shall mean, with respect to any given level of Hazardous Materials or Regulated Substances, that level or quantity of Hazardous Materials or Regulated Substances in any form or combination of forms which does not constitute a violation of any Environmental Laws.

“Permitted Facility” means a circuit board manufacturing facility, all related purposes such as ingress, egress and parking, and uses incidental thereto.

“ Person ” means any individual, partnership, corporation, limited liability company, trust, unincorporated organization, Governmental Authority or any other form of entity.

Exhibit 10.15

“ Personalty ” means any and all “goods” (excluding “inventory,” and including, without limitation, all “equipment,” “fixtures,” appliances and furniture (as “goods,” “inventory,” “equipment” and “fixtures” are defined in the applicable Uniform Commercial Code then in effect in the applicable jurisdiction)) from time to time situated on or used in connection with the Property, whether now owned or held or hereafter arising or acquired, together with all replacements and substitutions therefore and all cash and non-cash proceeds (including insurance proceeds and any title and UCC insurance proceeds) and products thereof, and, in the case of tangible collateral, together with all additions, attachments, accessions, parts, equipment and repairs now or hereafter attached or affixed thereto or used in connection therewith.

“ Price Index ” means the Consumer Price Index which is designated for the applicable month of determination as the United States City Average for All Urban Consumers, All Items, Not Seasonally Adjusted, with a base period equaling 100 in 1982 ‑ 1984, as published by the United States Department of Labor’s Bureau of Labor Statistics or any successor agency. In the event that the Price Index ceases to be published, its successor index measuring cost of living as published by the same Governmental Authority which published the Price Index shall be substituted and any necessary reasonable adjustments shall be made by Lessor and Lessee in order to carry out the intent of Section 4.02. In the event there is no successor index measuring cost of living, Lessor shall reasonably select an alternative price index measuring cost of living that will constitute a reasonable substitute for the Price Index.

“ Property” means that parcel or parcels of real estate legally described on Exhibit B attached hereto, all rights, privileges, and appurtenances associated therewith, and all buildings, fixtures and other improvements now or hereafter located on such real estate (whether or not affixed to such real estate).

“Real Estate Taxes” has the meaning set forth in Section 6.04.

“ Regulated Substances ” means “petroleum” and “petroleum‑based substances” or any similar terms described or defined in any of the Environmental Laws and/or any other applicable federal, state, county or local Laws applicable to or regulating USTs.

“ REIT ” means a real estate investment trust as defined under Section 856 of the Code.

“ Release ” means any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Materials, or Regulated Substances or any Threatened Release.

“ Remediation ” means any response, remedial, removal, or corrective action, any activity to cleanup, detoxify, decontaminate, contain or otherwise remediate any Hazardous Materials, Regulated Substances or USTs, any actions to prevent, cure or mitigate any Release, any action to comply with any Environmental Laws or with any permits issued pursuant thereto, any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or any evaluation relating to any Hazardous Materials, Regulated Substances or USTs.

“ Rental ” means, collectively, the Base Annual Rental and the Additional Rental.

“ Rental Adjustment ” means an amount equal to the lesser of (a) 2% of the Base Annual Rental in effect immediately prior to the applicable Adjustment Date, or (b) 1.25 multiplied by the product of (i) the percentage change between the Price Index for the month which is two months prior to the Effective Date or the Price Index used for the immediately preceding Adjustment Date, as applicable, and the Price Index for the month which is two months prior to the applicable Adjustment Date; and (ii) the then current Base Annual Rental.

Exhibit 10.15

“ Requisition ” means any temporary requisition or confiscation of the use or occupancy of the Property by any Governmental Authority, civil or military, whether pursuant to an agreement with such Governmental Authority in settlement of or under threat of any such requisition or confiscation, or otherwise.

“Reserve” has the meaning in Section 6.04.

“ Securities ” has the meaning set forth in Section 17.10.

“ Securities Act ” means of the Securities Act of 1933, as amended.

“ Securitization ” has the meaning set forth in Section 17.10.

“ Successor Lessor ” has the meaning set forth in Section 13.03.

“ Taking ” means (a) any taking or damaging of all or a portion of the Property (i) in or by condemnation or other eminent domain proceedings pursuant to any Law, general or special; (ii) by reason of any agreement with any condemnor in settlement of or under threat of any such condemnation or other eminent domain proceeding; or (iii) by any other means; or (b) any de facto condemnation. The Taking shall be considered to have taken place as of the later of the date actual physical possession is taken by the condemnor, or the date on which the right to compensation and damages accrues under the Law applicable to the Property.

“ Temporary Taking ” has the meaning set forth in Section 11.04.

“ Threatened Release ” means a substantial likelihood of a Release which requires action to prevent or mitigate damage to the soil, surface waters, groundwaters, land, stream sediments, surface or subsurface strata, ambient air or any other environmental medium comprising or surrounding the Property which may result from such Release.

“ Total Condemnation ” has the meaning set forth in Section 11.02.

“ Transaction ” has the meaning set forth in Section 14.01.

“ Transaction Documents ” means this Lease, the Guaranty, the Ground Lease and all documents related thereto.

“ U.S. Publicly Traded Entity ” means an entity whose securities are listed on a national securities exchange or quoted on an automated quotation system in the United States or a wholly‑owned subsidiary of such an entity.

“ USTs ” means any one or combination of underground tanks and associated product piping systems used in connection with storage, dispensing and general use of Regulated Substances.

Exhibit 10.16

UNITED STATES OF AMERICA Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 78017 / June 8, 2016

ACCOUNTING AND AUDITING ENFORCEMENT Release No. 3782 / June 8, 2016

ADMINISTRATIVE PROCEEDING File No. 3-17278



		ORDER INSTITUTING ADMINISTRATIVE
In the Matter of		AND CEASE-AND-DESIST PROCEEDINGS,
		PURSUANT TO SECTIONS 4C AND 21C OF
IEC ELECTRONICS CORP.,		THE SECURITIES EXCHANGE ACT OF
RONALD J. YEARS, CPA,		1934, AND RULE 102(e) OF THE
and DONALD S. DOODY,\		COMMISSION’S RULES OF PRACTICE,
		MAKING FINDINGS, AND IMPOSING
Respondents.		REMEDIAL SANCTIONS AND A CEASE-
		AND-DESIST ORDER

The Securities and Exchange Commission (“Commission”) deems it appropriate that cease- and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 (“Exchange Act”) against IEC Electronics Corp., Ronald J. Years, CPA, and Donald S. Doody (collectively, “Respondents”).

Exhibit 10.16

Additionally, the Commission deems it appropriate that administrative proceedings be, and hereby are, instituted pursuant to Section 4C of the Exchange Act 1 and Rule 102(e)(1)(iii) of the Commission’s Rules of Practice 2 against Years.

II.

In anticipation of the institution of these proceedings, Respondents have submitted Offers of Settlement (the “Offers”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over them and the subject matter of these proceedings, which are admitted, and except as provided herein in Section V, Respondents consent to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 4C and 21C of the Securities Exchange Act of 1934, and Rule 102(e) of the

Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions and a Cease- and-Desist Order (“Order”), as set forth below.

III.

On the basis of this Order and Respondents’ Offers, the Commission finds that:

Summary

IEC Electronics Corp. (“IEC”) filed false financial statements for Q3 2012, FYE 2012, and Q1 2013 as a result of misconduct that occurred at IEC’s now-former subsidiary, Southern California Braiding, Inc. (“SCB”). Former SCB controller, Ronald Years, and former IEC executive vice president of operations, Donald Doody, engaged in misconduct relating to SCB’s work-in-process inventory (“WIP”). Years made false accounting entries into a WIP spreadsheet that Years prepared, and these entries were based in part on amounts provided by Doody to Years that were false. Years and Doody also kept material in WIP that had already been used and added inventory to WIP that was missing. Years and Doody engaged in this misconduct to meet SCB’s

¹ Section 4C provides, in relevant part, that:

The Commission may censure any person, or deny, temporarily or permanently, to any person the privilege of appearing or practicing before the Commission in any way, if that person is found . . . to have willfully violated, or willfully aided and abetted the violation of, any provision of the securities laws or

the rules and regulations thereunder.

² Rule 102(e)(1)(iii) provides, in pertinent part, that:

The Commission may . . . deny, temporarily or permanently, the privilege of appearing or practicing before it . . . to any person who is found . . . to have willfully violated, or willfully aided and abetted the violation of any provision of the Federal securities laws or the rules and regulations thereunder.

budgeted gross profit margins (“GPMs”). In addition, Years failed to consider the percentage completion of WIP and consequently capitalized too many weeks of labor and overhead costs to WIP. As a result of Years’ and Doody’s misconduct, IEC materially understated cost of goods sold, and materially overstated gross profit and net income before taxes in its financial statements for Q3 2012 and FYE 2012, and, in the case of Years, Q1 2013. In Q2 2013, IEC’s then-CFO discovered potential issues with respect to SCB’s WIP, and after IEC determined that the prior accounting was incorrect, it announced the need for a restatement in May 2013 and filed the restatement in July 2013.

Respondents

1. IEC Electronics Corp. , (“IEC”) is a Delaware corporation headquartered in Newark, New York. IEC manufactures, among other things, circuit cards, cable and wire harnesses, and sheet metal components that can withstand harsh environments, such as extreme hot and cold temperatures. IEC services the medical, aerospace, defense, industrial, and transportation industries. In February 2015, IEC’s board of directors was replaced with a new board as a result of a proxy contest. The new board terminated the CEO, and elected a new CEO. IEC’s common stock is registered with the Commission pursuant to Exchange Act Section 12(b) and is listed on NYSE MKT under ticker symbol IEC.

2. Ronald J. Years , (“Years”) age 52, of La Habra, California, worked for IEC from

April 2008 through February 2013. Years was SCB’s controller from May 2011 through February

2013. Years has been a licensed CPA in Massachusetts since August 2012.

3. Donald S. Doody , (“Doody”) age 49, of Mukilteo, Washington, is the former executive vice president of operations for IEC. Doody worked in operations for IEC from 2004 through January 2014.

Other Relevant Entity

4. Southern California Braiding, Inc. , is a Delaware corporation headquartered in Bell Gardens, California. SCB was an IEC subsidiary from December 2010 to July 2015. IEC sold SCB in July 2015 to a privately held company. SCB has never been registered with the Commission in any capacity.

Facts

A. Background

5. IEC acquired SCB in December 2010. In May 2011, Years became SCB’s controller. Years reported to IEC’s then-CFO. In the summer of 2011, IEC’s then-CEO asked Doody to become involved in SCB’s operations because SCB was not performing financially as IEC’s CEO had expected. Doody reported directly to IEC’s CEO.

6. SCB mainly manufactured custom cables and wire harnesses for the aerospace and defense industries. It took SCB on average about six weeks to assemble/manufacture a product for a customer. SCB’s inventory mainly consisted of raw material and WIP. WIP consists of the material in production, the labor used to produce the product, and a portion of the factory overhead. SCB held few finished goods because when a product was complete, it was shipped to the customer.

7. Prior to IEC acquiring SCB, SCB was a privately held company that operated on a cash basis and lacked an adequate system of internal accounting controls. Years worked on implementing internal accounting controls over SCB’s inventory. Years, however, failed to implement an adequate system of internal accounting controls for WIP. Specifically, Years did not consider the percentage completion of WIP when he calculated how much labor and overhead should be capitalized to WIP at the end of each quarter. By not considering the percentage completion of WIP, Years capitalized too much labor and overhead to WIP and inappropriately inflated WIP. This resulted in the overstatement of labor and overhead in WIP and an understatement of cost of goods sold (“COGS”) and an overstatement of gross profit and net income before taxes for Q1 2012 through Q1 2013. 3 IEC’s and SCB’s fiscal year is from October 1 through September 30.

8. In addition, at the end of Q3 2012, both Years and Doody started inappropriately inflating WIP. At the end of Q3 2012 and Q4 2012, Years made false accounting entries that capitalized additional amounts of labor and overhead to WIP, and these entries were based in part on amounts provided by Doody to Years that were false. At the end of Q4 2012, Years and Doody also kept material in WIP that had already been used and added inventory to WIP that was missing. Years and Doody engaged in this misconduct to meet SCB’s budgeted GPMs.

9. As a result of their misconduct, Years and Doody overstated WIP and materially understated COGS and materially overstated gross profit and net income before taxes for Q3

2012 and FYE 2012, and, in the case of Years, Q1 2013. Thus, IEC filed a materially false Form

10-Q for Q3 2012, Form 10-K for FY 2012, and Form 10-Q for Q1 2013. IEC also filed multiple materially false Forms 8-K, and IEC’s earnings calls for Q3 2012 through Q1 2013 contained materially false information about IEC’s financial results.

³ When WIP is overstated on the balance sheet, COGS is understated by the same amount on the income statement. When COGS is understated, then gross profit and net income are overstated on the income statement.

B. Years an d Doody I n f lated S CB’s WIP

i. Failure to Consider Percentage Completion of WIP

10. Years failed to develop a methodology that accurately reflected the value of SCB’s WIP because he failed to consider the percentage completion of WIP. In addition, Years did not do any testing on WIP to determine the percentage completion. Thus, Years failed to implement adequate internal accounting controls over WIP, and, and as a result, Years inflated WIP from Q1 2012 through Q1 2013. In addition, there was lack of adequate internal accounting controls over the review of Years’ work. The IEC accounting personnel who reviewed Years’ WIP spreadsheet each month failed to see that Years was not considering the percentage completion of WIP. As a result of the lack of internal accounting controls over WIP, IEC had a material weakness in internal control over financial reporting related to WIP. IEC stated in its amended Form 10-K for FYE 2012 that it had this material weakness, and it stated in its Form 10-Q for Q3 2014 that this material weakness had been remediated.

11. SCB’s inventory mainly consisted of raw materials and WIP (SCB held few finished goods because generally when a product was complete, it was shipped to the customer). SCB’s WIP consisted of material, labor, and overhead. Although there was a system to track material, SCB never developed a system to track the actual amount of labor and overhead applied to each job in WIP. As a result, Years had to determine the appropriate amount of labor and overhead to capitalize to WIP each quarter. From Q2 2011 through Q4 2011, Years capitalized four weeks of labor and overhead to WIP each quarter. Starting in Q1 2012, Years developed a methodology to calculate labor and overhead capitalized to WIP. Years’ methodology was captured in a WIP spreadsheet. Years used this spreadsheet to calculate labor

and overhead to be capitalized to WIP on a monthly basis. Years’ methodology, however, failed to consider the percentage completion of WIP. From Q1 2012 through Q4 2012, because Years failed to consider the percentage completion of WIP, Years gradually increased the number of weeks that he capitalized labor and overhead to WIP from five weeks to eleven weeks. By the end of Q1 2013, Years was capitalizing thirteen weeks of labor and overhead to WIP.

12. In each quarter of FY 2012 and Q1 2013, it took SCB on average about six weeks to assemble/manufacture a product, and on average a product in WIP was about 25% complete at each quarter-end. This meant that on average only one and a half weeks (six weeks multiplied

by 25%) of labor and overhead should have been capitalized to WIP at each quarter-end versus the five to thirteen weeks that Years was capitalizing to WIP from Q1 2012 through Q1 2013. Because Years inappropriately capitalized too many weeks of labor and overhead to WIP, WIP was overstated during FY 2012 and for Q1 2013.

13. By at least October 2012, prior to SCB filing its FYE 2012 Form 10-K in November 2012, Years knew, or was reckless in not knowing, that he was capitalizing too many weeks of labor and overhead to WIP for Q4 2012.

ii. False Accounting Entries to WIP in Q3 2012 and Q4 2012

14. At quarter-ends Q3 2012 and Q4 2012, WIP was inappropriately inflated through false accounting entries that capitalized additional amounts of labor and overhead to WIP. Years made these false accounting entries into his WIP spreadsheet by hard coding, i.e. forcing, these amounts into the spreadsheet without any supporting formulas, and these entries were based in part on amounts provided by Doody to Years that were false. Years and Doody engaged in this misconduct to meet SCB’s budgeted GPMs for Q3 2012 and FYE 2012. At the end of Q3 2012, the accounting entry capitalized an additional $104,000 of labor and $265,000 of overhead to WIP that should not have been capitalized. At the end of Q4 2012, the accounting entry capitalized an additional $124,000 of labor and $346,000 of overhead to WIP that should not have been capitalized. As a result of these entries, inventory was overstated on IEC’s balance sheet, COGS was understated on IEC’s income statement, and gross profit and net income before taxes were overstated on IEC’s income statement for Q3 2012 and FYE 2012.

15. As part of IEC’s FYE 2012 audit, IEC’s auditors asked Years about the $124,000 of

labor and the $346,000 of overhead added to WIP for Q4 2012. Years emailed Doody and told him that the auditors were asking about the $124,000 of labor and the $346,000 of overhead that “doesn’t have backup.” Years attached to his email a spreadsheet that he created as support for the false accounting entry. He asked Doody if Doody had additional information that Years could use to support a percentage number in his spreadsheet. Years also said, “Going forward we all realize we have to do something with this and the other material in WIP. I will come up with a way to make it less visible in the future, but I have to get past this for now. Thanks for the input. Last thing I have to do… I hope.” Doody responded to Years by telling him where he could find additional information for the percentage number. Years gathered this additional information and sent it and the spreadsheet to the auditors as support for the false accounting entry.

iii. Keeping Material in WIP That Already Had Been Used

16. In Q4 2012, Years and Doody inappropriately inflated WIP on SCB’s balance sheet by keeping material in WIP that already had been used for a SCB customer on two job orders. Years kept this material in WIP by not recognizing enough COGS material related to these two job orders on SCB’s income statement during FY 2012 and Q1 2013. As a result of keeping this material in WIP, inventory was overstated on IEC’s balance sheet, COGS was understated on IEC’s income statement, and gross profit and net income before taxes were overstated on IEC’s income statement during FY 2012 and Q1 2013.

17. By late August 2012, following a physical inventory count, Years knew, or was reckless in not knowing, that at least $312,724 of material related to these two job orders for this customer had already been used and no longer existed in inventory. Years told Doody that this $312,724 of material was missing from inventory. Doody believed that Years was going to write- off this missing material from SCB’s balance sheet. Years, however, did not write-off this material, and by the end of Q4 2012, the balance grew to $395,138. In mid and late October 2012, prior to IEC filing its Form 10-K for FYE 2012, Years sent Doody emails reminding Doody that this inventory was still in WIP at the end of Q4 2012 and “shouldn’t be there.”

18. As part of IEC’s FYE 2012 audit, IEC’s auditors asked Years about this $395,138 of material in WIP. Years did not tell the auditors that the $395,138 of material had already been used on jobs shipped to a customer and that this material no longer existed in inventory. Instead, Years, among other things, falsely told the auditors that SCB had not yet shipped these job orders to the customer. Years had emailed Doody and told Doody that the auditors had asked about the

$395,138 of material still in WIP, and Years also told Doody what he planned to tell the auditors. Even though Doody knew, or was reckless in not knowing, that this material was missing from inventory and had not been written-off, Doody did not respond to Years and failed to take corrective action.

19. By the end of Q1 2013, the balance of this material grew to $422,132 because no

COGS for this material had been recognized by Years.

iv. Adding Missing Finished Goods Inventory to WIP

20. Lastly, in Q4 2012, Years and Doody inflated WIP by adding $116,227 of missing finished goods inventory (acquired during IEC’s acquisition of SCB) to WIP. As a result of adding this missing finished goods inventory to WIP, inventory was overstated on IEC’s balance sheet, COGS was understated on IEC’s income statement, and gross profit and net income before taxes were overstated on IEC’s income statement at FYE 2012.

21. By late August 2012, following a physical inventory count, Years and Doody knew, or were reckless in not knowing, that this finished goods inventory was missing. In the beginning of October 2012, Years emailed Doody seeking direction on what Years should do with the $116,227 of missing finished goods, writing, “Should go to [Cost of Goods Sold], or can go to WIP…” Doody responded, “…my sense is WIP for now…” Years then moved the inventory

from finished goods inventory to WIP in the general ledger. In mid and late October 2012, prior to IEC filing its Form 10-K for FYE 2012, Years sent Doody emails reminding Doody that this missing finished goods inventory (as well as the $395,128 of already used inventory) was still in WIP at the end of Q4 2012 and “shouldn’t be there.”

22. Years sent the auditors a spreadsheet that showed that Years was writing-off the

$116,227 of finished goods inventory. Years, however, did not write-off the $116,227 and instead moved the $116,227 into WIP. Years emailed Doody, informing him that the auditors had asked about the $395,138 of missing customer material (discussed above), and added that “[The auditors] haven’t seen the $116k of [finished goods] transferred into WIP.” Doody did not respond to Years and failed to take corrective action.

C. IEC Restated its FY 2012 and Q1 2013 Financial Statements

23. IEC restated its Q1 through Q3 2012, FYE 2012, and Q1 2013 financial statements because SCB overstated WIP, gross profit, and net income, and understated COGS.

In May 2013, IEC filed a Form 8-K that announced the restatement of its financials and provided the restated net income amounts for Q1 through Q3 2012, FYE 2012, and Q1 2013. In July

2013, IEC filed an amended Form 10-K for FYE 2012 and a Form 10-Q for Q1 2013. IEC

included its Q1 2012 through Q3 2012 restated financial statements in its amended Form 10-K

for FYE 2012.

24. The table below summarizes the impact of the misstatement on IEC’s net income before taxes from Q1 2012 through Q1 2013. 4 The overstatement of SCB’s WIP was material to IEC’s net income before taxes for Q3 2012, FYE 2012, and Q1 2013.



Period End	Net Income Before Taxes – Originally Reported	Net Income Before Taxes – Restated 5	$ Difference	% Difference of Restated
Q1 2012	$1,503,157	$1,460,017	$43,140	(3)%
Q2 2012	$4,136,520	$3,962,678	$173,842	(4)%
Q3 2012	$3,452,045	$2,888,635	$563,410	(20)%
Q4 2012	$2,921,742	$2,180,500	$741,242	(34)%
FYE 2012	$12,013,436	$10,491,801	$1,521,635	(15)%
Q1 2013	$378,990	($160,070)	$539,060	Profit to loss
FYE 2012 + Q1 2013			$2,060,695

25. IEC’s FYE 2012 net income before taxes was overstated by $1,521,635, of which

$924,991, 6 or 61%, was the result of both Years and Doody inappropriately inflating WIP in

Q3 2012 and Q4 2012. The remainder of IEC’s overstated income in FYE 2012 was mainly

from Years failing to consider the percentage completion of WIP and thus, capitalizing too many weeks of labor and overhead to WIP from Q1 2012 through Q4 2012.

26. IEC’s Q1 2013 net income before taxes was overstated by $539,060, the majority of which was from Years failing to consider the percentage completion of WIP. The $539,060 overstatement in Q1 2013 took IEC’s net income before taxes from a profit to a loss for that quarter.

⁴ The restated net income before taxes amounts in this table for Q1 2012, Q4 2012, and FYE 2012 are different than the restated amounts reported by IEC for two reasons. First, for FY 2011, WIP was overstated by $245,328. Because this amount was not material to IEC’s FY 2011 financial statements, IEC included this overstatement in its Q1 2012 restated net income before taxes; this $245,328 overstatement is not included in the table above because the amount related to FY 2011. Second, during the restatement process, IEC did not discover the $116,227 of missing finished goods inventory that Years and Doody moved to WIP. As a result, IEC did not deduct the $116,227 from IEC’s Q4 2012 restated net income before taxes.

⁵ For Q1 2012 through Q1 2013, the restated figures also include small amounts of additional material that IEC wrote-off from WIP and deducted from net income before taxes. For FYE 2012 and Q1 2013, IEC wrote-off additional material of $70,408 and $74,068, respectively.

⁶ The total $924,991 is arrived at by adding the Q4 2012 false accounting entry of $124,000 of labor and

$346,000 of overhead, plus the $395,138 of material that had already been shipped and no longer existed in WIP but was still held in WIP (less an inventory reserve of $56,374), plus the $116,227 of missing

finished goods inventory that was moved to WIP.

27. As a result, IEC filed a materially false Form 10-Q for Q3 2012, Form 10-K for FY 2012, and Form 10-Q for Q1 2013. IEC also filed multiple false Forms 8-K for Q3 2012 through Q1 2013. 7 In addition, IEC’s earnings calls for Q3 2012, Q4 2012 / FYE 2012, and Q1

2013 contained false information about IEC’s financial results, including its net income.

D. Later Developments at IEC

28. Both Years and Doody no longer work for IEC. Years left IEC in February 2013, and Doody voluntarily left in January 2014. IEC is also under new management, including a new CEO and new Board of Directors, as a result of activist shareholders waging a proxy battle in early

2015. In addition, IEC no longer owns SCB; IEC sold SCB in July 2015 to a privately held company.

Violations

29. As a result of the conduct described above, IEC and Doody violated, and Years willfully violated, Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder, and IEC violated, Years willfully aided and abetted and caused IEC’s violations of, and Doody caused IEC’s violations of, Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder, which prohibit fraudulent conduct in connection with the purchase or sale of securities.

30. As a result of the conduct described above, IEC violated, Years willfully aided and abetted and caused IEC’s violations of, and Doody caused IEC’s violations of, Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder, which requires an issuer to file with the Commission accurate annual, current, and quarterly reports.

31. As a result of the conduct described above, IEC violated, Years willfully aided and abetted and caused IEC’s violations of, and Doody caused IEC’s violations of, Section 13(b)(2)(A) of the Exchange Act, which requires an issuer to make and keep books, records, and accounts, which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer.

32. As a result of the conduct described above, IEC violated, and Years willfully aided and abetted and caused IEC’s violations of, Section 13(b)(2)(B), which requires an issuer to devise and maintain an adequate system of internal accounting controls.

33. As a result of the conduct described above, Years willfully violated, and Doody violated, Section 13(b)(5) of the Exchange Act, which prohibits any person from knowingly circumventing or knowingly failing to implement a system of internal accounting controls or knowingly falsifying any book, record, or account of an issuer.

⁷ Form 8-K, Q3 2012 Earnings Release 7/31/12; Form 8-K, Q4 2012 / FYE 2012 Earnings Release

11/20/12; Form 8-K, Presentation - Noble Financial Conference 1/22/13; Form 8-K, Presentation - Annual

IEC Shareholders Meeting 1/30/13; Form 8-K, Q1 2013 Earnings Release 2/5/13.

34. As a result of the conduct described above, Years willfully violated, and Doody violated, Rule 13b2-1 of the Exchange Act, which prohibits any person from, directly or indirectly, falsifying or causing to be falsified, any book, record, or account that the Exchange Act requires an issuer to maintain.

35. As a result of the conduct described above, Years willfully violated, and Doody violated, Rule 13b2-2 of the Exchange Act, which prohibits a director or officer of an issuer, or any other person acting under the direction thereof, directly or indirectly, from making or causing to be made, a materially false or misleading statement or omission to an accountant in connection with a required audit or the preparation or filing of a required document or report.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions

agreed to in Respondents’ Offers.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, IEC cease and desist from committing or causing any violations and any future violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.

B. Pursuant to Section 21C of the Exchange Act, Years cease and desist from committing or causing any violations and any future violations of Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(b)(5) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13b2-1, and 13b2-2 thereunder.

C. Pursuant to Section 21C of the Exchange Act, Doody cease and desist from committing or causing any violations and any future violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(5) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13b2-1, and 13b2-2 thereunder.

D. Years is denied the privilege of appearing or practicing before the Commission as an accountant.

E. Doody is prohibited for a period of five (5) years from the date of the Order from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act, or that is required to file reports pursuant to Section 15(d) of the Exchange Act.

F. IEC shall, within 10 days of the entry of this Order, pay a civil money penalty of

$200,000 to the Securities and Exchange Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely payment of the civil money penalty is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.

G. Years shall pay a civil money penalty of $40,000 to the Securities and Exchange Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). Payment shall be made in the following installments: (1) $30,000 within 10 days of the entry of this Order; (2) $2,500 within 90 days of entry of this Order; (3) $2,500 within 180 days of entry of this Order; (4) $2,500 within 270 days of entry of this Order; and (5) $2,500 within 360 days of entry of this Order. If any payment is not made by the date the payment is required by this Order, the entire outstanding balance of the civil money penalty, plus any additional interest accrued pursuant to 31 U.S.C. § 3717, shall be due and payable immediately, without further application.

H. Doody shall pay disgorgement of $26,368, prejudgment interest of $2,836.48, and a civil money penalty of $25,000 to the Securities and Exchange Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). Payment shall be made in the following installments: (1) $29,204.48 within 10 days of the entry of this Order; (2) $12,500 within 90 days of entry of this Order; and (3) $12,500 within 180 days of entry of this Order. If any payment is not made by the date the payment is required by this Order, the entire outstanding balance of disgorgement, prejudgment interest, and the civil money penalty, plus any additional interest accrued pursuant to SEC Rule of Practice 600 and 31 U.S.C. § 3717, shall be due and payable immediately, without further application.


I.	All payments required by this Order must be made in one of the following ways:

(1) Respondents may transmit payment electronically to the Commission,

which will provide detailed ACH transfer/Fedwire instructions upon request;

(2) Respondents may make direct payment from a bank account via Pay.gov through the SEC website at http://www.sec.gov/about/offices/ofm.htm ; or

(3) Respondents may pay by certified check, bank cashier’s check, or United States postal money order, made payable to the Securities and Exchange Commission and hand-delivered or mailed to:

Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthur Boulevard

Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying Respondent as a Respondent in these proceedings, and the file number of these proceedings; a copy of the cover letter and check or money order must be sent to Victoria A. Levin, Assistant Regional Director, Division of Enforcement, Securities and Exchange

Commission, Los Angeles Regional Office, 444 South Flower Street, Suite 900, Los Angeles, California 90071.

J. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be treated as penalties paid to the government for all purposes, including all tax purposes. To

preserve the deterrent effect of the civil penalty, Respondents agree that in any Related Investor Action, they shall not argue that they are entitled to, nor shall they benefit by, offset or reduction of any award of compensatory damages by the amount of any part of Respondents’ payment of a civil penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such a Penalty Offset, Respondents agree that they shall, within 30 days after entry of a final order granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty Offset to the Securities and Exchange Commission. Such a payment shall not be deemed an additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed in this proceeding. For purposes of this paragraph, a “Related Investor Action” means a private damages action brought against Respondents by or on behalf of one or more investors based on substantially the same facts as alleged in the Order instituted by the

Commission in this proceeding.

It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section

523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by Respondents Years and Doody, and further, any debt for disgorgement, prejudgment interest, civil penalty or other amounts due by Respondents Years and Doody under this Order or any other judgment, order, consent order, decree, or settlement agreement entered in connection with this proceeding, is a debt for the violation by Respondents Years and Doody of the federal securities laws or any regulation or order issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19).

By the Commission.

Brent J. Fields

Secretary

Exhibit 21.1

Subsidiaries of IEC Electronics Corp.

September 30, 2016



Subsidiary	State of Incorporation

IEC Electronics Wire and Cable, Inc.	New York

IEC Electronics Corp.-Albuquerque	New Mexico

IEC Analysis & Testing Laboratory, LLC	New Mexico

IEC California Holdings, Inc.	Delaware

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-103847, 333-122181, 333-151218, 333-174884 and 333-180041 on Form S-8 of IEC Electronics Corp. of our report dated December 16, 2016 relating to the financial statements, appearing in this Annual Report on Form 10-K.

/s/Crowe Horwath LLP

New York, New York

December 16, 2016

Exhibit 31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffrey T. Schlarbaum, certify that:


1.	I have reviewed this Annual Report on Form 10-K for the year ended September 30, 2016 of IEC Electronics Corp.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Dated: December 16, 2016		/s/ Jeffrey T. Schlarbaum
		Jeffrey T. Schlarbaum
		President and Chief Executive Officer

Exhibit 31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael T. Williams, certify that:


1.	I have reviewed this Annual Report on Form 10-K for the year ended September 30, 2016 of IEC Electronics Corp.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Dated: December 16, 2016		/s/ Michael T. Williams
		Michael T. Williams
		Chief Financial Officer

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the the Annual Report of IEC Electronics Corp. (the "Company") on Form 10-K for the fiscal year ended September 30, 2016 as filed with the Securities and Exchange Commission on the day hereof (the "Report"), I, Jeffrey T. Schlarbaum, President and Chief Executive Officer of the Company and Michael T. Williams, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Dated: December 16, 2016		/s/ Jeffrey T. Schlarbaum
		Jeffrey T. Schlarbaum
		President and Chief Executive Officer



Dated: December 16, 2016		/s/ Michael T. Williams
		Michael T. Williams
		Chief Financial Officer