IEC ELECTRONICS CORP (Form: 8-K, Received: 12/23/2010 15:21:03)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) – December 17, 2010

IEC ELECTRONICS CORP.

(Exact Name of Registrant as Specified in its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

0-6508	13-3458955
(Commission File Number)	(IRS Employer Identification No.)

1 05 Norton Street, Newark, New York 14513

(Address of principal executive offices)(Zipcode)

(315) 331-7742

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01

Entry into a Material Definitive Agreement

Southern California Braiding Co., Inc. Purchase Agreement

On December 17, 2010, CSCB, Inc. (“Buyer”), a newly formed, wholly owned subsidiary of IEC Electronics Corp. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) made among the Buyer, Southern California Braiding Co., Inc. (“Seller”), 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 (“Exemption Trust”), 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 (“Survivor’s Trust”), Leo P. McIntyre (“McIntyre”) and Craig Pfefferman (“Pfefferman,” collectively with the Seller, Exemption Trust, Survivor’s Trust, and McIntyre, the “Selling Parties”). Pursuant to the Purchase Agreement, the Buyer acquired substantially all of the assets of the Seller (the “Transaction”). The Company guaranteed performance of the Buyer’s obligations under the Purchase Agreement.

The Transaction purchase price was $25,000,000, which included $24,391,000 in cash, 100,000 shares of restricted Company stock valued at $609,000, and assumption of certain operating liabilities of Seller. The purchase price was subject to adjustment based upon closing working capital of the Seller. An estimated adjustment at closing resulted in an additional payment of $1,639,458 to Seller at closing. The final working capital adjustment will be determined subsequent to the closing date, and may result in a cash payment to the Buyer or Seller, as the case may be. The cash portion of the purchase price was financed with loans from Manufacturers and Trader’s Trust Company (“Bank”) in transactions discussed below.

Of the purchase price, $2,500,000 was deposited in escrow to cover (i) certain indemnification obligations, (ii) a portion of any shortfall in 2011 gross sales below $20,000,000 and 2011 backlog below $10,000,000, (iii) adjustments in working capital, subject to replenishment of the escrow by the Seller, and (iv) accounts receivable not fully reserved in the working capital adjustment that are not collected within 180 days, subject to replenishment of the escrow by the Seller. Any portion of the escrow not used to cover claims will be released to the Seller on March 31, 2012. In addition, a supplemental escrow of $623,162 was established and will be released upon Buyer’s receipt of certain customer consents to assumption of contracts by the Buyer.

The Selling Parties entered into a five-year agreement not to compete with the purchased business. Pfefferman will be employed by the Buyer post-closing.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is filed as Exhibit 2.1 to this Report. The Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company or the other parties thereto. The Purchase Agreement contains representations and warranties the parties thereto made to, and solely for the benefit of, the other parties thereto. Certain representations and warranties were made as of a specific date, may be subject to a contractual standard of materiality different from those generally applicable to shareholders and investors, or may have been used for purposes of allocating risk between the respective parties rather than establishing matters as facts. Accordingly, investors should not rely on the representations and warranties as characterizations of the actual state of facts at the time they were made or otherwise, and investors should not rely on the representations and warranties for any other purpose. In addition, the Purchase Agreement is modified by the underlying disclosure schedules. Information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreements, and such change may or may not be fully reflected in the Company’s public disclosures.

Third Amended and Restated Credit Facility Agreement

On December 17, 2010, the Company entered into a Third Amended and Restated Credit Agreement (“Third Amended Credit Agreement”) with Manufacturers and Traders Trust Company (“Lender”), a New York banking corporation, pursuant to which the Lender has agreed to provide the Company with $51,544,493 in aggregate of senior secured credit facilities. These facilities modify and replace the existing Revolving Credit Commitment, extend the existing Equipment Line through December 17, 2013 continuing the term debt outstanding thereunder, provide for a new SCB Term Loan in the principal amount of $20,000,000, and include the existing Energy Loan (original amount $203,000, of which $94,506 was outstanding as of December 17, 2010), the existing 2008 Term Loan (original amount $1,700,000, of which $349,980 was outstanding as of December 17, 2010), the existing M&T Sale-Leaseback (“Lease/Term Loan Facility”), the existing GTC Term Loan (original amount of $5,000,000, of which $4,000,004 was outstanding on December 17, 2010), the existing Mortgage Secured Term Loan (original amount of $4,000,000, of which $3,733,336 was outstanding on December 17, 2010), and the existing Celmet Term Loan (original amount of $2,000,000, of which $1,866,667 was outstanding on December 17, 2010), as outlined in the Second Amended and Restated Credit Facility Agreement dated July 30, 2010, as amended September 13, 2010, between the Company and the Lender (“Prior Agreement”) which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 5, 2010. The Third Amended Credit Agreement amends and restates in its entirety the Prior Agreement.

The following is a summary of the new senior secured facilities:

A $20,000,000 Revolving Credit Commitment ("Revolving Credit Loans"). Borrowings under this facility cannot exceed the lesser of the Borrowing Base and $20,000,000. The Borrowing Base is the sum of 85% of eligible receivables plus 35% of eligible inventories up to $3,750,000, or in the case of overline advances, 70% of eligible inventories up to $4,750,000. The revolving credit facility terminates on December 17, 2013 at which time all Revolving Credit Loans will be repaid in full. The Company may elect an overline advance under the Revolving Credit Facility if no overline advance has been outstanding in the prior 30 days, and upon such request the interest rate on the Revolving Credit Loans is increased 0.5 percentage points. Overline advances must be repaid within 60 days and amounts outstanding in excess of the Borrowing Base must be repaid immediately. The Company will incur quarterly commitment fees based on the unused amount of the Revolving Credit Facility.

A $20,000,000 Term Loan (the "SCB Term Loan"). The SCB Term Loan will be paid in sixty equally monthly payments of $333,333.33 each on the first day of each month, and matures on December 17, 2015.

The rates of interest applicable to the Energy Loan and existing loans with fixed rates under the Equipment Line remain unchanged. Revolving Credit Loans, floating rate and new loans under the Equipment Line, the 2008 Term Loan, the GTC Term Loan, the Mortgage Secured Term Loan, the Celmet Term Loan, and the SCB Term Loan now bear interest at LIBOR plus the Applicable Margin. The Applicable Margin is based on the Company's Total Debt/EBITDARS, and ranges from 3.75 percentage points for Total Debt/EBITDARS equal to or greater than 3.25:1.00, to 2.25 percentage points for Total Debt/EBITDARS less than 1.75:1.00. On the date of closing, the Applicable Margin was 3.25%. Interest on all facilities is payable monthly.

The Third Amended Credit Agreement requires the Company to apply all net cash proceeds from the sales of assets out of the ordinary course of business if the proceeds exceed $100,000 in the aggregate and all net cash proceeds from property casualty insurance not applied to purchase replacement property to the prepayment of loans under the Third Amended Credit Agreement. In addition, there is a mandatory prepayment equal to 50% of Excess Cash Flow (as defined in the Third Amended Credit Agreement) for the fiscal year last ended to be applied first to the SCB Term Loan, then to the Celmet Term Loan, then to the GTC Term Loan, then to the Mortgage Secured Term Loan and then to the 2008 Term Loan.

Of the amounts disbursed under the Third Amended Credit Agreement, approximately $26,030,000 was paid to the Selling Parties and into escrow as cash consideration under the Purchase Agreement described above and below under Item 2.01, and the balance of $155,000 was applied to certain transaction expenses.

The loans under the Third Amended Credit Agreement are subject to acceleration upon the occurrence of any of the following events of default: failure to make payments under the Third Amended Credit Agreement within ten days of the due date; failure to perform any other obligation to Lender under the Third Amended Credit Agreement subject, in the case of certain covenants, to an opportunity to cure within 30 days after notice; failure to perform any obligation to Lender other than under the Third Amended Credit Agreement after any applicable cure or grace periods; default in the payment of other indebtedness in excess of the principal amount of $100,000; inaccuracy of any representation and warranty in the Third Amended Credit Agreement or related documents; filing of a petition in bankruptcy not stayed, bonded or vacated within 60 days of filing or similar events evidencing the financial difficulties of the Company; occurrence of a Change of Control (as defined in the Third Amended Credit Agreement); unenforceability of any security document entered into in connection with the Third Amended Credit Agreement; occurrence of any event that makes any employee benefit plan of the Company subject to termination under ERISA; or suspension or termination of any government contract of the Company that would have a material adverse effect on the Company.

The Third Amended Credit Agreement contains various covenants that, among other restrictions, limit the Company’s ability and the ability of its subsidiaries to:

incur debts or grant liens;

make certain investments;

engage in mergers and acquisitions or sell, transfer, assign or convey assets;

amend the Company’s certificate of incorporation or bylaws;

pay dividends or distributions on or repurchase the Company’s capital stock;

change the nature of its business;

form subsidiaries; and

engage in transactions with affiliates.

The Third Amended Credit Agreement also contains covenants requiring the Company to maintain:

a Debt to EBITDARS Ratio (as defined in the Third Amended Credit Agreement), on a consolidated basis, no greater than 3.50 to 1.00 at closing and through September 29, 2011; no greater than 3.25 to 1.00 September 30, 2011 through September 29, 2012; no greater than 3.00 to 1.00 September 30, 2012 through September 29, 2013, and no greater than 2.75 to 1.00 September 30, 2013 and thereafter. The covenant shall be reported at the end of each fiscal quarter, and for calculation purposes related to the business of Buyer for periods prior to that ending on December 31, 2010, EBITDARS applicable to Buyer will be treated as $1,592,000 per applicable fiscal quarter (the “Buyer EBITDARS Assumption”); and

A minimum quarterly EBITDARS (as defined in the Third Amended Credit Agreement), on a consolidated basis, equal to or greater than $1,5000,000, measured at the end of each fiscal; and

At all times a Fixed Charge Coverage Ratio (as defined in the Third Amended Credit Agreement), on a consolidated basis, equal to or greater than 1.25 to 1.00, reported at the end of each fiscal quarter, and for calculation purposes related to the business of Buyer for periods prior to that ending on December 31, 2010, using the Buyer EBITDARS Assumption.

The Company’s obligations under the Third Amended Credit Agreement are secured by, among other things, (i) a security interest in all of the assets of the Company, IEC Electronics Wire and Cable, Inc. ("IECW&C"), General Technology Corporation (“GTC”) and Buyer, granted on the terms and subject to the conditions of an Amended and Restated General Security Agreement dated as of December 16, 2009 by the Company, IECW&C and GTC in favor of the Lender (“Security Agreement”) and the Supplement to Security Agreement dated as of December 17, 2010 ; (ii) a pledge of all of the Company’s equity interest in IECW&C, GTC and Buyer on the terms and subject to the conditions of that Amended and Restated Pledge Agreement dated as of December 17, 2010 by and between the Company and the Lender; (iii) a negative pledge on the Company’s real property on the terms and subject to the conditions of that Negative Pledge Agreement dated as of May 30, 2008 by and between the Company and the Lender and (iv) a mortgage in favor of the Lender made by GTC covering GTC's interest in property and improvements located at premises at 1450 Mission Avenue NE, Albuquerque, New Mexico. The Company’s obligations under the Third Amended Credit Agreement are also guaranteed by IECW&C, GTC and Buyer.

Item 2.01

Completion of Acquisition of Disposition of Assets

On December 17, 2010 the Buyer completed the acquisition of substantially all of the assets of the Seller pursuant to the Purchase Agreement and on the terms discussed in Item 1.01 above.

The Seller, located in Bell Gardens, California, provides precision, high reliability wire, cable and harness products to military and defense markets, primarily military prime contractors and NASA, built to withstand the demands of extreme environments. The Seller’s annual revenues for 2010 are expected to be in the range of $20,000,000. Other than in connection with the acquisition, none of the Selling Parties has had any material relationship with the Company, the Buyer, any of their affiliates, any director or officer of the Company or Buyer, or any associate of any such director or officer.

On December 17, 2010 the Company issued a press release announcing the acquisition of the Seller which was disclosed in the Company’s Current Report on Form 8-K filed on that date.

The financial statements required under Item 9.01(a) to be filed in connection with the completion of the Company’s acquisition of the Seller are not included in the initial filing of this Current Report on Form 8-K and shall be filed by amendment not later than 71 days after the date on which this Current Report on Form 8-K is filed.

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

On December 17, 2010, the Company entered into the Third Amended Credit Agreement on the terms discussed in Item 1.01 above.

Item 9.01

Financial Statements and Exhibits

(d) Exhibits

Exhibit 2.1*	Asset Purchase Agreement dated December 17, 2010 by and 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
	*	Schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request. Contents of schedules are described in the list of schedules attached at the end of the filed agreement.
Exhibit 10.1	Third Amended and Restated Credit Agreement dated December 17, 2010 by and between IEC Electronics Corp. and Manufacturers and Traders Trust Company

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		IEC Electronics Corp.
		(Registrant)

Date: December 23, 2010	By:	/s/ W. Barry Gilbert
		W. Barry Gilbert
		Chairman, Chief Executive Officer

Exhibit 2.1

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “ Agreement ”), dated as of December 17, 2010, is entered into among SOUTHERN CALIFORNIA BRAIDING CO., INC., a California corporation (“ Seller ”), 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 (“ Exemption Trust ”), 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 (“ Survivor Trust ”), CRAIG PFEFFERMAN (“ Pfefferman ”), an individual, and LEO P. McINTYRE ( McIntyre ”), an individual (with Exemption Trust, Survivor Trust, Pfefferman, and McIntyre individually and collectively called “ Shareholders ” for identification purposes, it being understood that McIntyre is not actually a stockholder of Seller) and CSCB, Inc., a Delaware corporation (“ Buyer ”).

RECITALS:

WHEREAS, Seller is engaged in the business of manufacturing, selling, servicing and supporting cable assemblies, molded cables, wiring harnesses, multi-conductor cable, specialty cables, “Black Box” inter-connecting devices, fiber optics, test panels and cabinets, connectors and specialty electro-mechanical assemblies and similar or related products, as well as providing engineering and manufacturing feasibility and capabilities studies, including such other and all business carried on by Seller currently or within the past three years or currently directly and actually planned or proposed to be carried on by Seller to the actual knowledge of Shareholders or the members of the senior management team of Seller that report directly to Craig Pfefferman (collectively, the “ Business ”); and

WHEREAS, Seller wishes to sell and assign to Buyer, and Buyer wishes to purchase and assume from Seller, substantially all the assets, and certain specified liabilities, of the Business, subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATION

1.1 Definitions . The following terms have the meanings specified or referred to in this Article 1:

“ Accounts Receivable ” has the meaning set forth in Section 2.1(a).

“ Action ” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

“ Affiliate ” of a Person means any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled By, or is Under Common Control With, such Person.

“ Agreement ” has the meaning set forth in the preamble.

“ Assigned Contracts ” has the meaning set forth in Section 2.1(c).

“ Assignment and Assumption Agreement ” has the meaning set forth in Section 3.2(a)(iii).

“ Assignment and Assumption of Lease ” has the meaning set forth in Section 3.2(a)(iv).

“ Assumed Liabilities ” has the meaning set forth in Section 2.3.

“ Audited Financial Statements ” has the meaning set forth in Section 4.4.

“ Balance Sheet ” has the meaning set forth in Section 4.4.

“ Balance Sheet Date ” has the meaning set forth in Section 4.4.

“ Benefit Plan ” has the meaning set forth in Section 4.19(a).

“ Bill of Sale ” has the meaning set forth in Section 3.2(a)(ii).

“ Books and Records ” has the meaning set forth in Section 2.1(m).

“ Business ” has the meaning set forth in the recitals.

“ Business Day ” means any day except Saturday, Sunday or any other day on which commercial banks located in New York are authorized or required by Law to be closed for business.

“ Buyer ” has the meaning set forth in the preamble.

“ Buyer Basket Exclusions ” has the meaning set forth in Section 7.4(a).

“ Buyer Indemnitees ” has the meaning set forth in Section 7.2.

“ Buyer’s Accountants ” means EFP Rotenberg, LLC or such other firm as may be designated by Buyer.

“ CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.

“ Closing ” has the meaning set forth in Section 3.1.

“ Closing Backlog ” means the closing backlog shown on Seller’s books in the Ordinary Course of Business as of the Closing Date related to customers listed in Section 1.1 (a) .

“ Closing Date ” has the meaning set forth in Section 3.1.

“ Closing Working Capital ” means: (a) Current Assets, less (b) Current Liabilities, determined as of the open of business on the Closing Date as more particularly described in Section 2.6.

“ Closing Working Capital Statement ” has the meaning set forth in Section 2.6(a)(i).

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Collections Statement ” has the meaning set forth in Section 6.8(c).

“ Contracts ” means all contracts, leases, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.

“ Control ” (including the terms “ Controlled By ” and “ Under Common Control With ”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ Current Assets ” means the current assets of the Business that are Purchased Assets and are “Accounts receivable less allowance for doubtful accounts” “Inventory,” “Prepaid expenses” and Deposits related to Purchased Assets; provided, however, to the extent that they would be otherwise included therein, Current Assets shall not include (i) tax assets such as prepaid Taxes, (ii) prepaid expenses related to Excluded Assets, Excluded Contracts and Excluded Liabilities, and (iii) cash.

“ Current Liabilities ” means the current liabilities of the Business that are “Accounts payable” and “Accrued expenses;” provided, however, to the extent that they would otherwise be included therein, Current Liabilities shall not include (i) Excluded Liabilities, (ii) liabilities for Taxes, (iii) liabilities for transaction costs and transfer taxes related to the transactions contemplated by this Agreement, and (iv) obligations, including salary, bonus, benefits, and any others, to Employees.

“ Designated Consents ” means the consents shown on Section 1.1 (a) of the Disclosure Schedules and further described in Section 2.9.

“ Direct Claim ” has the meaning set forth in Section 7.5(c).

“ Disclosure Schedules ” means the Disclosure Schedules delivered by Seller and Buyer concurrently with the execution and delivery of this Agreement.

“ Disputed Amounts ” has the meaning set forth in Section 2.6(b)(iii).

“ Dollars or $ ” means the lawful currency of the United States.

“ Employees ” means those Persons employed by Seller in connection with the Business immediately prior to the Closing Date.

“ Encumbrance ” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“ Environmental Attributes ” means any emissions and renewable energy credits, energy conservation credits, benefits, offsets and allowances, emission reduction credits or words of similar import or regulatory effect (including emissions reduction credits or allowances under all applicable emission trading, compliance or budget programs, or any other federal, state or regional emission, renewable energy or energy conservation trading or budget program) that have been held, allocated to or acquired for the development, construction, ownership, lease, operation, use or maintenance of the Business or the Purchased Assets or as of (i) the date of this Agreement and (ii) future years for which allocations have been established and are in effect as of the date of this Agreement.

“ Environmental Claim ” means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from (a) the presence, Release of, or exposure to, any Hazardous Materials or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

“ Environmental Law ” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata) or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq., the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq., the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq., the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq., the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq., the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq., the California Safe Drinking Water and Toxic Enforcement Act of 1986 (known as “Proposition 65”), Health & Safety Code Secs. 25249.5 et seq, the California Global Warming Solutions Act of 2006, Health & Safety Code 38500 et seq and, as applicable, all Laws and other requirements of the European Union or other foreign jurisdiction of a similar nature.

“ Environmental Notice ” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

“ Environmental Permit ” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law and/or issued by a Governmental Authority.

“ Environmental Report ” means the Phase I Environmental Site Assessment and Limited Compliance Review dated December 7, 2010 related to Seller and prepared by Environmental Resources Management.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“ Escrow Agent ” means Wells Fargo.

“ Escrow Agreement ” means the Escrow Agreement among Buyer, Seller and the Escrow Agent, to be executed and delivered at the Closing in the form attached hereto as Exhibit A .

“ Escrow Amount ” means the sum of $2,500,000 to be deposited with the Escrow Agent and held in escrow pursuant to Section 2.5(b) and the Escrow Agreement.

“ Estimated Closing Working Capital ” has the meaning set forth in Section 2.5(d).

“ Estimated Closing Working Capital Adjustment ” has the meaning set forth in Section 2.5(d).

“ Excluded Assets ” has the meaning set forth in Section 2.2.

“ Excluded Contracts ” has the meaning set forth in Section 2.2(b).

“ Excluded Liabilities ” has the meaning set forth in Section 2.4.

“ Excluded Liability Objection Notice ” has the meaning set forth in Section 6.14.

“ Excluded Liability Payment Notice ” has the meaning set forth in Section 6.14.

“ Financial Statement s” has the meaning set forth in Section 4.4.

“ FIRPTA Certificate ” has the meaning set forth in Section 3.2(a)(viii).

“ GAAP ” means United States generally accepted accounting principles in effect from time to time, as codified in the Accounting Standards Codification.

“ Governmental Authority ” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

“ Governmental Order ” means any order, writ, judgment, injunction, decree, consent decree, stipulation, determination or award entered by or with any Governmental Authority.

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

“ Guarantor’s Transfer Agent ” means Registrar and Transfer Company, 10 Commerce Drive, Cranford, New Jersey 07016-3572, Attention: Rick E. Boyle (800-866-1340 ext. 2609).

“ Hazardous Materials ” means (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, polychlorinated biphenyls and greenhouse gases (including carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride).

“ Impaired Benefits ” means the aggregate Closing Backlog for Raytheon agreements listed in and purchase orders referenced in Section 1.1 (a) of the Disclosure Schedules .

“ Indemnified Party ” has the meaning set forth in Section 7.5.

“ Indemnifying Party ” has the meaning set forth in Section 7.5.

“ Independent Accountants ” means Grant Thornton, LLP.

“ Insurance Policies ” has the meaning set forth in Section 4.15.

“ Intellectual Property ” means all of the following and similar intangible property and related proprietary rights, interests and protections, however arising, pursuant to the Laws of any jurisdiction throughout the world: (a) trademarks, service marks, trade names, brand names, logos, trade dress and other proprietary indicia of goods and services, whether registered, unregistered or arising by Law, and all registrations and applications for registration of such trademarks, including intent-to-use applications, and all issuances, extensions and renewals of such registrations and applications, (b) internet domain names, whether or not trademarks, registered in any generic top level domain by any authorized private registrar or Governmental Authority, (c) original works of authorship in any medium of expression, whether or not published, all copyrights (whether registered, unregistered or arising by Law), all registrations and applications for registration of such copyrights, and all issuances, extensions and renewals of such registrations and applications, (d) confidential information, formulas, designs, devices, technology, know-how, research and development, inventions, methods, processes, compositions and other trade secrets, whether or not patentable and (e) patented and patentable designs and inventions, all design, plant and utility patents, letters patent, utility models, pending patent applications and provisional applications and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations and renewals of such patents and applications.

“ Intellectual Property Assets ” means all Intellectual Property that is owned by Seller and used in or necessary for the conduct of the Business as conducted during the past three years and as currently planned or proposed to be conducted.

“ Intellectual Property Assignments ” has the meaning set forth in Section 3.2(a)(iv).

“ Intellectual Property Licenses ” means all licenses, sublicenses and other agreements by or through which other Persons, including Seller’s Affiliates, Shareholders or Related Persons, grant Seller exclusive or non-exclusive rights or interests in or to any Intellectual Property that is used in or necessary for the conduct of the Business as currently conducted but in all cases excluding off-the-shelf software licenses.

“ Intellectual Property Registrations ” means all Intellectual Property Assets that are subject to any issuance, registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.

“ Interim Balance Sheet ” has the meaning set forth in Section 4.4.

“ Interim Balance Sheet Date ” has the meaning set forth in Section 4.4.

“ Interim Financial Statem ents” has the meaning set forth in Section 4.4.

“ Inventory ” has the meaning set forth in Section 2.1(b).

“ Knowledge of Seller or Seller’s Knowledge ” or any other similar knowledge qualification, means the actual knowledge of Leo P. McIntyre or Craig Pfefferman, or knowledge either of such Persons could be expected to discover or otherwise become aware of in the course of conducting an reasonably comprehensive investigation of management level employees or others likely to have special knowledge of a situation regarding the accuracy of the matter in question.

“ Law ” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

“ Leased Real Property ” has the meaning set forth in Section 4.10(b).

“ Leases ” has the meaning set forth in Section 4.10(b).

“ Liabilities ” means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

“ Losses ” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, diminution of value, costs or expenses of whatever kind, whether or not from Third Party Claims, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers and defending any claims.

“ Material Adverse Effect ” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Business, (b) the value of the Purchased Assets, or (c) the ability of Seller to consummate the transactions contemplated hereby on a timely basis, but in determining whether a Material Adverse Effect has occurred, there shall be excluded any effect, condition, event, change or occurrence impacting Seller to the extent caused by any actions taken, delayed or omitted to be taken by Seller at the request of Buyer, or any of its representatives.

“ Material Contracts ” has the meaning set forth in Section 4.7(a).

“ Material Customers ” has the meaning set forth in Section 4.14(a).

“ Material Suppliers ” has the meaning set forth in Section 4.14(b).

“ Negotiation Period ” has the meaning set forth in Section 2.5(c).

“ Objection Discussion Period ” has the meaning set forth in Section 6.14.

“ Ordinary Course of Business ” with respect to any action taken by a person means such action is consistent in nature and scope with the past practices of such Person, is of a magnitude either consistent in nature and scope with the past practices of such Person or reasonably related to the then current needs of the Business, and is taken in the ordinary course of normal, day-to-day operations of such Person.

“ Owned Real Property ” has the meaning set forth in Section 4.10(a).

“ Permits ” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from any applicable Governmental Authorities.

“ Permitted Encumbrances ” has the meaning set forth in Section 4.8(a)(i).

“ Person ” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

“ Pfefferman Escrow Shares ” means 96,413 restricted shares of Guarantor that has a Closing Date market value of $587,155.17, based upon the closing price for Guarantor stock the second last Business Day immediately prior to the Closing Date, delivered by Buyer to the Escrow Agent.

“ Pfefferman Purchase Shares ” means 3,587 restricted shares of Guarantor.

“ Post-Closing Adjustment ” has the meaning set forth in Section 2.6(a)(ii).

“ Post-Closing Tax Period ” means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date.

“ Pre-Closing Tax Period ” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

“ Purchase Price ” has the meaning set forth in Section 2.5.

“ Purchased Assets ” has the meaning set forth in Section 2.1.

“ Qualified Benefit Plan ” has the meaning set forth in Section 4.19(c).

“ Real Property ” means, collectively, the Owned Real Property and the Leased Real Property.

“ Related Person ” of any Person means any immediate family member including a parent or parent inlaw, sibling or sibling inlaw, child or child inlaw, grandchild or grandchild inlaw, or first cousin or first cousin inlaw.

“ Release ” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

“ Representative ” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

“ Resolution Period ” has the meaning set forth in Section 2.6(b)(ii).

“ Restricted Business ” means the Business, including without limitation the procurement, manufacture, or sale of products or services of the kind procured, manufactured, or sold in the Business.

“ Restricted Period ” has the meaning set forth in Section 6.3(a).

“ Review Period ” has the meaning set forth in Section 2.6(b)(i).

“ Seller ” has the meaning set forth in the preamble.

“ Seller Basket Exclusions ” has the meaning set forth in Section 7.4(b).

“ Seller Indemnitees ” has the meaning set forth in Section 7.3.

“ Seller’s Accountants ” means Kushner, Smith, Joanou & Gregson, LLP.

“ Shareholders ” has the meaning set forth in the preamble to this Agreement.

“ Statement of Objections ” has the meaning set forth in Section 2.6(b)(ii).

“ Subsidiary ” of any Person means any other Person that directly or indirectly, through one or more intermediaries, is Controlled By such Person.

“ Supplemental Escrow Amount ” means the aggregate sum of the Impaired Benefits, to be deposited with the Escrow Agent and held in escrow pursuant to the Escrow Agreement.

“ Tangible Personal Property ” has the meaning set forth in Section 2.1(e).

“ Target Working Capital ” has the meaning set forth in Section 2.6(a)(ii).

“ Taxes ” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

“ Tax Return ” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“ Territory ” means any geographic area in which the Business has been transacted or carried on, not limited to areas in which Seller has physical locations.

“ Third Party Claim ” has the meaning set forth in Section 7.5(a).

“ Third Party Consent ” shall have the meaning provided in Section 2.9.

“ Transaction Documents ” means this Agreement, the Escrow Agreement, the Bill of Sale, the Assignment and Assumption Agreement, Intellectual Property Assignments, Assignment and Assumption of Leases, and the other agreements, instruments and documents required to be delivered at the Closing.

“ Undisputed Amounts ” has the meaning set forth in Section 2.6(b)(iii).

“ WARN Act ” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.

“ Working Capital Adjustment ” has the meaning set forth in Section 2.5(d).

1.2 Interpretation . For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”, (b) the word “or” is not exclusive and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein (i) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement, (ii) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (iii) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

ARTICLE 2

PURCHASE AND SALE

2.1 Purchase and Sale of Assets . Subject to the terms and conditions set forth herein, at the Closing, Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller, free and clear of any Encumbrances other than Permitted Encumbrances, all of Seller’s right, title and interest in, to and under all of the assets, properties and rights of every kind and nature, whether real, personal or mixed, tangible or intangible (including goodwill), wherever located and whether now existing or hereafter acquired (other than the Excluded Assets), which relate to, or are used or held for use in connection with, the Business (collectively, the “ Purchased Assets ”), including the following:

(a) all accounts or notes receivable held by Seller, and any security, claim, remedy or other right related to any of the foregoing (“ Accounts Receivable ”);

(b) all inventory, finished goods, raw materials, work in progress, packaging, supplies, parts and other inventories (“ Inventory ”);

(c) all Contracts with Seller’s customers and all offers or solicitations made by or to Seller to enter into such Contracts, all Intellectual Property Licenses, and all other Contracts including set forth on Section 2.1(c) of the Disclosure Schedules , (the “ Assigned Contracts ”);

(d) all Intellectual Property Assets;

(e) all furniture, fixtures, equipment, machinery, tools, molds, vehicles, office equipment, supplies, computers, telephones and other tangible personal property (the “ Tangible Personal Property ”);

(f) all Leased Real Property;

(g) to the extent transferable, all Permits, including Environmental Permits, which are held by Seller and required for the conduct of the Business as currently conducted or for the ownership and use of the Purchased Assets, including those listed on Section 4.17(b) and Section 4.18(b) of the Disclosure Schedules ;

(h) all rights to any Actions of any nature available to or being pursued by Seller to the extent related to the Purchased Assets or the Assumed Liabilities (not including Liabilities assumed pursuant to Section 2.4(h), whether arising by way of counterclaim or otherwise;

(i) all prepaid expenses, credits, advance payments, claims, security, refunds, rights of recovery, rights of set-off, rights of recoupment, deposits, charges, sums and fees related to the Purchased Assets (excluding any such item relating to the payment of Taxes);

(j) all of Seller’s rights under warranties, indemnities, non-competition agreements, non-disclosure agreements, non-solicitation agreements, exclusive relationships, and all similar rights against third parties to the extent related to any Purchased Assets;

(k) all insurance benefits, including rights and proceeds, arising from or relating to the Business, the Purchased Assets or the Assumed Liabilities, but not including proceeds of insurance for Excluded Liabilities covered by Section 2.4(e);

(l) all trade names, including all rights to use the name “Southern California Braiding” and derivatives thereof;

(m) originals, or where not available, copies, of all books and records, including, but not limited to, books of account, ledgers and general, financial and accounting records, machinery and equipment maintenance files, customer lists, customer purchasing histories, price lists, distribution lists, supplier lists, manuals, production data, quality control records and procedures, customer complaints and inquiry files, research and development files, records and data (including all correspondence with any Governmental Authority), sales material and records (including pricing history, total sales, terms and conditions of sale, sales and pricing policies and practices), strategic plans, internal financial statements, marketing and promotional surveys, material and research and intellectual property files relating to the Intellectual Property Assets and the Intellectual Property Licenses, but not including items described in Section 2.2(d) (“ Books and Records ”);

(n) non-exclusive rights to use training programs and materials currently used in the Business; and

(o) all goodwill and the going concern value of the Business.

2.2 Excluded Assets . Notwithstanding the foregoing, the Purchased Assets shall not include the following assets (collectively, the “ Excluded Assets ”):

(a) cash and cash equivalents;

(b) Contracts that are not Assigned Contracts (the “ Excluded Contracts ”);

(d) the corporate seals, organizational documents, minute books, stock books, Tax Returns, books of account or other documents or records having to do with the corporate organization of Seller or the maintenance and existence of Seller including taxpayer and other identification numbers; Tax Returns, Tax information and Tax records; auditors’ work papers; all books and records prepared or received in connection with the sale of the Business, including legal advice received in connection therewith, offers received from prospective purchasers and any information relating to such offers; and books and records related exclusively to the Excluded Assets or the Excluded Liabilities;

(e) Benefit Plans;

(f) notes made by Affiliates, Shareholders or Related Persons payable to, and other obligations of Affiliates, Shareholders and Related Persons to, Seller;

(g) the assets, properties and rights specifically set forth on Section 2.2(g) of the Disclosure Schedules ;

(h) all attorney-client privileged communications with, and attorney work product for, Seller with respect to Excluded Assets or Excluded Liabilities;

(i) prepaid Taxes, prepaid expenses not part of Purchased Assets, refunds to Seller unless included in Current Assets in the Closing Working Capital, and deposits and returns pertaining to Taxes that are Seller’s obligation.

(j) the rights which accrue or will accrue to Seller under the Transaction Documents.

2.3 Assumed Liabilities . Subject to the terms and conditions set forth herein, Buyer shall assume and agree to pay, perform and discharge only the following Liabilities of Seller (collectively, the “ Assumed Liabilities ”), and no other Liabilities:

(a) all accounts payable of Seller to third parties for which there is an adequate accrual in the Closing Working Capital;

(b) all Liabilities in respect of the Assigned Contracts but only to the extent that such Liabilities thereunder relate to periods after the Closing Date or there is an adequate accrual for the Liabilities thereunder in the Closing Working Capital; provided in either case that such Liabilities were incurred in the Ordinary Course of Business and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation by Seller on or prior to the Closing Date; and

(c) Liabilities for customer markdowns, rebates, returns, refunds, chargebacks, discounts and allowances for which there is an adequate accrual in the Closing Working Capital.

2.4 Excluded Liabilities . Except for the Assumed Liabilities, Buyer shall not assume and shall not be responsible to pay, perform or discharge any Liabilities of Shareholders, Seller or any of their Affiliates of any kind or nature whatsoever other than the Assumed Liabilities (the “ Excluded Liabilities ”). Seller shall, and shall cause each of its Shareholders and Affiliates to, pay and satisfy in due course all Excluded Liabilities which they are obligated to pay and satisfy. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but not be limited to, the following:

(a) any Liabilities of Seller arising or incurred in connection with the negotiation, preparation, investigation and performance of this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, including fees and expenses of counsel, accountants, consultants, advisers, brokers shown on Section 4.22 of the Disclosure Schedules and any others;

(b) any Liability (including Encumbrances) for (i) Taxes of Seller (or any Shareholder or Affiliate of Seller) or relating to the Business, the Purchased Assets or the Assumed Liabilities for any Pre-Closing Tax Period, (ii) Taxes that arise out of the consummation of the transactions contemplated hereby or that are the responsibility of Seller pursuant to Section 6.9 or (iii) other Taxes of Seller (or any Shareholder or Affiliate of Seller) of any kind or description (including any Liability for Taxes of Seller (or any Shareholder or Affiliate of Seller) that becomes a Liability of Buyer under any common law doctrine of de facto merger or transferee or successor liability or otherwise by operation of contract or Law);

(d) any Liabilities (including Encumbrances) in respect of any Action (including any pending or threatened Action) arising out of, relating to or otherwise in respect of the operation of the Business or the Purchased Assets to the extent such Action relates to such operation on or prior to the Closing Date;

(e) any product Liability or similar claim for injury to a Person or property which arises out of or is based upon any express or implied representation, warranty, agreement or guaranty made by Seller, or by reason of the improper performance or malfunctioning of a product, improper design or manufacture, failure to adequately package, label or warn of hazards or other related product defects of any products at any time manufactured, distributed or sold or any service performed by Seller;

(f) any recall, design defect or similar claims as to any products manufactured, distributed or sold or any service performed by Seller;

(g) any Liabilities of Seller arising under or in connection with any Benefit Plan providing benefits to any present or former employee of Seller;

(h) any Liabilities of Seller to any present or former employees, temporary employees, agents or independent contractors of Seller, of any kind or nature, including any Liabilities associated with any claims for wages (including overtime, unpaid meal breaks, accrued unused vacation, PTO, WARN pay, commissions and bonuses and associated interest and penalties) or other benefits, bonuses, workers’ compensation (including claims made or claims incurred but not reported), severance, retention, termination or other payments or any claims under any employment, severance, retention or termination agreement with any employee, former employee, agent or independent contractor of Seller;

(i) any Environmental Claims, or Liabilities under Environmental Laws, to the extent arising out of or relating to facts, circumstances or conditions existing on or prior to the Closing Date or otherwise to the extent arising out of any actions or omissions of Seller;

(j) any accounts payable of Seller (i) to the extent for which there is not an adequate accrual in the Closing Working Capital, (ii) which constitute intercompany payables owing to Shareholders, Related Persons or Affiliates of Seller, or (iii) which constitute debt, loans or credit facilities to financial institutions;

(k) any Liabilities (including Encumbrances) of the Business relating to or arising from unfulfilled commitments, quotations, purchase orders, customer orders or work orders that (i) do not constitute part of the Purchased Assets issued by the Business’ customers to Seller on or before the Closing Date, (ii) did not arise in the Ordinary Course of Business or (iii) are not validly and effectively assigned to Buyer pursuant to this Agreement;

(l) any Liabilities to indemnify, reimburse or advance amounts to any present or former stockholder, officer, director, employee, consultant, advisor or agent of Seller (including with respect to any breach of fiduciary obligations by same), except for indemnification of same pursuant to Section 7.3 as Seller Indemnitees;

(m) any Liabilities (including Encumbrances) under the Excluded Contracts or any other Contracts, including Intellectual Property Licenses, (i) which are not validly and effectively assigned to Buyer pursuant to this Agreement, subject, however to Section 2.9(a), (ii) which do not conform to the representations and warranties with respect thereto contained in this Agreement or (iii) to the extent such Liabilities arise out of or relate to a breach by Seller of such Contracts prior to the Closing Date;

(n) any Liabilities (including Encumbrances) associated with debt, loans, letters of credit or credit facilities of Seller owing to financial institutions;

(o) any Liability to distribute to any of Seller’s shareholders or otherwise apply any part of the consideration received hereunder; and

(p) any Liabilities arising out of, in respect of or in connection with the failure by Seller or any of its Shareholders or Affiliates to comply with any Law or Governmental Order.

2.5 Purchase Price . The aggregate purchase price for the Purchased Assets shall be $25,000,000, subject to adjustment pursuant to Section 2.5(d) and Section 2.6 hereof (the “ Purchase Price ”), plus the assumption of the Assumed Liabilities. The Purchase Price shall be paid as follows:

(a) The Purchase Price less the Escrow Amount and Supplemental Escrow Amount shall be paid by (i) deposit in FedEx, for next Business Day delivery, of a written direction to the Guarantor’s Transfer Agent, with accompanying opinion of counsel, to issue and deliver the Pfefferman Purchase Shares to Pfefferman, (ii) delivery of $3,941,001 in cash to Pfefferman, and (iii) delivery of $19,553,450 in cash to the Seller, or at Seller’s request to the Exemption Trust and/or Survivor Trust, with the afore-referenced cash deliveries to be made by wire transfer of immediately available funds to an account designated in writing by the recipient to Buyer or Buyer’s counsel no later than one Business Day prior to the Closing Date which shall be held in trust for Buyer until completion of the Closing; and

(b) The Escrow Amount shall be deposited by (i) deposit in FedEx, for next Business Day delivery, of a written direction to the Guarantor’s Transfer Agent, with accompanying opinion of counsel, to issue and deliver the Pfefferman Escrow Shares in the name of Pfefferman to the Escrow Agent, and (ii) wire transfer of $2,536,007.36 in immediately available funds into an account designated by the Escrow Agent, each of which shall be held and distributed to Seller in accordance with the terms of the Escrow Agreement, subject, however, to reduction (and corresponding distribution to Buyer) in accordance with the terms of the Escrow Agreement to satisfy:

(i) any adjustments to the Purchase Price in favor of Buyer pursuant to Section 2.6(a) not timely paid by Seller, subject, however, to Seller’s ongoing obligation to replenish any such amount,

(ii) any and all claims made by Buyer or any other Buyer Indemnitee against Seller pursuant to Article 7,

(iii) in the event gross sales of the acquired Business are less than $20,000,000 in calendar 2011, 30% of the difference between $20,000,000 and the actual total amount of gross sales for such period,

(iv) in the event the backlog of the acquired Business at the end of calendar 2011 is less than $10,000,000, 30% of the difference between $10,000,000 and the actual total backlog for such period,

(v) any payment made by Buyer in accordance with Section 6.8, subject, however, to Seller’s ongoing obligation to replenish any such amount, and

(vi) any payment made by Buyer in accordance with Section 6.14, subject, however, to Seller’s ongoing obligation to replenish any such amount.

(c) Buyer agrees to act in good faith and not take any commercially unreasonable actions which would result in an unreasonable distortion of the sales or backlog calculations used in determining any adjustments to the Purchase Price pursuant to Section 2.5(b)(iii) and Section 2.5(b)(iv) above. Buyer will deliver to Seller a copy of any Shortfall Escrow Notice given under the Escrow Agreement. After receipt of the Shortfall Escrow Notice from Buyer, Seller shall have 30 days to review the Shortfall Escrow Notice. During such review period, Seller and Seller’s Accountants, at Seller’s expense, shall have full access to the relevant books and records of Buyer, the personnel of, and work papers prepared by, Buyer and/or Buyer’s Accountants to the extent that they relate to the Shortfall Escrow Notice and to such historical financial information (to the extent in Buyer’s possession) relating to the Shortfall Escrow Notice as Seller may reasonably request for the purpose of reviewing the Shortfall Escrow Notice and to prepare any objections, provided, that such access shall be scheduled with Buyer in advance and shall be in a manner that does not interfere with the normal business operations of Buyer. In the event that Seller in good faith believes that Buyer has not acted in good faith and or has taken any such commercially unreasonable actions, Seller may give a Dispute Notice as provided in the Escrow Agreement provided that such Dispute Notice is given within thirty (30) days after the Shortfall Escrow Notice is given. Such Dispute Notice shall specify in reasonable detail the disputed amount and the basis for the dispute. The Buyer and Seller shall negotiate in good faith to resolve such disputed matters within 30 days after the delivery of the Dispute Notice (the “ Negotiation Period ”), and, if the same are so resolved, in whole or in part, within the Negotiation Period, the Buyer and Seller shall give joint written instructions to the Escrow Agent specifying what, if any portion, of the disputed amount shall be released to the Buyer under the Escrow Agreement. If the disputed matters are not so resolved, then the parties shall submit such dispute to the Independent Accountants that shall act as the arbitrator. Each of Buyer and Seller will have the opportunity to present to, and discuss with, the Independent Accountants any material related to the dispute. The determination shall be made by the Independent Accountants within thirty (30) days after submission of the dispute to it, and the Independent Accountants’ decision will be final and binding upon the parties. The fees and expenses of the Independent Accountants shall be borne by the Seller and Buyer in proportion to the respective amounts by which the arbitrator makes an adverse determination to each of them.

(d) The Supplemental Escrow Amount shall be deposited by wire transfer of immediately available funds into an account designated by the Escrow Agent and shall be held and distributed to Seller in applicable portions upon receipt of applicable Designated Consents in accordance with the terms of the Escrow Agreement, subject, however, to distribution of remaining portions to Buyer upon failure of Seller to provide such Designated Consents within the time provided in the Escrow Agreement. Buyer shall have no obligation to make shipments to customers from which Designated Consents are required until such respective consents are received.

(e) The Purchase Price shall be reduced in the event that the Closing Working Capital is less than $2,713,852 (the “ Target Working Capital ”). Such reduction will be reflected as a reduction in the Purchase Price by an amount equal to the difference between the Target Working Capital and the Closing Working Capital. The Purchase Price payable at Closing shall be increased in the event that such Closing Working Capital is greater than the Target Working Capital. Such increase will be reflected as an increase in the Purchase Price by an amount equal to the difference between the Closing Working Capital and the Target Working Capital. Such reduction or increase shall be referred to herein as the “ Working Capital Adjustment .” The Working Capital Adjustment shall be calculated and paid in two stages. An initial adjustment shall be made to the Purchase Price payable at Closing based upon a statement of the estimated Closing Working Capital (the “ Estimated Closing Working Capital ”) as of the Closing prepared by Seller’s Accountants in accordance with Section 2.6(a)(i) and delivered by Seller to Buyer two (2) Business Days prior to Closing. The Purchase Price payable at Closing will reflect any difference between Target Working Capital and Estimated Closing Working Capital (the “ Estimated Closing Working Capital Adjustment ”). The final calculation of the adjustment to the Purchase Price shall be based upon the Closing Working Capital Statement referred to in Section 2.6(a)(i) and shall take into account the Post-Closing Adjustment (if any) pursuant to 2.6(a)(ii) below. Payment with respect to any Post-Closing Adjustment shall be made as provided in 2.6(b)(vi) below.

2.6 Purchase Price Adjustment .

(a) Post-Closing Adjustment .

(i) Within 90 days after the Closing Date, Buyer shall prepare and deliver to Seller (A) a statement (the “ Closing Working Capital Statement ”) setting forth its calculation of Closing Working Capital with supporting detail comparable to that contained in the statement of Estimated Closing Working Capital, and (B) a certificate of the Chief Financial Officer of Buyer that the Closing Working Capital Statement was prepared in accordance with this subsection. The Estimated Working Capital Adjustment shall be prepared (A) in the case of inventory, using the audited inventory value established in Seller’s Account’s Independent Accountant’s Report on Applying Agreed Upon Procedures as of November 30, 2010 delivered under letter dated December 9, 2010, and (B) in the case of other items, including accounts receivable less reserve for doubtful accounts, deposits related to Purchased Assets, accounts payable, and accrued expenses, not including accrued obligations to Employees, as shown in Seller’s internal reports. The final Working Capital Adjustment shall be based upon a reconciliation of the categories of items listed in (A) and (B) as included in the Estimated Working Capital Adjustment to actual as of the Closing Date.

(ii) The “ Post-Closing Adjustment ” shall be an amount equal to the Closing Working Capital, as finally determined pursuant to this Section 2.6, minus Estimated Closing Working Capital. If the Post-Closing Adjustment is a positive number, Buyer shall pay to Seller an amount equal to the Post-Closing Adjustment. If the Post-Closing Adjustment is a negative number, Seller shall pay to Buyer an amount equal to the Post-Closing Adjustment.

(b) Examination and Review .

(i) Examination . After receipt of the Closing Working Capital Statement from Buyer, Seller shall have 30 days (the “ Review Period ”) to review the Closing Working Capital Statement. During the Review Period, Seller and Seller’s Accountants shall have full access to the relevant books and records of Buyer, the personnel of, and work papers prepared by, Buyer and/or Buyer’s Accountants to the extent that they relate to the Closing Working Capital Statement and to such historical financial information (to the extent in Buyer’s possession) relating to the Closing Working Capital Statement as Seller may reasonably request for the purpose of reviewing the Closing Working Capital Statement and to prepare a Statement of Objections (defined below), provided, that such access shall be scheduled with Buyer in advance and shall be in a manner that does not interfere with the normal business operations of Buyer.

(ii) Objection . On or prior to the last day of the Review Period, Seller may object to the Closing Working Capital Statement by delivering to Buyer a written statement setting forth Seller’s objections in reasonable detail, indicating each disputed item or amount and the basis for Seller’s disagreement therewith (the “ Statement of Objections ”). If Seller fails to deliver the Statement of Objections before the expiration of the Review Period, the Closing Working Capital Statement and the Post-Closing Adjustment, as the case may be, reflected in the Closing Working Capital Statement shall be deemed to have been accepted by Seller and shall be final and binding. If Seller delivers the Statement of Objections before the expiration of the Review Period, Buyer and Seller shall negotiate in good faith to resolve such objections within 30 days after the delivery of the Statement of Objections (the “ Resolution Period ”), and, if the same are so resolved within the Resolution Period, the Post-Closing Adjustment and the Closing Working Capital Statement with such changes as may have been previously agreed in writing by Buyer and Seller, shall be final and binding.

(iii) Resolution of Disputes . If Seller and Buyer fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections before expiration of the Resolution Period, then any amounts remaining in dispute (“ Disputed Amounts ” and any amounts not so disputed, the “ Undisputed Amounts ”) shall be submitted for resolution to the Independent Accountants who, acting as experts and not arbitrators, shall resolve the Disputed Amounts only and make any adjustments to the Post-Closing Adjustment, as the case may be, and the Closing Working Capital Statement. The parties hereto agree that all adjustments shall be made without regard to materiality. The Independent Accountants shall only decide the specific items under dispute by the parties and their decision for each Disputed Amount must be within the range of values assigned to each such item in the Closing Working Capital Statement and the Statement of Objections, respectively.

(iv) Fees of the Independent Accountants . If such a determination is necessary and (A) the Working Capital Adjustment, as finally determined, is greater than the last amount proposed by the Seller, then the fees and expenses of such accounting firm will be borne by the Buyer, and (B) the Working Capital Adjustment, as finally determined, is less than the last amount proposed by the Seller, then the fees and expenses of such accounting firm will be borne by the Seller.

(v) Determination by Independent Accountants . The Independent Accountants shall make a determination as soon as practicable within 30 days (or such other time as the parties hereto shall agree in writing) after their engagement, and their resolution of the Disputed Amounts and their adjustments to the Closing Working Capital Statement and/or the Post-Closing Adjustment shall be conclusive and binding upon the parties hereto.

(vi) Payments of Post-Closing Adjustment . Except as otherwise provided herein, payment of any Post-Closing Adjustment, together with interest calculated as set forth below, shall be paid by wire transfer of immediately available funds to such account as is directed by Buyer or Seller, as the case may be. Such payment shall be due:

(A) if there are no Disputed Amounts, within five Business Days of acceptance of the applicable Closing Working Capital Statement, or

(B) if there are Disputed Amounts, as to the Undisputed Amounts then on or before the fifth Business Day after the last day of the Resolution Period, and as to Disputed Amounts, on or before the fifth Business Day after the resolution described in clause (v) above.

Any payment (including interest) of the Post-Closing Adjustment owed by Seller to Buyer and not promptly paid by Seller shall be paid to Buyer by the Escrow Agent from the Escrow Amount pursuant to the terms of the Escrow Agreement, and Seller shall reimburse the amount of any such payment to the Escrow Agent immediately with interest calculated as set forth herein. The amount of any Post-Closing Adjustment shall bear interest from and including the date on which the payment is finally determined and due (or in the case of reimbursement of the Escrow Agent, from and including the date the Escrow Agent made payment to the Buyer), to but excluding the date of payment at four percent (4%) per annum. Such interest shall be calculated daily on the basis of a 365 day year and the actual number of days elapsed, without compounding.

(c) Adjustments for Tax Purposes . Any payments made pursuant to Section 2.6 shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law.

2.7 Allocation of Purchase Price . Seller and Buyer agree that $100,000 of the Purchase Price shall be allocated to the covenants contained in Section 6.3. Buyer will advise Seller of its allocation of the remaining Purchase Price when completed.

2.8 Guaranty .

(a) Guarantor joins in and executes this Agreement for the sole purpose of evidencing its agreement to this Section 2.8, and shall have no obligation or liability hereunder except as provided in this Section 2.8.

(b) Guarantor hereby guarantees for the benefit of the Seller and Shareholders the full, faithful and punctual performance of all obligations and covenants made and undertaken by Buyer in this Agreement, in accordance with their terms; provided, however, Guarantor shall have no obligation for the Assumed Liabilities. This undertaking shall be for the sole and exclusive benefit of Seller and Shareholders and no other Person shall be a third party beneficiary or shall have any rights against Guarantor or benefits based upon the Guarantor’s agreement made in this subsection.

(c) The obligations of Guarantor under this Section 2.8 shall survive the Closing. Upon failure by Buyer, after written demand by Seller and Shareholders with a copy to Guarantor, to perform its obligations and covenants undertaken in this Agreement in accordance with their terms, separate action may be brought and prosecuted against Guarantor hereunder without necessity of Seller and Shareholder pursuing any other remedy in the power of such Seller or Shareholder whatsoever, including against Buyer, prior to enforcing the obligations of Guarantor under this Section 2.8. Guarantor shall be entitled to any defenses, counterclaims, setoffs, or other remedies or benefits to which Buyer could otherwise avail itself.

(d) Guarantor agrees that any circumstance which operates to toll the statute of limitations as to Buyer or Shareholders shall also operate to toll the statute of limitations as to Guarantor. Buyer and Shareholders agree that any statute of limitations or time limitation for the benefit of Seller under this Agreement shall be equally applicable for the benefit of Guarantor.

(e) Guarantor authorizes the Seller and/or Shareholders, without affecting or impairing the liability of Guarantor under this Section 2.8, from time to time to amend this Agreement in accordance with Section 8.8 to release Buyer from any of its obligations hereunder or thereunder or waive any of the conditions hereof or thereof.

(f) Seller may, without notice to or the further consent of Buyer or Guarantor, assign its rights hereunder in whole or in part to any permitted assignee of this Agreement in accordance with Section 10.6.

(g) Except to the extent expressly provided in this Agreement, with respect to its obligations under this Section 2.8, Guarantor waives all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, and notices of acceptance of this Agreement.

2.9 Third Party Consents; Permits .

(a) To the extent that Seller’s rights under any Contract constituting a Purchased Asset, or any other Purchased Asset, may not be assigned to Buyer without the consent of another Person (“ Third Party Consent ”) that has not been obtained, including those consents described in Section 4.17(b) of the Disclosure Schedules , this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful, and Shareholders shall cause Seller, and Seller, at its expense, shall use its reasonable best efforts to obtain any such required consent(s) (including, if applicable, novations) as promptly as possible. If any Third Party Consent shall not be obtained or if any attempted assignment would be ineffective or would impair Buyer’s rights under the Purchased Asset in question so that Buyer would not in effect acquire the benefit of all such rights, Shareholders shall cause Seller, and Seller, to the maximum extent permitted by law and the Purchased Asset, and upon Buyer’s request, shall act after the Closing as Buyer’s agent in order to obtain for it the benefits thereunder and, at Buyer’s request, shall cooperate, to the maximum extent permitted by Law and the Purchased Asset, with Buyer in any other reasonable arrangement designed to provide such benefits to Buyer. In any such arrangement requested by Buyer, Buyer shall have the sole responsibility with respect to the completion of the work; shall bear all costs and expenses with respect thereto; shall be solely entitled to the benefits thereof; and shall be solely responsible for any breach of warranty with respect to performance of such agreements after the Closing Date.

(b) Certain Third Party Consents are listed on Schedule 1.1(a) of the Disclosure Schedules . The parties agree that, in addition to the other obligations and rights of the parties under this Section 2.9, failure by Seller to deliver any of such listed Third Party Consents (“ Designated Consents ”) shall result in Buyer’s right to payment of the Impaired Benefits set forth in such Schedule under the circumstances set forth in the Escrow Agreement. Any such payment shall be treated as a reduction of Purchase Price hereunder. The Buyer acknowledges that the Third Party Consent may be general in nature and may not specifically reference each and every agreement listed in Schedule 1.1(a) of the Disclosure Schedules , so long as such Third Party Consent reasonably permits Buyer to assume and fulfill such agreements and receive the benefits thereof.

(c) The Seller shall provide reasonable cooperation to Buyer as requested by Buyer in connection with issuance to Buyer of Permits necessary for continued operation of the Business after the Closing Date.

(d) This Section 2.9 shall survive Closing.

ARTICLE 3

CLOSING

3.1 Closing . Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at such time, date or place as Seller and Buyer may mutually agree. The date on which the Closing occurs is herein referred to as the “ Closing Date ” and the effective time of the Closing shall be 12:01 a.m. New York time on the Closing Date. The parties agree that the Transaction Documents may be executed and delivered in electronically scanned format, which shall be legally binding upon the parties, provided that the parties will deliver originally executed copies of the Transaction Documents promptly after the Closing Date (it being understood that any failure to deliver such originally executed copies shall not affect the validity of the signatures delivered in electronically scanned format).

3.2 Closing Deliverables .

(a) At the Closing, Seller shall deliver to Buyer the following:

(i) the Escrow Agreement duly executed by Seller;

(ii) a bill of sale in substantially the form of Exhibit B hereto (the “ Bill of Sale ”) and duly executed by Seller, transferring the tangible personal property included in the Purchased Assets to Buyer;

(iii) an assignment and assumption agreement in substantially the form of Exhibit C hereto (the “ Assignment and Assumption Agreement ”) and duly executed by Seller, effecting the assignment to and assumption by Buyer of the Purchased Assets and the Assumed Liabilities;

(iv) assignments in substantially the form of Exhibit D hereto (the “ Intellectual Property Assignments ”) and duly executed by Seller, transferring all of Seller’s right, title and interest in and to the Intellectual Property Assets and the Intellectual Property Licenses to Buyer;

(v) with respect to each Lease, an Assignment and Assumption of Lease in form and substance satisfactory to Buyer (each, an “ Assignment and Assumption of Lease ”) and duly executed by Seller and the applicable lessor;

(vi) a power of attorney in substantially the form of Exhibit E hereto and duly executed by Seller;

(vii) evidence satisfactory to Buyer that all Encumbrances relating to the Purchased Assets shall have been released in full, other than Permitted Encumbrances;

(viii) a certificate pursuant to Treasury Regulations Section 1.1445-2(b) (the “ FIRPTA Certificate ”) that Seller is not a foreign person within the meaning of Section 1445 of the Code duly executed by Seller;

(ix) the certificates of the Secretary or Assistant Secretary of Seller certifying (A) that attached thereto are true and complete copies of all resolutions adopted by the board of directors of Seller authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby, and (B) the names and signatures of the officers of Seller authorized to sign this Agreement, the Transaction Documents and the other documents to be delivered hereunder and thereunder; and

(x) such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Buyer, as may be required to give effect to this Agreement;

and delivery by Pfefferman to the Escrow Agent an executed undated stock power covering the Pfefferman Escrow Shares.

(b) At the Closing, Buyer shall deliver to Seller the following:

(i) the Purchase Price less the Escrow Amount and Supplemental Escrow Amount;

(ii) the Escrow Agreement duly executed by Buyer;

(iii) the Assignment and Assumption Agreement duly executed by Buyer;

(iv) with respect to each Lease, an Assignment and Assumption of Lease duly executed by Buyer; and

(v) a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyer certifying (A) that attached thereto are true and complete copies of all resolutions adopted by the board of directors of Buyer authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby, and (B) the names and signatures of the officers of Buyer authorized to sign this Agreement, the Transaction Documents and the other documents to be delivered hereunder and thereunder.

(c) At the Closing, Buyer shall deliver the Escrow Amount and Supplemental Escrow Amount to the Escrow Agent pursuant to the Escrow Agreement.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the correspondingly numbered Section of the Disclosure Schedules, Seller and each Shareholder severally, but not jointly, represent and warrant to Buyer that the statements contained in this Article 4 are true and correct as of the date hereof.

4.1 Organization and Qualification of Seller; Subsidiaries . Seller is a corporation duly organized, validly existing and in good standing under the Laws of the state of California and has full corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on the Business as currently conducted. Section 4.1 of the Disclosure Schedules sets forth each jurisdiction in which Seller is licensed or qualified to do business, and Seller is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the ownership of the Purchased Assets or the operation of the Business as currently conducted makes such licensing or qualification necessary except where such failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect. Seller has no Subsidiaries.

4.2 Authority of Seller and Shareholders .

(a) Seller has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and any other Transaction Document to which Seller is a party, the performance by Seller of its obligations hereunder and thereunder and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by Buyer and Guarantor) this Agreement constitutes a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except as such enforceability against Seller may be limited by limitations on enforceability against Buyer or Guarantor by virtue of bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies against Buyer or Guarantor. When each other Transaction Document to which Seller is or will be a party has been duly executed and delivered by Seller (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Seller enforceable against it in accordance with its terms, except as such enforceability against Seller may be limited by limitations on enforceability against Buyer or Guarantor by virtue of bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies against Buyer or Guarantor.

(b) Each Shareholder has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which such Shareholder is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Shareholders of this Agreement and any other Transaction Document to which Shareholders are party, the performance by Shareholders of their obligations hereunder and thereunder and the consummation by Shareholders of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Shareholders. This Agreement has been duly executed and delivered by Shareholders, and (assuming due authorization, execution and delivery by Buyer) this Agreement constitutes a legal, valid and binding obligation of Shareholders enforceable against Shareholders in accordance with its terms, except as such enforceability against Shareholder may be limited by limitations on enforceability against Buyer or Guarantor by virtue of bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies against Buyer or Guarantor. When each other Transaction Document to which any Shareholder is or will be a party has been duly executed and delivered by such Shareholder (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of such Shareholder enforceable against it in accordance with its terms, except as such enforceability against Shareholder may be limited by limitations on enforceability against Buyer or Guarantor by virtue of bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies against Buyer or Guarantor.

4.3 No Conflicts; Consents . The execution, delivery and performance by Seller of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby (including assignment of the Assigned Contracts, Leased Real Property, and Intellectual Property Assets), do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of Seller, (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Seller, the Business or the Purchased Assets, (c) except as set forth in Section 4.3 of the Disclosure Schedules , require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract or Permit to which Seller is a party or by which Seller or the Business is bound or to which any of the Purchased Assets are subject (including any Assigned Contract or agreement related to Leased Real Property or Intellectual Property Assets) or (d) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on the Purchased Assets. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Seller in connection with the execution and delivery of this Agreement or any of the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby (except for Permits set forth in Section 4.3 of the Disclosure Schedules required for continued operation of the Business in the Ordinary Course of Business immediately after Closing).

4.4 Financial Statements . Complete copies of the financial statements consisting of the balance sheet of the Business as of December 31, 2009 and the related statements of income and retained earnings, stockholders’ equity and cash flow for the year then ended audited by Seller’s Accountant (the “ Audited Financial Statements ”), and unaudited, financial statements prepared by Seller’s Accountant consisting of the balance sheet of the Business as of September 30, 2010 and the related statements of income and retained earnings, stockholders’ equity and cash flow for the nine month period then ended (the “ Interim Financial Statements ” and together with the Audited Financial Statements, the “ Financial Statements ”) have been delivered to Buyer. Except as set forth in Section 4.4 of the Disclosure Schedules , the Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Audited Financial Statements). Except as set forth in Section 4.4 of the Disclosure Schedules , the Financial Statements are based on the books and records of the Business, and fairly present the financial condition of the Business in all material respects as of the respective dates they were prepared and the results of the operations of the Business for the periods indicated. The balance sheet of the Business as of December 31, 2009 that is part of the Audited Financial Statements is referred to herein as the “ Balance Sheet ” and the date thereof as the “ Balance Sheet Date ” and the balance sheet of the Business as of September 30, 2010 is referred to herein as the “ Interim Balance Sheet ” and the date thereof as the “ Interim Balance Sheet Date ”.

4.5 Undisclosed Liabilities . Except as set forth in Section 4.5 of the Disclosure Schedules , Seller has no Liabilities with respect to the Business, except (a) Excluded Liabilities, and (b) those which have either have been paid or are included and adequately reserved for in the Closing Working Capital. For the avoidance of doubt, the Liabilities disclosed in Section 4.5 of the Disclosure Schedules are Excluded Liabilities.

4.6 Absence of Certain Changes, Events and Conditions .

(a) Since the Balance Sheet Date, and other than in the Ordinary Course of Business, except as set forth in Section 4.6 of the Disclosure Schedules there has not been any:

(i) material change in any method of accounting or accounting practice for the Business, except as required by GAAP, as set forth in Section 4.4 of the Disclosure Schedules , or as disclosed in the notes to the Financial Statements;

(ii) material change in cash management practices and policies, practices and procedures with respect to collection of Accounts Receivable, establishment of reserves for uncollectible Accounts Receivable, accrual of Accounts Receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;

(iii) incurrence, assumption or guarantee of any indebtedness for borrowed money in connection with the Business, except unsecured current obligations and Liabilities incurred in the Ordinary Course of Business not including obligations or Liabilities to Seller, Shareholders or their Affiliates and Related Persons;

(iv) transfer, assignment, sale or other disposition of any of the Purchased Assets shown or reflected in the Balance Sheet, except for the sale of Inventory in the Ordinary Course of Business;

(v) cancellation of any debts or claims or amendment, termination or waiver of any rights constituting Purchased Assets except in a writing included in Section 4.7 of the Disclosure Schedules ;

(vi) transfer, assignment or grant of any license or sublicense of any material rights under or with respect to any Intellectual Property Assets or Intellectual Property Licenses;

(vii) material damage, destruction or loss, or any material interruption in use, of any Purchased Assets, whether or not covered by insurance;

(viii) acceleration, termination, material modification to or cancellation of any Assigned Contract or Permit, except in a writing included in Section 4.7 of the Disclosure Schedules ;

(ix) material capital expenditures which would constitute an Assumed Liability;

(x) loan to, or entry into any other transaction with, any Employees, which loan or transaction remains outstanding or ongoing on the Closing Date;

(xi) adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;

(xii) purchase, lease or other acquisition of the right to own, use or lease any property or assets in connection with the Business for an amount in excess of $5,000 individually (in the case of a lease, for the entire term of the lease, not including any option term) or $50,000 in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of Inventory or supplies in the Ordinary Course of Business, leases set forth in Section 4.7 of the Disclosure Schedules , and transactions with respect to which there is no ongoing financial obligation as of the Closing Date;

(xiii) adoption, amendment, modification or termination of any bonus, profit sharing, incentive, severance, or other plan, Contract or commitment for the benefit of any Employees (or any such action taken with respect to any other Benefit Plan); or

(xiv) any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.

(b) Since the Interim Balance Sheet Date, and other than in the Ordinary Course of Business, except as set forth in Section 4.6 of the Disclosure Schedules there has not been any:

(i) event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(ii) entry into any Contract that would constitute a Material Contract;

(iii) imposition of any Encumbrance upon any of the Purchased Assets;

(iv) grant of any bonuses, whether monetary or otherwise, or any general wage or salary increases in respect of any Employees, other than as provided for in any written agreements or consistent with past practice and disclosed on Section 4.6(b)(iv) of the Disclosure Schedules , or change in the terms of employment for any Employee and disclosed on Section 4.6(b)(iv) of the Disclosure Schedules ;

(v) entry into or termination of any employment agreement or collective bargaining agreement covering any of the Employees, written or oral, or modification of the terms of any such existing agreement; or

(vi) any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.

4.7 Material Contracts .

(a) Section 4.7(a) of the Disclosure Schedules lists each of the following Contracts (x) by which any of the Purchased Assets are bound or affected or (y) to which Seller is a party or by which it is bound in connection with the Business or the Purchased Assets (such Contracts, together with all Contracts relating to Intellectual Property set forth in Section 4.11(d) and Section 4.11(f) of the Disclosure Schedules , being “ Material Contracts ”):

(i) all Contracts involving aggregate consideration in excess of $50,000 and that have a term (including the term applicable to any options to renew) extending at least 90 days after the date of this Agreement;

(ii) all Contracts with suppliers to the Business except purchase orders on Seller’s standard purchase order form provided to Buyer prior to the Closing;

(iii) all Contracts that require Seller to purchase or sell a stated portion of the requirements or outputs of the Business or that contain “take or pay” provisions;

(iv) all Contracts that provide for the indemnification of any Person or the assumption of any Tax, environmental or other Liability of any Person;

(v) all Contracts that relate to the acquisition or disposition of any business, a material amount of stock or assets (except inventory or goods intended to become inventory purchased by Seller in the Ordinary Course of Business) of any other Person or any real property (whether by merger, sale of stock, sale of assets or otherwise);

(vi) all broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts;

(vii) all employment agreements and Contracts with temporary employees, independent contractors or consultants (or similar arrangements) and which are not cancellable without penalty or with less than 90 days’ notice;

(viii) except for Contracts relating to trade receivables, all Contracts relating to indebtedness (including guarantees, indemnity bonds and letters of credit);

(ix) all Contracts with any Governmental Authority, including a specific listing of any Contracts requiring HUB Zone or similar designation status;

(x) all Contracts that limit or purport to limit the ability of Seller to compete in any line of business or with any Person or in any geographic area or during any period of time;

(xi) all joint venture, partnership or similar Contracts;

(xii) all Contracts for the sale of any of the Purchased Assets or for the grant to any Person of any option, right of first refusal or preferential or similar right to purchase any of the Purchased Assets;

(xiii) all powers of attorney with respect to the Business or any Purchased Asset;

(xiv) all collective bargaining agreements or Contracts with any labor organization, union or association; and

(xv) all other Contracts that are material to the Purchased Assets or the operation of the Business and not previously disclosed pursuant to this Section 4.7.

(b) Each Material Contract is valid and binding in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies, and is in full force and effect. None of Seller or, to Seller’s Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under) in any material respect, or has provided or received any notice of any intention to terminate, any Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Buyer. There are no material disputes pending or, to Seller’s Knowledge, threatened under any Contract with a customer of Seller, Contract related to Intellectual Property, or other Material Contract included in the Purchased Assets.

(c) With respect to all Contracts with Governmental Authorities with a remaining term of 180 days or more after the date of this Agreement, to the knowledge of Seller and Shareholders, the Seller is not subject to any pending or, to Seller’s Knowledge, threatened debarment proceedings.

4.8 Title to Purchased Assets; Third Party Owned Assets .

(a) Except as set forth in Section 4.8 of the Disclosure Schedules , Seller has good and valid title to, or a valid leasehold interest in, all of the Purchased Assets. All such Purchased Assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as “ Permitted Encumbrances ”):

(i) those items set forth in Section 4.8 of the Disclosure Schedules ;

(ii) liens for Taxes not yet due and payable or being contested in good faith by appropriate procedures and which are Excluded Liabilities;

(iii) mechanics’, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the Ordinary Course of Business or amounts that are not delinquent and which are not, individually or in the aggregate, material to the Business or the Purchased Assets;

(iv) easements, rights of way, zoning ordinances and other similar encumbrances affecting Real Property which are not, individually or in the aggregate, material to the Business or the Purchased Assets, which do not prohibit or interfere with the current operation of any Leased Real Property; or

(v) liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the Ordinary Course of Business which are not, individually or in the aggregate, material to the Business or the Purchased Assets.

(b) Section 4.8(b) of the Disclosure Schedules lists all customer or supplier owned equipment, machinery, tools, molds, inventory and other material tangible property in possession of the Business or located on its premises, and none of which is reflected as a Current Asset in the Interim Balance Sheet, Estimated Closing Working Capital or Closing Working Capital.

(c) Section 4.8(c) of the Disclosure Schedules lists all personal property leases for assets part of the Purchased Assets.

4.9 Condition and Sufficiency of Assets . The buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property included in the Purchased Assets are in good operating condition and repair (reasonable wear and tear excepted), and are reasonably adequate for the uses to which they are being put. The Purchased Assets are sufficient for the continued conduct of the Business after the Closing Date in substantially the same manner as conducted prior to the Closing Date and constitute all of the rights, property and assets necessary to conduct the Business (including fulfillment of employee training and training commitments under Contracts part of the Purchased Assets) as currently conducted. None of the Excluded Assets are material to the Business.

4.10 Real Property .

(a) No real property owned by Seller (together with all buildings, fixtures, structures and improvements situated thereon and all easements, rights-of-way and other rights and privileges appurtenant thereto, collectively, the “ Owned Real Property ”) is used in or necessary for the conduct of the Business as currently conducted.

(b) Section 4.10(b) of the Disclosure Schedules sets forth each parcel of real property leased by Seller and used in or necessary for the conduct of the Business as currently conducted (together with all rights, title and interest of Seller in and to leasehold improvements relating thereto, including, but not limited to, security deposits, reserves or prepaid rents paid in connection therewith, collectively, the “ Leased Real Property ”), and a true and complete list of all leases, subleases, licenses, concessions and other agreements (whether written or oral), including all amendments, extensions renewals, guaranties and other agreements with respect thereto, pursuant to which Seller holds any Leased Real Property (collectively, the “ Leases ”). Seller has delivered to Buyer a true and complete copy of each Lease. With respect to each Lease:

(i) such Lease is valid, binding, enforceable and in full force and effect, and Seller enjoys peaceful and undisturbed possession of the Leased Real Property;

(ii) Seller is not in breach or default under such Lease, and no event has occurred or circumstance exists which, with the delivery of notice, passage of time or both, would constitute such a breach or default by Seller, and Seller has paid all rent and other sums due and payable under or related to such Lease;

(iii) Seller has not received nor given any written notice of any default or event that with notice or lapse of time, or both, would constitute a default by Seller under any of the Leases and, to the Knowledge of Seller, no other party is in default thereof, and no party to any Lease has exercised any termination rights with respect thereto;

(iv) except as set forth in Section 4.10(b) of the Disclosure Schedules , Seller has not subleased, assigned or otherwise granted to any Person the right to use or occupy such Leased Real Property or any portion thereof; and

(v) Seller has not pledged, mortgaged or otherwise granted an Encumbrance on its leasehold interest in any Leased Real Property.

(c) Seller has not received any written notice of (i) violations of building codes and/or zoning ordinances or other governmental or regulatory Laws affecting the Leased Real Property, (ii) existing, pending or threatened condemnation proceedings affecting the Leased Real Property or (iii) existing, pending or threatened zoning, building code or other moratorium proceedings, or similar matters which could reasonably be expected to adversely affect the ability to operate the Leased Real Property as currently operated. Neither the whole nor any material portion of any Leased Real Property has been damaged or destroyed by fire or other casualty.

(d) No tax abatement or other governmental incentive, an no payment-in-lieu of tax agreement or similar arrangement, affects any Leased Real Property.

(e) The Leased Real Property is sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted prior to the Closing and constitutes all of the real property necessary to conduct the Business as currently conducted.

(f) Except as set forth in Section 4.10(f) of the Disclosure Schedules , Seller has no contractual obligations to make any modifications or improvements to any Leased Real Property.

4.11 Intellectual Property .

(a) Section 4.11(a) of the Disclosure Schedules lists all Intellectual Property Registrations. All required filings and fees related to the Intellectual Property Registrations have been timely filed with and paid to the relevant Governmental Authorities and authorized registrars, and all Intellectual Property Registrations are otherwise in good standing. Seller has provided Buyer with true and complete copies of file histories, documents, certificates, office actions, correspondence and other materials related to all Intellectual Property Registrations in Seller’s possession or otherwise reasonably available to Seller.

(b) Except as set forth in Section 4.11(b) of the Disclosure Schedules , Seller owns, exclusively or jointly with other Persons, all right, title and interest in and to the Intellectual Property Assets, free and clear of Encumbrances.

(c) Seller is in full compliance in all material respects with all legal requirements applicable to the Intellectual Property Assets and Seller’s ownership and use thereof.

(d) Section 4.11(d) of the Disclosure Schedules lists all Intellectual Property Licenses. Seller has provided Buyer with true and complete copies of all such Intellectual Property Licenses. All such Intellectual Property Licenses are valid, binding and enforceable between Seller and the other parties thereto, except as such enforceability may be limited by limitations on enforceability against the other parties thereto by virtue of bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies against the other parties thereto, and Seller and, to Seller’s Knowledge, such other parties are in full compliance with the terms and conditions of such Intellectual Property Licenses.

(e) The Intellectual Property Assets and Intellectual Property Licenses as currently or formerly owned, licensed or used by Seller or proposed to be used by Buyer, and the conduct of the Business as currently and formerly conducted by Seller and if conducted in the same manner by Buyer have not and do not infringe, violate or misappropriate the Intellectual Property of any Person. Seller has not received any written communication, or to Seller’s Knowledge other overt communication, and no Action has been instituted, settled or, to Seller’s Knowledge, threatened that alleges any such infringement, violation or misappropriation, and none of the Intellectual Property are subject to any outstanding Governmental Order.

(f) Section 4.11(f) of the Disclosure Schedules lists all licenses, sublicenses and other agreements pursuant to which Seller grants rights or authority to any Person with respect to any Intellectual Property Assets or Intellectual Property Licenses. Seller has provided Buyer with true and complete copies of all such agreements. All such agreements are valid, binding and enforceable between Seller and the other parties thereto, except as such enforceability may be limited by limitations on enforceability against the other parties thereto by virtue of bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies against the other parties thereto, and Seller and, to Seller’s Knowledge, all such other parties are in full compliance with the terms and conditions of such agreements. No Person has infringed, violated or misappropriated, or is infringing, violating or misappropriating, any Intellectual Property Assets.

(g) Seller has taken all reasonable precautions to protect the secrecy, confidentiality and value of all trade secrets to the extent necessary to enable Buyer to enjoy the full benefits thereof.

4.12 Inventory . All Inventory is owned by Seller free and clear of all Encumbrances. Except as listed in Section 4.12 to the Disclosure Schedules , no Inventory is held on a consignment basis or owned by third Persons, and no such consigned or non-owned Inventory is included in the Estimated Closing Working Capital or Closing Working Capital. The quantities of each item of Inventory (whether raw materials, work-in-process or finished goods) are not excessive, but are reasonable in the present circumstances of Seller.

4.13 Accounts Receivable . The Accounts Receivable have arisen from bona fide transactions entered into by Seller involving the sale of goods or the rendering of services in the Ordinary Course of Business.

4.14 Customers and Suppliers .

(a) Section 4.14(a) of the Disclosure Schedules sets forth with respect to the Business (i) each customer who has paid aggregate consideration to Seller for goods or services rendered in an amount greater than or equal to $200,000 in either of 2009 and 2010 year-to-date (collectively, the “ Material Customers ”) and (ii) the amount of consideration paid by each Material Customer during such periods. Seller has not received any written notice, and to Seller’s Knowledge there has been no oral communication or discussion, that any of the Material Customers has ceased, or is considering or intending to cease after the Closing, to use the goods or services of the Business or to otherwise terminate or materially reduce its relationship with the Business.

(b) Section 4.14(b) of the Disclosure Schedules sets forth with respect to the Business (i) each supplier to whom Seller has paid consideration for goods or services rendered in an amount greater than or equal to $100,000 in either of 2009 and 2010 year-to-date (collectively, the “ Material Suppliers ”) and (ii) the amount of purchases from each Material Supplier during such periods. Except as set forth in Section 4.14(b) of the Disclosure Schedules , Seller has not received any written notice, and to Seller’s Knowledge there has been no oral communication or discussion, that any of the Material Suppliers has ceased, or is considering or intending to cease after the Closing, to supply goods or services to the Business or to otherwise terminate or materially reduce its relationship with the Business.

(c) Except as set forth in Section 4.14(c) of the Disclosure Schedules , no supplier of any goods or services to Seller that are necessary for the fulfillment of the Assigned Contracts is a sole source for such goods or services, unless such sole source supplier is and will be under an enforceable legal obligation to provide such goods and services to the Seller and Buyer.

4.15 Insurance . Section 4.15 of the Disclosure Schedules sets forth (a) a true and complete list of all current policies or binders of fire, earthquake, wind, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, fiduciary liability and other casualty and property insurance maintained by Seller or its Affiliates and relating to the Business, the Purchased Assets or the Assumed Liabilities (collectively, the “ Insurance Policies ”), (b) whether each policy is an occurrence or claims-made policy, and (c) with respect to the Business, the Purchased Assets or the Assumed Liabilities, a list of all pending claims and the claims history for Seller since January 1, 2008. There are no claims related to the Business, the Purchased Assets or the Assumed Liabilities pending under any such Insurance Policies as to which coverage has been denied or disputed or in respect of which there is an outstanding reservation of rights. Neither Seller nor any of its Affiliates has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if not yet due, accrued. All such Insurance Policies (a) are in full force and effect and enforceable in accordance with their terms, (b) are, to Seller’s Knowledge, provided by carriers who are financially solvent and (c) have not been subject to any lapse in coverage. None of Seller or any of its Affiliates is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy. The Insurance Policies are sufficient for compliance with all applicable Laws and Contracts to which Seller is a party or by which it is bound. True and complete copies of the Insurance Policies have been made available to Buyer.

4.16 Legal Proceedings; Governmental Orders .

(a) Except as disclosed in Section 4.16(a) of the Disclosure Schedules , there are no Actions pending or, to Seller’s Knowledge, threatened against or by Seller relating to or affecting the Business, the Purchased Assets or the Assumed Liabilities.

(b) There are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against, relating to or affecting the Business.

4.17 Compliance With Laws; Permits .

(a) Seller has complied, and is now complying, in all material respects with all Laws applicable to the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets.

(b) All Permits required for Seller to conduct the Business as currently conducted or for the ownership and use of the Purchased Assets have been obtained by Seller and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. Section 4.17(b) of the Disclosure Schedules lists all current Permits issued to Seller which are related to the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Section 4.17(b) of the Disclosure Schedules .

4.18 Environmental Matters .

(a) The operations of Seller with respect to the Business and the Purchased Assets are currently and have been in compliance with all Environmental Laws. Seller has not received from any Person, with respect to the Business or the Purchased Assets, any: (i) Environmental Notice or Environmental Claim or (ii) written request for information pursuant to Environmental Law or Environmental Permit, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date.

(b) Seller has obtained and is in compliance with all Environmental Permits (each of which is disclosed in Section 4.18(b) of the Disclosure Schedules ) necessary for the conduct of the Business as currently conducted or the ownership, lease, operation or use of the Purchased Assets. All such Environmental Permits are in full force and effect and shall be maintained in full force and effect by Seller through the Closing Date in accordance with Environmental Law, and Seller has not received any Environmental Notice or written communication regarding any adverse change in the status or terms and conditions of the same. Except as described in Section 7.3 of the Environmental Report no Environmental Permits are necessary in order for Buyer to operate the Business as currently conducted after the Closing. With respect to any such Environmental Permits, Seller has undertaken, or will undertake prior to the Closing Date, all measures reasonably necessary to alleviate any conditions that would prevent Buyer from obtaining Environmental Permits legally required to operate the Business in a manner consistent with operation of the Business by the Seller.

(c) Except as disclosed in Section 4.18(c) of the Disclosure Schedules , none of the Business or the Purchased Assets or any real property currently or formerly owned, leased or operated by Seller in connection with the Business is listed on, or has been proposed for listing on, the National Priorities List (or CERCLIS) under CERCLA, or any similar list maintained by a Governmental Authority other than the United State Environmental Protection Agency.

(d) There has been no Release of Hazardous Materials in contravention of Environmental Law or Environmental Permit with respect to the Business or the Purchased Assets or any real property currently or formerly owned, leased or operated by Seller in connection with the Business, and Seller has not received an Environmental Notice that any of the Business or the Purchased Assets or real property currently or formerly owned, leased or operated by Seller in connection with the Business (including soils, groundwater, surface water, buildings and other structure located thereon) has been contaminated with any Hazardous Material which could reasonably be expected to result in an Environmental Claim against, or a violation of Environmental Law or term of any Environmental Permit by, Seller.

(e) Section 4.18(e) of the Disclosure Schedules contains a complete and accurate list of all active or abandoned aboveground or underground storage tanks owned or operated by Seller in connection with the Business or the Purchased Assets.

(f) Section 4.18(f) of the Disclosure Schedules contains a complete and accurate list of all on-site and off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by Seller and any predecessors in connection with the Business or the Purchased Assets as to which Seller may retain liability, and none of these facilities or locations has been placed or proposed for placement on the National Priorities List (or CERCLIS) under CERCLA, or any similar list maintained by a Governmental Authority other than the United States Environmental Protection Agency, and Seller has not received any Environmental Notice regarding potential liabilities with respect to such on-site or off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by Seller.

(g) Seller has not retained or assumed, by contract or operation of Law, any liabilities or obligations of third parties under Environmental Law or any Environmental Permit.

(h) Seller and Shareholders have provided or otherwise made available to Buyer and listed in Section 4.18(h) of the Disclosure Schedules : (i) any and all environmental reports, studies, audits, records, sampling data, site assessments, risk assessments, economic models and other similar documents with respect to the Business or the Purchased Assets or any real property currently or formerly owned, leased or operated by Seller in connection with the Business, which are in the possession or control of Seller or Shareholders, related to compliance with Environmental Laws, Environmental Permits, Environmental Claims or an Environmental Notice or the Release of Hazardous Materials, and (ii) any and all documents concerning planned or anticipated capital expenditures required to reduce, offset, limit or otherwise control pollution and/or emissions, manage waste or otherwise ensure compliance with current or future Environmental Laws and Environmental Permits (including costs of remediation, pollution control equipment and operational changes).

(i) Neither Seller nor any Shareholder is aware of, or reasonably anticipates on the basis of any Law, or notice, proposal or agreement that is in writing as of the Closing Date, any condition, event or circumstance concerning the Release or regulation of Hazardous Materials that might, after the Closing Date, prevent, impede or materially increase the costs associated with the ownership, lease, operation, performance or use of the Business or the Purchased Assets as currently carried out.

(j) Seller does not own any Environmental Attributes.

4.19 Employee Benefit Matters .

(a) Section 4.19(a) of the Disclosure Schedules contains a true and complete list of each benefit, retirement, employment, compensation, incentive, stock option, restricted stock, stock appreciation right, phantom equity, change in control, severance, vacation, paid time off, fringe-benefit and other similar agreement, plan, policy, program and other arrangement (and any amendments thereto), whether or not reduced to writing, in effect and covering one or more Employees, former employees, temporary employees, consultants and contract workers and the beneficiaries and dependents of any such Employee or former employee, temporary employee, consultant and contract worker of the Business, that is maintained, sponsored, contributed to, or required to be contributed to by Seller, or under which Seller has or may have any liability for premiums or benefits (as listed on Section 4.19(a) of the Disclosure Schedules , each, a “ Benefit Plan ”).

(b) With respect to each Benefit Plan, Seller has made available to Buyer accurate, current and complete copies of each of the following: (i) where the Benefit Plan has been reduced to writing, the plan document together with all amendments, (ii) where the Benefit Plan has not been reduced to writing, a written summary of all material plan terms, (iii) where applicable, copies of any trust agreements, custodial agreements, insurance policies, administration agreements and similar agreements and investment management or investment advisory agreements, (iv) copies of any summary plan descriptions, employee handbooks or similar employee communications relating to any Benefit Plan, (v) in the case of any Benefit Plan that is intended to be qualified under Section 401(a) of the Code, a copy of the most recent determination letter from the Internal Revenue Service, (vi) in the case of any Benefit Plan for which Forms 5500 are required to be filed, a copy of the most recently filed Forms 5500, with schedules attached, and (vii) copies of material notices, letters or other correspondence from the Internal Revenue Service, Department of Labor or Pension Benefit Guaranty Corporation relating to the Benefit Plan.

(c) Each Benefit Plan complies in all material respects with all applicable Laws (including ERISA and the Code and the regulations promulgated thereunder). Each Benefit Plan that is intended to be qualified under Section 401(a) of the Code (a “ Qualified Benefit Plan ”) has received a favorable and current determination letter from the Internal Revenue Service, or with respect to a prototype plan, can rely on an opinion letter from the Internal Revenue Service to the prototype plan sponsor, to the effect that such Qualified Benefit Plan is so qualified and that the plan and the trust related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, and nothing has occurred that could reasonably be expected to cause the revocation of such determination letter from the Internal Revenue Service or the unavailability of reliance on such opinion letter from the Internal Revenue Service, as applicable. Nothing has occurred with respect to any Benefit Plan that has subjected or could reasonably be expected to subject Seller or, with respect to any period on or after the Closing Date, Buyer or any of its Affiliates, to a penalty under Section 502 of ERISA or to an excise tax under the Code. All benefits, contributions and premiums relating to each Benefit Plan have been timely paid in accordance with the terms of such Benefit Plan, the terms of all applicable Laws and the accounting principles. With respect to any Benefit Plan, no event has occurred or is reasonably expected to occur that has resulted in or would subject Seller or, with respect to any period on or after the Closing Date, Buyer or any of its Affiliates, to a Tax under Section 4971 of the Code or the assets of any of the foregoing Persons to a lien under Section 412(n) of the Code.

(d) No Benefit Plan (i) provides for defined benefit pension benefits, (ii) is a “multiemployer plan” (as defined in Section 3(37) of ERISA) or (iii) is a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA).

(e) Neither Seller nor any of its Affiliates (i) has withdrawn from any pension plan under circumstances resulting (or expected to result) in a liability to the Pension Benefit Guaranty Corporation, (ii) has any assets subject to a lien for unpaid contributions to any Benefit Plan which would be a liability of Seller or become a liability of Buyer, (iii) has failed to pay premiums to the Pension Benefit Guaranty Corporation when due with respect to any pension plan which would be a liability of Seller, or (iv) is engaged in any transaction which would give rise to liability under Section 4069 or Section 4212(c) of ERISA which would be a liability of Seller or become a liability of Buyer.

(f) Other than as required under Section 601 et. seq. of ERISA, no Benefit Plan provides benefits or coverage in the nature of health, life or disability insurance following retirement or other termination of employment (other than death benefits when termination occurs upon death).

(g) There is no pending or, to Seller’s Knowledge, threatened action relating to a Benefit Plan, and no Benefit Plan has within the three years prior to the date hereof been the subject of an examination or audit by a Governmental Authority or is the subject of an application or filing under, or is a participant in, an amnesty, voluntary compliance, self-correction or similar program sponsored by any Governmental Authority.

(h) There has been no amendment to, announcement by Seller or any of its Affiliates relating to, or change in employee participation or coverage under, any Benefit Plan that would increase the annual expense of maintaining such plan above the level of the expense incurred therefore for the most recent fiscal year with respect to any Employee. Neither Seller nor any of its Affiliates or Shareholders has any commitment or obligation or has made any representations to any Employee, whether or not legally binding, to adopt, amend or modify any Benefit Plan including as related to health reform legislation.

(i) Each Benefit Plan that is subject to Section 409A of the Code has been operated in compliance with such Section and all applicable regulatory guidance (including proposed regulations, notices, rulings, and final regulations).

(j) No Benefit Plan exists that could (i) result in the payment to any Employee of any money or other property, or (ii) accelerate or provide any other rights or benefits (including funding of compensation or benefits through a trust or otherwise) to any Employee, except as a result of any partial plan termination resulting from this Agreement, in each case, as a result of the execution of this Agreement or otherwise related in any way to the transactions contemplated by this Agreement.

(k) Seller is not a party to and has no obligations related to any multiemployer Plan, as described in Section 4001(a)(3) of ERISA.

4.20 Employment Matters .

(a) Section 4.20(a) of the Disclosure Schedules contains a list of all persons who are active Employees, consultants, or contractors of the Business as of the date hereof, and sets forth for each such individual the following: (i) name, (ii) title or position (including whether full or part time), (iii) hire date, (iv) current annual base compensation rate, (v) commission, bonus or other incentive-based compensation (including a history of such compensation paid for 2009 and to be paid prior to Closing for 2010 pursuant to Section 6.1(c)), (vi) a description of the fringe benefits provided to each such individual as of the date hereof and (vii) security clearance with applicable level, if any. As of the date hereof, all commissions and bonuses earned or payable to Employees, consultants, or contractors of the Business for services performed on or prior to the date hereof have been paid in full and there are no outstanding agreements, understandings or commitments of Seller with respect to any commissions, bonuses or increases in compensation.

(b) Seller is not a party to, or bound by, any collective bargaining or other Contract with a labor organization representing any of its Employees, and there are no labor organizations representing, purporting to represent or, to Seller’s Knowledge, attempting to represent any Employee. There has never been, nor has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor activity or dispute affecting Seller or any of its Employees.

(c) Except as set forth in Section 4.20(c) of the Disclosure Schedules , Seller is and has been in compliance in all material respects with all applicable Laws pertaining to employment and employment practices to the extent they relate to the Employees, as well as anyone performing services for Seller whether classified as a contractor, temporary employee, independent contractor or otherwise, including all applicable Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, health and safety, workers’ compensation, leaves of absence and unemployment insurance. All individuals characterized and treated by Seller as consultants or contractors of the Business are properly treated as independent contractors under all applicable Laws. There are no Actions against Seller pending, or to the Seller’s Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former employee, temporary employee, consultant or independent contractor of the Business, including any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay or any other employment related matter arising under applicable Laws.

(d) Seller has complied with the WARN Act and the California WARN Act and it has no plans to undertake any action in the future that would trigger the WARN Act or the California WARN Act.

4.21 Taxes . Except as set forth in Section 4.21 of the Disclosure Schedules :

(a) All Tax Returns required to be filed by Seller for any Pre-Closing Tax Period have been, or will be, timely filed. Such Tax Returns are, or will be, true, complete and correct in all respects. All Taxes due and owing by Seller (whether or not shown on any Tax Return) have been, or will be, timely paid.

(b) Seller has withheld and paid to the applicable Governmental Authority each Tax required to have been withheld and paid in connection with amounts paid or owing to any Employee, independent contractor, creditor, customer, shareholder or other party, and complied with all information reporting and backup withholding provisions of applicable Law.

(c) No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of Seller.

(d) All deficiencies asserted, or assessments made, against Seller as a result of any examinations by any taxing authority have been fully paid.

(e) Seller is not a party to any Action by any taxing authority. There are no pending or threatened Actions by any taxing authority.

(f) There are no Encumbrances for Taxes upon any of the Purchased Assets nor, to Seller’s Knowledge, is any taxing authority in the process of imposing any Encumbrances for Taxes on any of the Purchased Assets (other than for current Taxes not yet due and payable).

(g) Seller is not a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2.

(h) Seller is not, and has not been, a party to, or a promoter of, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011 4(b).

(i) None of the Purchased Assets is property that Seller is required to treat as being owned by any other person pursuant to the so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954, as amended.

(j) None of the Purchased Assets is tax-exempt use property within the meaning of Section 168(h) of the Code.

4.22 Brokers . Except as set forth in Section 4.22 of the Disclosure Schedules , no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Seller, and Seller shall be responsible for any fees or commissions under arrangements referenced in Section 4.22 of the Disclosure Schedules .

4.23 Full Disclosure . No representation or warranty by Seller in this Agreement and no statement contained in the Disclosure Schedules to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer and Guarantor represent and warrant to Seller that the statements contained in this Article 5 are true and correct as of the date hereof.

5.1 Organization of Buyer . Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the state of Delaware, and Guarantor is a corporation duly organized, validly existing and in good standing under the Laws of the state of Delaware.

5.2 Authority of Buyer . Each of Buyer and Guarantor has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which Buyer and Guarantor respectively are party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer and Guarantor of this Agreement and any other Transaction Document to which Buyer and Guarantor respectively are party, the performance by Buyer and Guarantor of its respective obligations hereunder and thereunder and the consummation by Buyer and Guarantor of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer and Guarantor respectively. This Agreement has been duly executed and delivered by Buyer and Guarantor, and (assuming due authorization, execution and delivery by Seller) this Agreement constitutes a legal, valid and binding obligation of Buyer Guarantor respectively, enforceable against Buyer and Guarantor as applicable in accordance with its terms, except as such enforceability against Buyer and Guarantor may be limited by limitations on enforceability against Seller or Shareholders by virtue of bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies against Seller or Shareholders. When each other Transaction Document to which Buyer and/or Guarantor is or will be a party has been duly executed and delivered by Buyer and Guarantor as applicable (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Buyer and Guarantor, as applicable, enforceable against it in accordance with its terms, except as such enforceability against Buyer and Guarantor may be limited by limitations on enforceability against Seller or Shareholders by virtue of bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies against Seller or Shareholders.

5.3 No Conflicts; Consents . The execution, delivery and performance by each of Buyer and Guarantor of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of Buyer or Guarantor, (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer or Guarantor or (c) require the consent which consent has not been obtained, notice or other action by any Person under any Contract to which Buyer or Guarantor is a party. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer or Guarantor in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby.

5.4 Brokers . No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Buyer.

5.5 Legal Proceedings . There are no Actions pending or, to Buyer’s knowledge, threatened against or by Buyer or any Shareholder or Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.

ARTICLE 6

COVENANTS

6.1 Employees and Employee Benefits .

(a) Commencing on the Closing Date, Seller shall terminate all Employees, temporary employees, independent contractors and others providing services to the Business who are actively at work on the Closing Date.

(b) Seller shall be solely responsible, and Buyer shall have no obligations whatsoever for, any compensation or other amounts payable to any Employee or former Employee, temporary employee, agent or independent contractor, including, wages of any kinds (including hourly pay, overtime pay, commission, bonus, salary, accrued unused vacations, meal break pay, termination pay, WARN notice pay, and associated penalties and interest), fringe, pension or profit sharing benefits, or severance pay payable to any Employee (or former Employee) of Seller or any individual who has provided services to Seller in any capacity for any period relating to the service with Seller at any time prior to the Closing Date. Seller shall pay such Liabilities to the applicable Persons on the Closing Date

(c) Section 2.4(h) of the Disclosure Schedules lists all obligations to each Employee, including temporary employees and contractors, as fully accrued through the Closing Date.

(d) Seller shall remain solely responsible for the satisfaction of all claims for medical, dental, life insurance, health accident or disability benefits brought by or in respect of Employees (or former Employees) or agents of Seller which claims relate to events occurring prior to the Closing Date. Seller also shall remain solely responsible for all worker’s compensation claims of any Employees (or former Employees) or agents of Seller which relate to events occurring prior to the Closing Date, whether or not reported. Seller shall pay, or cause to be paid, all such amounts to the appropriate persons to the greatest extent practical on or prior to the Closing Date, and otherwise as and when due.

(e) Commencing on the Closing Date, Buyer intends to offer, at Buyer’s sole discretion, employment on an “at will” basis, to all of Seller’s active Employees for avoidance of doubt, not including temporary employees, independent contractors and consultants), except Leo P. McIntyre and, if active, Douglas Cronin, who are in good standing, and to provide line and managerial employees aggregate (including salary and benefits) compensation levels generally comparable to those currently in place.

(f) Each Employee of the Business who becomes employed by Buyer in connection with the transaction shall be given service credit for the purpose of eligibility under Buyer Benefit Plans for his or her period of service with the Seller prior to the Closing Date; provided, however, that such credit shall be given pursuant to payroll or plan records, at the election of Buyer, in its sole and absolute discretion.

6.2 Confidentiality . From and after the Closing Date, Seller and Shareholders shall, and shall cause their Affiliates, Related Persons and respective Representatives to hold, in confidence any and all information, whether written or oral, concerning the Business, except to the extent that Seller can show that such information (a) is generally available to and known by the public through no fault of Seller, Shareholders, any of their Affiliates, Related Persons or respective Representatives, or (b) is lawfully acquired by Seller or Shareholders, any of their Affiliates or respective Related Persons or Representatives from and after the Closing Date from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If Seller, Shareholders, or any of their Affiliates or respective Related Persons or Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, Seller or Shareholders, as the case may be, shall (i) promptly notify Buyer in writing, (ii) cooperate with Buyer’s reasonable efforts to obtain an appropriate protective order or other assurance that confidential treatment will be accorded such information, (iii) and shall disclose only that portion of such information which Seller or Shareholders are advised by their counsel in writing is legally required to be disclosed.

6.3 Non-Competition; Non-Solicitation .

(a) For so long as Buyer (or any Person deriving title to the goodwill or ownership interest from Buyer) carries on the Business or a like Business, or if shorter, for a period of five (5) years after the Closing Date (collectively, the “ Restricted Period ”), Seller and the Shareholders shall not, and shall not permit any of their respective Affiliates or Related Persons to, directly or indirectly, (i) engage in or assist others in engaging in the Restricted Business in the Territory, (ii) have an interest in any Person that engages directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant, or (iii) cause, induce or encourage any material actual or prospective client, customer, supplier or licensor of the Business (including any existing or former client or customer of Seller and any Person that becomes a client or customer of the Business after the Closing Date), or any other Person who has a material business relationship with the Business, to terminate or modify any such actual or prospective relationship. Notwithstanding the foregoing, Seller and Shareholders may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if Seller and Shareholders are not a Person who Controls, or a member of a group which Controls, such Person and does not, directly or indirectly, own 5% or more of any class of securities of such Person.

(b) During the Restricted Period, Seller and Shareholders shall not, and shall not permit any of their Affiliates or Related Persons to, directly or indirectly, solicit any person who is offered employment by Buyer pursuant to Section 6.1(e) or is or was employed in the Business during the Restricted Period, or encourage any such employee to leave such employment.

(c) Notwithstanding anything to the contrary contained herein, the terms, conditions and restrictions contained in this Section 6.3 will exclude: (i) Leo P. McIntyre’s ownership of and performance of services for SCB Training Center, Inc., (ii) Craig Pfefferman’s ownership of and performance of services for CasCade Holding, Inc. and CasCade Belts, Inc. and (iii) Leo P. McIntyre’s hiring of Victoria Sanchez and Mark Stevens, provided, Ms. Sanchez will be available to Buyer on part-time basis for up to 90 days after the Closing and for reasonable transition assistance thereafter, subject to her agreement to be so available. The activities of SCB Training Center, Inc., CasCade Holding, Inc. and CasCade Belts, Inc. shall not be expanded in a manner that would overlap with the Business in violation of this Section 6.3 beyond such overlap as exists as of the Closing Date, and for the avoidance of any doubt, there shall be no limitation whatsoever on training activities conducted by SCB Training Center, Inc..

(d) After the Closing Date, except as otherwise may be legally required, neither Seller nor Shareholders will disparage Buyer or Guarantor or any of their directors, officers, employees or agents, and neither Buyer nor Guarantor will disparage Seller or Shareholders.

(e) If Seller or any Shareholder breaches, or threatens to commit a breach of, any of the provisions of this Section 6.3, Buyer shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to Buyer under law or in equity:

(i) the right and remedy to have such provision specifically enforced by any court having jurisdiction, it being acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to Buyer and that money damages may not provide an adequate remedy to Buyer; and

(ii) the right and remedy to recover from the Seller all monetary damages suffered by Buyer as the result of any acts or omissions constituting a breach of this Section 6.3.

(f) Seller and Shareholders acknowledge that the restrictions contained in this Section 6.3 are reasonable and necessary to protect the legitimate interests of Buyer and constitute a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 6.3 should ever be adjudicated to exceed the time, geographic, product or service or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service or other limitations permitted by applicable Law. The covenants contained in this Section 6.3 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

6.4 Governmental Approvals and Consents . From and after the Closing:

(a) Each party hereto shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions required under any Law applicable to such party or any of its Affiliates, and (ii) use commercially reasonable efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the other Transaction Documents. Each party shall cooperate fully with the other party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals.

(b) Shareholders shall cause Seller to, and Seller shall comply with Section 2.9.

(c) Without limiting the generality of the parties’ undertakings pursuant to subsections (a) and (b) above, each of the parties hereto shall use all reasonable best efforts to:

(i) respond to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions contemplated by this Agreement or any other Transaction Document;

(ii) avoid the imposition of any order or the taking of any action that would restrain, alter or enjoin the transactions contemplated by this Agreement or any other Transaction Document; and

(iii) in the event any Governmental Order adversely affecting the ability of the parties to consummate the transactions contemplated by this Agreement or any other Transaction Document has been issued, to have such Governmental Order vacated or lifted.

(d) All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on behalf of either party before any Governmental Authority or the staff or regulators of any Governmental Authority, in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between Seller or Buyer with Governmental Authorities in the Ordinary Course of Business, any disclosure which is not permitted by Law or any disclosure containing confidential information) shall be disclosed to the other party hereunder in advance of any filing, submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Each party shall give notice to the other party with respect to any meeting, discussion, appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with such notice being sufficient to provide the other party with the opportunity to attend and participate in such meeting, discussion, appearance or contact.

(e) Notwithstanding the foregoing, nothing in this Section 6.4 shall require, or be construed to require, Buyer or any of its Affiliates to agree to (i) sell, hold, divest, discontinue or limit, before or after the Closing Date, any assets, businesses or interests of Buyer or any of its Affiliates, (ii) any conditions relating to, or changes or restrictions in, the operations of any such assets, businesses or interests which, in either case, could reasonably be expected to result in a Material Adverse Effect or materially and adversely impact the economic or business benefits to Buyer of the transactions contemplated by this Agreement and the other Transaction Documents or (iii) any material modification or waiver of the terms and conditions of this Agreement.

6.5 Books and Records .

(a) In order to facilitate the resolution of any claims made against or incurred by Seller prior to the Closing Date, or for any other reasonable purpose, for a period of five years after the Closing Date, Buyer shall:

(i) retain the Books and Records (including personnel files) relating to periods prior to the Closing Date in a manner reasonably consistent with the prior practices of Seller; and

(ii) upon reasonable notice, afford the Seller’s Representatives reasonable access (including the right to make, at Seller’s expense, photocopies), during normal business hours, to such Books and Records.

(b) In order to facilitate the resolution of any claims made by or against or incurred by Buyer after the Closing Date, or for any other reasonable purpose, for a period of five years following the Closing Date, Seller and Shareholders shall:

(i) retain the books and records (including personnel files) of Seller which relate to the Business and its operations for periods prior to the Closing Date; and

(ii) upon reasonable notice, afford the Buyer’s Representatives reasonable access (including the right to make, at Buyer’s expense, photocopies), during normal business hours, to such books and records.

(c) In furtherance of this Section 6.5, after the Closing, each of Buyer and Seller will afford the other and its respective representatives or agents reasonable access during normal business hours (on terms not unreasonably disruptive to the business, operations or employees of Buyer or Seller, as applicable) to the records and all other data and information relating to Taxes with respect to the Business pertaining to taxable years or periods ending at or prior to the Closing for the purpose of obtaining information relating to Taxes, to the extent such access is reasonably necessary to (i) prepare and complete any Tax Returns; (ii) prosecute or defend litigation or administrative controversies; and (iii) comply with requests made by any Governmental Authority conducting an audit, investigation or inquiry relating to Seller’s or Buyer’s activities. After the Closing, Buyer and Seller agree to (i) retain all books and records in their possession with respect to Tax matters pertinent to the Business relating to any Tax period beginning before the Closing until the expiration of the statute of limitations (and, to the extent notified by either of them to the other, any extensions thereof) of the respective Tax periods, and to abide by all record retention agreements entered into with any Governmental Authority; and (ii) give the other reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other so requests, to allow the other to take possession of such books and records.

(d) Neither Buyer nor Seller shall be obligated to provide the other party with access to any books or records (including personnel files) pursuant to this Section 6.5 where such access would violate any Law.

6.6 Public Announcements . Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed), and the parties shall cooperate as to the timing and contents of any such announcement. The parties acknowledge that a press release will be issued in connection with execution of this Agreement and, if separate, with Closing, that they will cooperate as to its content, and neither party will unreasonably delay or withhold consent to the content thereof.

6.7 Bulk Sales Laws . Subject to Section 6.10, the parties hereby waive compliance with the provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Purchased Assets to Buyer; it being understood that any Liabilities arising out of the failure of Seller to comply with the requirements and provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction which would not otherwise constitute Assumed Liabilities shall be treated as Excluded Liabilities.

6.8 Receivables .

(a) From and after the Closing Date, if Seller, Shareholders or any of their Affiliates receives or collects any funds relating to any Accounts Receivable or any other Purchased Asset, Seller, Shareholders or their respective Affiliate shall remit such funds to Buyer within two (2) Business Days after its receipt thereof. From and after the Closing Date, if Buyer or its Affiliates receives or collects any funds relating to any Excluded Asset, Buyer or its respective Affiliate shall remit any such funds to Seller within two (2) Business Days after its receipt thereof.

(b) [Intentionally Omitted]

(c) Buyer shall act in good faith to collect the Accounts Receivable in the Ordinary Course of Business after the Closing Date. One hundred eighty (180) days after the date hereof, the Buyer shall advise the Seller in writing of the amount of the Closing Date Accounts Receivable that have been collected by Buyer (the “ Collections Statement ”). After receipt of the Collections Statement from Buyer, Seller shall have thirty (30) days to review and object to the Collections Statement. During such review period, Seller and Seller’s Accountants shall have full access to the relevant books and records of Buyer, the personnel of, and work papers prepared by, Buyer and/or Buyer’s Accountants to the extent that they relate to the Collections Statement and to such historical financial information (to the extent in Buyer’s possession) relating to the Collections Statement as Seller may reasonably request for the purpose of reviewing the Collections Statement and to prepare any objections, provided, that such access shall be scheduled with Buyer in advance and shall be in a manner that does not interfere with the normal business operations of Buyer. Seller’s objection, if any, shall specify in reasonable detail the disputed amount and the basis for the dispute. The Buyer and Seller shall negotiate in good faith to resolve such disputed matters within thirty (30) days after the delivery of Seller’s delivery of its objection, and, if the same are so resolved, in whole or in part, within the 30-day period, the Buyer and Seller shall give joint written instructions to the Escrow Agent specifying what, if any portion, of the disputed amount shall be released to the Buyer under the Escrow Agreement. If the disputed matters are not so resolved, then the parties shall submit such dispute to the Independent Accountants. Each of Buyer and Seller will have the opportunity to present to, and discuss with, the Independent Accountants any material related to the dispute. The determination shall be made by the Independent Accountants within thirty (30) days after submission of the dispute to it, and the Independent Accountants’ decision will be final and binding upon the parties. Six (6) Business Days after receipt of such binding determination, the Seller and Buyer will give joint written instructions to the Escrow Agent for release of any funds owed to Buyer that are not paid directly by Buyer within five (5) Business Days. The fees and expenses of the Independent Accountants shall be borne by the Seller and Buyer in proportion to the respective amounts by which the arbitrator makes an adverse determination to each of them. If the aggregate amount of such collections is greater than the amount of Accounts Receivable reflected in the Closing Working Capital less any reserve for uncollectible Accounts Receivable reflected in the Closing Working Capital, then within ten (10) Business Days Buyer shall pay to Seller such excess collected amount. If the aggregate amount of such collections is less than the amount of Accounts Receivable reflected in the Closing Working Capital less any reserve for uncollectible Accounts Receivable reflected in the Closing Working Capital, then within ten (10) Business Days Seller shall pay to Buyer such shortfall amount. Upon any failure of Buyer to make such payment, Seller may make a claim under the Escrow Agreement for the same, subject to Buyer’s ongoing obligation to replenish any such amount.

6.9 Transfer Taxes . All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the other Transaction Documents (including any real property transfer Tax and any other similar Tax) up to an aggregate maximum of $80,000 shall be borne and paid fifty percent by Seller and fifty percent by Buyer when due, and any amount in excess of $80,000 shall be borne and paid by Seller. Seller shall, at its own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect thereto as necessary) and pay such Taxes and promptly after determination of the amount due Buyer shall pay its share to Seller.

6.10 Taxes Imposed on Buyer . Seller shall file Tax Returns of the transactions contemplated by this Agreement in the form required by taxing authorities and pay all related taxes, if the failure to file such returns or pay such Taxes could subject the Buyer to any Taxes of Seller. Seller shall provide evidence to the Buyer that such liabilities have been paid in full or otherwise satisfied.

6.11 Change of Name . Within two (2) Business Days following the Closing Date, Seller will change its name so that it no longer contains “Southern California Braiding” or “SCB,” a derivative thereof, or a name sufficiently similar to be reasonably likely to cause confusion. Notwithstanding the foregoing, nothing contained herein shall prohibit the use of the name SCB Training Center, Inc. by Leo P. McIntyre.

6.12 Insurance Policies . If requested by Buyer, Seller shall cause Buyer to be listed as an additional insured from and after the Closing Date with respect to all liability insurance policies that relate to the Business and Purchased Assets.

6.13 Continued Assistance . Buyer shall cooperate with Seller and provide reasonable assistance which Seller may reasonably request, at Seller’s expense, in connection with Seller’s defense or prosecution of any claims, actions or investigations arising out of or related to its ownership of the Purchased Assets or the conduct of the Business prior to the Closing or as to any other Excluded Liabilities. Seller and Shareholders shall cooperate with Buyer and provide reasonable assistance which Buyer may reasonably request, at Buyer’s expense, in connection with Buyer’s defense or prosecution of any claims, actions or investigations arising out of or related to its ownership of the Purchased Assets or the conduct of the Business after the Closing or as to any other Assumed Liabilities.

6.14 Payment of Excluded Liabilities .

(a) Seller shall pay, or make adequate provision for the timely payment, in full all of the Excluded Liabilities and other Liabilities of Seller under this Agreement.

(b) If any such Liabilities are not so paid or provided for, and if Buyer reasonably determines that failure to make any payments will impair Buyer's use or enjoyment of the Purchased Assets or conduct of the Business with the Purchased Assets, Buyer may, at any time after the Closing Date give written notice to Seller of the same (“ Excluded Liability Payment Notice ”). Buyer may elect to make all such payments directly (but shall have no obligation to do so) and recover the amount so paid from Seller (including making claim under the Escrow Agreement for the same, but if such a claim is paid under the Escrow Agreement Seller shall promptly replenish the Escrow Amount for the amount so paid) unless Seller gives written notice to Buyer within fifteen (15) days after the Excluded Liability Payment Notice of its objection to payment, providing with reasonable specificity its defenses to payment of such Excluded Liability (“ Excluded Liability Objection Notice ”). If such an Excluded Liability Objection Notice is given, the Buyer and Seller shall negotiate in good faith to resolve such the dispute within fifteen (15) days after the delivery of the Excluded Liability Objection Notice (the “ Objection Discussion Period ”), and, if the dispute is resolved that parties shall act or fail to act accordingly. If the disputed matters are not resolved during the Objection Discussion Period, then the parties shall submit such dispute to the Independent Accountants. Each of Buyer and Seller will have the opportunity to present to, and discuss with, the Independent Accountants any material related to the dispute. The determination shall be made by the arbitrator within thirty (30) days after submission of the dispute to it, and the arbitrator’s decision will be final and binding upon the parties. The fees and expenses of the arbitrator shall be borne by the party that is not the prevailing party in the dispute.

(c) This Section 6.14 is not intended to affect or displace Buyer’s rights to Indemnification under Section 7.2(c) except to the extent that liabilities covered hereby are paid or resolved pursuant to Section 6.14(b).

6.15 Further Assurances . Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents.

6.16 Credit Cards . Seller shall cause all credit cards used by Employees and consultants and others with respect to the Business, including Leo P. McIntyre’s American Express Card and Craig Pfefferman’s Visa credit card, to be cancelled on the Closing Date and shall be responsible for any and all charges on such cards. Buyer will provide reasonable cooperation requested by Seller in communicating with Employees as to such cancellation.

6.17 Training Center . Buyer will permit SCB Training Center, Inc. to continue to occupy space in the Leased Real Property, rent-free, for a transition period of up to ninety (90) days after the Closing Date.

ARTICLE 7

INDEMNIFICATION

7.1 Survival . Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is the earlier of 30 days after delivery of Buyer’s audited results for the first full fiscal year completed after the Closing Date and March 31, 2012; provided, however, that the representations and warranties in Section 4.1, Section 4.2, Section 4.8(a), Section 4.11(b), Section 4.18, Section 5.1, and Section 5.2 shall survive indefinitely and the representations and warranties in Section 4.19, Section 4.21, Section 4.22 and Section 5.4 shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus 60 days. All covenants and agreements of the parties contained herein shall survive the Closing until the expiration of the applicable statute of limitations plus 60 days, or if longer for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice in accordance with Section 8.2, from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

7.2 Indemnification By Seller . Subject to the other terms and conditions of this Article 8, Shareholders, (as to Pfefferman severally and not jointly as related to the other Shareholders and in the amount of and limited to eighteen and eight tenths percent (18.8%), and as to the other Shareholders, severally and not jointly as related to Pfefferman but jointly and severally among such other Shareholders, and in the amount of and limited to eighty one an two tenths percent (81.2%)), and Seller shall indemnify and defend each of Buyer and its Affiliates and their respective Representatives (collectively, the “ Buyer Indemnitees ”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to or by reason of:

(a) any inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement, the other Transaction Documents or in any certificate or instrument delivered by or on behalf of Seller pursuant to Section 3.2(a) of this Agreement;

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller or Shareholders pursuant to this Agreement, the other Transaction Documents or any certificate or instrument delivered by or on behalf of Seller pursuant to this Agreement or any Transaction Document;

(d) any “Environmental Compliance Issues” and “Safety Compliance Issues” identified in the Environmental Report, and any Environmental Claim arising out of or relating to the Business or Purchased Assets related to activities, circumstances or conditions in existence on or prior to the Closing Date; or

(e) any Third Party Claim based upon, resulting from or arising out of the business, operations, properties, assets or obligations of Seller, Shareholders or any of their Affiliates (other than the Assumed Liabilities) conducted, existing or arising on or prior to the Closing Date.

For the avoidance of doubt, for purposes of Section 7.2(a), Losses shall include any inaccuracy of Seller’s representation in Section 4.20(c), but shall not include any failure of Buyer from and after the Closing Date to properly classify and characterize employees whether in reliance upon Seller’s past practice or otherwise.

7.3 Indemnification By Buyer . Subject to the other terms and conditions of this Article 8, Buyer shall indemnify and defend each of Seller, Shareholders and their Affiliates and their respective Representatives (collectively, the “ Seller Indemnitees ”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:

(a) any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement, the other Transaction Documents or in any certificate or instrument delivered by or on behalf of Seller pursuant to Section 3.2(b) of this Agreement;

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement; or

7.4 Certain Limitations . The indemnification provided for in Section 7.2 and Section 7.3 shall be subject to the following limitations:

(a) Seller and Shareholders shall not be liable to the Buyer Indemnitees for indemnification under Section 7.2(a) (other than with respect to a claim for indemnification based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in Section 4.1, Section 4.2, Section 4.8(a), Section 4.11(b), Section 4.18, Section 4.19, Section 4.21 and Section 4.22 (the “ Buyer Basket Exclusions ”)):

(i) until the aggregate amount of all Losses in respect of indemnification under Section 7.2(a) (other than those based upon, arising out of, with respect to or by reason of the Buyer Basket Exclusions) exceeds $112,500, in which event Seller shall be required to pay or be liable for all such Losses in excess of $112,500; and

(ii) with respect to any Losses in respect of indemnification under Section 7.2(a) (other than those based upon, arising out of, with respect to or by reason of the Buyer Basket Exclusions) if the aggregate of all such Losses exceeds $2,500,000, and with respect to any Losses in respect of indemnification under Section 7.2(a) arising out of, with respect to or by reason of the Buyer Basket Exclusions if the aggregate of all such Losses exceeds the $25,000,000.

(b) Buyer shall not be liable to the Seller Indemnitees for indemnification under Section 7.3(a) (other than with respect to a claim for indemnification based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in Section 5.1, Section 5.2 and Section 5.4 (the “ Seller Basket Exclusions ”)):

(i) until the aggregate amount of all Losses in respect of indemnification under Section 7.3(a) (other than those based upon, arising out of, with respect to or by reason of the Seller Basket Exclusions) exceeds $112,500, in which event Buyer shall be required to pay or be liable for all such Losses in excess of $112,500; and

(ii) with respect to any Losses in respect of indemnification under Section 7.3(a) (other than those based upon, arising out of, with respect to or by reason of the Buyer Basket Exclusions) if the aggregate of all such Losses exceeds $2,500,000, and with respect to any Losses in respect of indemnification under Section 7.3(a) with respect to or by reason of the Buyer Basket Exclusions if the aggregate of all such Losses exceeds $25,000,000.

(c) For purposes of this Article 8, if after taking into account any qualification of any representation or warranty that is qualified by materiality, Material Adverse Effect or other similar qualification, there is any inaccuracy in or breach of such representation or warranty, then the amount of any indemnification hereunder in excess of $125,000 in the aggregate as to all matters covered by this subsection shall be determined without regard to such qualification.

(d) Payments by an Indemnifying Party pursuant to Section 7.2 or Section 7.3 in respect of any Loss shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment actually received by the Indemnified Party in respect of any such claim, less any related costs and expenses, including the aggregate cost of pursuing any related insurance claims and any related increases in insurance premiums or other charge-backs (it being agreed that neither party shall have any obligation to seek to recover any insurance proceeds in connection with or prior to making a claim under this Article 8 and that, promptly after the realization of any insurance proceeds, indemnity contribution or other similar payment, the Indemnified Party shall reimburse the Indemnifying Party for such reduction in Losses for which the Indemnified Party was indemnified prior to the realization of reduction of such Losses. Payments by an Indemnifying Party pursuant to Article 7 in respect of any Losses shall be net of any Tax benefit actually realized by an Indemnified Party or its Affiliates in connection with the payment of any such Losses. An Indemnified Party will be deemed to have “actually realized” a Tax benefit when and to the extent that the amount of Taxes with respect to the taxable year in which the Loss is realized payable by such Indemnified Party is reduced by the amount of Taxes that such Indemnified Party would otherwise have been required to pay but for such Losses.

7.5 Indemnification Procedures . The party making a claim under this Article 8 is referred to as the “ Indemnified Party ”, and the party against whom such claims are asserted under this Article 8 is referred to as the “ Indemnifying Party ”.

(a) Third Party Claims . If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “ Third Party Claim ”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 calendar days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party is prejudiced by reason of such failure. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided, that if the Indemnifying Party is Seller, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third Party Claim that (i) is asserted directly by or on behalf of a Person that is a supplier or customer of the Business and if the Indemnified Party determines in good faith that there is a reasonable probability that such Third Party Claim may materially adversely affect it other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, or (ii) seeks an injunction or other equitable relief against the Indemnified Party, but further provided that such Indemnifying Party shall have the right to participate in such defense with counsel selected by it subject to the Indemnifed Party’s right to control the defense thereof. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 7.5(b), it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided, that if in the reasonable opinion of counsel to the Indemnified Party, (A) there are material legal defenses available to an Indemnified Party that are materially different from or additional to those available to the Indemnifying Party and that cannot be effectively asserted by the Indemnifying Party, or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to Section 7.5(b), pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Seller and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 6.2) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

(b) Settlement of Third Party Claims . Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 7.5(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within ten Business Days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 7.5(a), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

(c) Direct Claims . Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “ Direct Claim ”) shall be asserted by the Indemnified Party giving the Indemnifying Party written notice thereof. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have 30 calendar days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Indemnified Party’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such 30 day period, the Indemnifying Party shall be deemed to have agreed to accept such claim. If the claim is timely rejected by the Indemnifying Party, the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

7.6 Payments . Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this Article 8, if not covered by the Escrow Agreement the Indemnifying Party shall satisfy its obligations within 10 Business Days of such final, non-appealable adjudication by wire transfer of immediately available funds. The parties hereto agree that should an Indemnifying Party not make full payment of any such obligations within such 10 Business Day period, any amount payable shall accrue interest from and including the date the payment was due to but excluding the date such payment has been made at four percent (4%) per annum. Such interest shall be calculated daily on the basis of a 365 day year and the actual number of days elapsed, without compounding.

7.7 Tax Treatment of Indemnification Payments . All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

7.8 Effect of Investigation . The representations, warranties and covenants of the Indemnifying Party in this Agreement, and the Indemnified Party’s right to indemnification with respect thereto, shall not be affected or deemed waived (a) by reason of any investigation made by or on behalf of the Indemnified Party (including by any of its Representatives), or (b) by reason of the fact that the Indemnified Party or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate. Except for the representations and warranties expressly contained in this Agreement and the Disclosure Schedules, neither Seller nor any Shareholder makes any representations or warranties, express or implied, relating to Seller or the Business, and each of Seller and the Shareholders hereby disclaim any other representations or warranties with respect to the negotiation, execution and delivery of this Agreement or the transactions contemplated hereby notwithstanding the delivery or disclosure, in writing or orally, to Buyer of any documentation or other information.

7.9 Exclusive Remedies . Subject to Section 6.3 and Section 8.11, the parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein, in the other Transaction Documents or in any certificate or instrument delivered by or on behalf of Seller pursuant to Section 3.2(a) or Section 3.2(b) of this Agreement shall be pursuant to the indemnification provisions set forth in this Article 8. In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to this Agreement, the Transaction Documents, or any certificate or instrument delivered by or on behalf of Seller pursuant to Section 3.2(a) or Section 3.2(b) of this Agreement, it may have against the other parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in this Article 8. Nothing in this Section 7.9 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any Person’s fraudulent misconduct.

ARTICLE 8

MISCELLANEOUS

8.1 Expenses . Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.

8.2 Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), or (c) on the fifth day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.2):

If to Seller, McIntyre, Survivor Trust and Exemption Trust:

Leo P. McIntyre

55665 Pebble Beach

LaQuinta, California 92253

with a copy to:

Law Offices of Carol L. Newman

21860 Burbank Boulevard, Suite 360

Woodland Hills, California 91367-7406

Attention: Carol L. Newman, Esq.

and

Buchalter Nemer

1000 Wilshire Boulevard, Suite 1500

Los Angeles, California 90017

Attention: Jeremy M. Weitz, Esq.

If to Pfefferman:

Craig Pfefferman

560 Breckenridge Place

Simi Valley, California 92065

with a copy to:

Law Offices of Carol L. Newman

21860 Burbank Boulevard, Suite 360

Woodland Hills, California 91367-7406

Attention: Carol L. Newman, Esq.

and

Buchalter Nemer

1000 Wilshire Boulevard, Suite 1500

Los Angeles, California 90017

Attention: Jeremy M. Weitz, Esq.

and

Emily S. Levin, Esq.

Aronson Levin & Fey, LLP

Sherman Oaks, CA 91403

If to Buyer:

SCB Acquisition, LLC

c/o IEC Electronics Corp.

105 Norton Street

Newark, New York 14513

Attention: W. Barry Gilbert, CEO and

Susan E. Topel-Samek, CFO

with a copy to:

Harris Beach PLLC

99 Garnsey Road

Pittsford, New York 14534

Attention: Beth Ela Wilkens

8.3 Headings . The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

8.4 Severability . If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

8.5 Entire Agreement . This Agreement and the other Transaction Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

8.6 Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the parties (including the Guarantor) hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns. No party may assign its rights or obligations hereunder without the prior written consent of each of the other parties (including Guarantor), which consent shall not be unreasonably withheld or delayed; provided, however, that Buyer may, without the prior written consent of Seller, pledge its rights hereunder to its lender. No assignment shall relieve the assigning party of any of its obligations hereunder.

8.7 No Third-party Beneficiaries . Except as provided in Article 8, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

8.8 Amendment and Modification; Waiver . This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

8.9 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial .

(a) All matters arising out of or related to this Agreement shall be governed by and construed in accordance with the internal laws of the state of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the state of Delaware or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the state of Delaware.

(b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA SITTING IN DELAWARE OR THE COURTS OF THE STATE OF DELAWARE, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

8.10 Specific Performance . The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

8.11 Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

[SIGNATURE PAGES FOLLOW]

BUYER:

CSCB, INC.

By:
	W. Barry Gilbert
	Chief Executive Officer

[Signature Page – Asset Purchase Agreement]

SELLER:

SOUTHERN CALIFORNIA BRAIDING CO., INC.

By:

Name:
Title:

SHAREHOLDERS:

CRAIG PFEFFERMAN

LEO P. McINTYRE, TRUSTEE OF THE

McINTYRE SURVIVORS TRUST RESTATEMENT

DATED JUNE 13, 2006, CREATED UNDER THE

McINTYRE FAMILY TRUST DATED

OCTOBER 4, 1993

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

[Signature Page – Asset Purchase Agreement]

GUARANTOR:

Guarantor executes this Agreement for the sole and limited purposes of evidencing its agreement to Section 2.8 and Article 5 hereof.

IEC ELECTRONICS CORP.

By:
	W. Barry Gilbert
	Chief Executive Officer

[Signature Page – Asset Purchase Agreement]

SCHEDULES TO ASSET PURCHASE AGREEMENT

1.1(a)	Designated Consents
2.1(c)	Assigned Contracts
2.3(d)	Assumed Liabilities
2.3(g)	Excluded Assets
4.1	Qualification to Do Business
4.3	No Conflicts; Consents
4.4	Financial Statements
4.5	Undisclosed Liabilities
4.6	Absence of Changes, Events and Conditions
4.7	Material Contracts
4.8(a)	Title to Purchased Assets; Third Party Owned Assets
4.8(b)	Third Party Equipment
4.8(c)	Personal Property Leases
4.9	Condition/Sufficiency of Assets
4.10(b)	Real Property
4.10(f)	Modifications to Real Property
4.11(a)	Intellectual Property Registrations and Assets
4.11(b)	Encumbrances on Intellectual Property
4.11(d)	Intellectual Property Inbound Licenses
4.11(f)	Intellectual Property Outbound Licenses
4.12	Inventory
4.14(a)	Customers
4.14(b)	Suppliers
4.14(c)	Exclusive Suppliers
4.15	Insurance
4.16(a)	Legal Proceedings
4.17(b)	Permits
4.18(b)	Environmental Matters
4.18(c)	National Priorities List
4.18(e)	List of Storage Tanks
4.18(f)	Hazardous Materials
4.18(h)	Environmental Reports
4.18(j)	Environmental Attributes
4.19	Employee Benefit Plans
4.20(a)	Employment Matters
4.20(c)	Compliance With Employment Laws
4.22	Brokers

EXHIBITS TO ASSET PURCHASE AGREEMENT

A	Escrow Agreement
B	Bill of Sale
C	Assignment and Assumption Agreement
D	Intellectual Property Assignments
E	Power of Attorney

Exhibit 10.1

THIRD AMENDED AND RESTATED CREDIT FACILITY AGREEMENT

This THIRD AMENDED AND RESTATED CREDIT FACILITY AGREEMENT (“ Agreement ”) is made as of December 17, 2010 by and among IEC ELECTRONICS CORP., a corporation formed under the laws of the State of Delaware (“ Borrower ”) and MANUFACTURERS AND TRADERS TRUST COMPANY (“ Lender ”), a New York banking corporation, with offices at 255 East Avenue, Rochester, New York 14604. This Agreement evidences in part obligations evidenced by, and amends and restates in its entirety the Second Amended and Restated Credit Facility Agreement made between the Borrower and Lender, dated July 30, 2010, as amended (“ Prior Agreement ”). All references to the Prior Agreement in any Loan Document made or delivered in connection with the Prior Agreement shall be deemed to be references to the Prior Agreement as amended and restated by this Agreement.

ARTICLE 1 - DEFINITIONS

1.1 Definitions . The following terms shall have the following meanings unless otherwise expressly stated herein:

“ 2008 Term Loan ” means the $1,700,000 aggregate original outstanding principal balance term loan described in Article 3 hereof.

“ 2008 Term Loan Maturity Date ” means January 1, 2012.

“ 2008 Term Loan Note ” means the Amended and Restated 2008 Term Loan Note described in Section 3.2.

“ Affiliate ” means any Person which directly or indirectly, or through one or more intermediaries, Controls or is Controlled By or is Under Common Control with Borrower; provided, however, that neither Lender, nor any of its Affiliates, shall be considered an Affiliate of any Credit Party.

“ Agreement ” means this Third Amended and Restated Credit Facility Agreement.

“ 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 EBITDARS Ratio, calculated for Borrower on a consolidated basis and without duplication in accordance with GAAP:

Level	Debt to EBITDARS	Revolving Line Facility*	Other Facilities
I	≥ 3.25 to 1	3.50%	3.75%
II	≥ 2.75 to 1 and < 3.25 to 1	3.25%	3.50%
III	≥ 2.25 to 1 and < 2.75 to 1	3.00%	3.25%
IV	≥ 1.75 to 1 and < 2.25 to 1	2.75%	3.00%
V	< 1.75 to 1	2.25%	2.50%

For amounts outstanding as an Overline Advance, the Applicable Margin will be the applicable level shown in the above table plus 0.50%.

The Applicable Margin shall be fixed at Level II for a six month period from the date of this Agreement. 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 15.4 for the quarterly accounting period ending on July 1, 2011, the Applicable Margin will be adjusted based upon the Debt to EBITDARS 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 Lender pursuant to Section 15.4, based upon the Debt to EBITDARS 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 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 rate (calculated based upon days elapsed over a 360 day year) shown in the table below based on the applicable Debt to EBITDARS Ratio, calculated for Borrower on a consolidated basis and without duplication in accordance with GAAP:

Level	Debt to EBITDARS	Unused Fee
I	≥ 3.25 to 1	0.500%
II	≥ 2.75 to 1 and < 3.25 to 1	0.375%
III	≥ 2.25 to 1 and < 2.75 to 1	0.250%
IV	≥ 1.75 to 1 and < 2.25 to 1	0.250%
V	< 1.75 to 1	0.125%

The Applicable Unused Fee shall be fixed at Level II for a six month period from the date of this Agreement. 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 15.4 for the quarterly accounting period ending on July 1, 2011, the Unused Fee will be adjusted based upon the Debt to EBITDARS 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 15.4, based upon the Debt to EBITDARS ratio shown therein. In the event that any QCC Sheet is not delivered by the date required, the 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 day the 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 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.

- 2 -

“ Asset Disposition ” means any sale, assignment, transfer, lease, or other disposition by a Person to any other Person, whether in one transaction or in a series of related transactions, of any of its assets, business units or other properties (including (i) any interest in property, whether tangible or intangible, (ii) Capital Securities of Subsidiaries, and (iii) any sale-leaseback transaction), provided, however, that “Asset Disposition” shall not include (a) the sale of inventory in the ordinary course of business, (b) the disposition of any obsolete or retired property not used or useful in the business of any of the Credit Parties in return for a fair market value, and (c) the disposition of any property of the Credit Parties in return for a fair market value when proceeds from that disposition are invested within six (6) months thereafter in similar assets for Borrower’s business.

“ Automatic Adjustment Rate Determination Date ” means, with respect to LIBOR Loans other than Daily LIBOR Loans, two (2) LIBOR Business Days before the first day of the applicable Interest Period.

“ Automatic Continuation Option ” shall, with respect to any LIBOR Loan, mean the option to have the then-current Interest Period duration, as previously selected by Borrower, remain the same for the succeeding Interest Period.

“ Base Rate ” means the higher of (i) the Prime Rate, and (ii) the Federal Funds Rate plus one-half of one percentage point (.5%), plus the Applicable Margin.

“ Base Rate Loan ” means any Loan when and to the extent that the interest rate for such Loan is determined by reference to the Base Rate.

“ Borrower ” means IEC Electronics Corp. and its successors, legal representatives and assigns.

“ Borrowing Base ” means the sum of the following:

(a) 85% of the Eligible Accounts of the Credit Parties; plus

(b) 35% of the Eligible Inventories of the Credit Parties up to a maximum of $3,750,000, or if the Inventory Overline Advance Rate has been elected pursuant to Section 2.2, 70% of the Borrower’s Eligible Inventories up to a maximum of $4,750,000.

“ Borrowing Base Report ” means a report described in Section 13.1 of this Agreement.

“ Breakage Costs ” means amounts covered by Section 10.6.

“ Business Day ” means any day other than a Saturday, Sunday, or other day on which commercial banking institutions in New York, New York are authorized or required by law or other governmental action to remain closed for business.

“ Capital Security ” means, (a) with respect to any Person that is a corporation, any and all shares, interests or equivalents in capital stock (without limitation whether voting or nonvoting, and whether common or preferred) of such corporation, and (b) with respect to any Person that is not a corporation, any and all partnership, membership, limited liability company or other equity interests of such Person; and (c) in each case, any and all warrants, rights or options to purchase any of the foregoing with respect to any Person, any security convertible into any of the foregoing, participations, and any other equity interests or equity equivalents, including stock appreciation rights or phantom stock, with respect to such Person.

- 3 -

“ Casualty Event ” means, with respect to any property (including any interest in property) of any Credit Party, any loss of, theft of, damage to, or condemnation or other taking of, such property for which any of the Credit Parties receive insurance proceeds, proceeds of a condemnation award, or other compensation, which proceeds are not used to replace or restore such property or make a similar investment in Borrower’s business within six (6) months of receiving the insurance or other proceeds.

“ Celmet Assets ” means the assets purchased by Borrower in the Celmet Transaction.

“ Celmet ” means Celmet Co., Inc.

“ Celmet Term Loan ” means the $2,000,000 aggregate original outstanding principal balance term loan described in Article 8 hereof.

“ Celmet Term Loan Maturity Date ” means July 30, 2015.

“ Celmet Term Loan Note ” means the Celmet Term Loan Note evidencing the Celmet Term Loan.

“ Celmet Transaction ” means the Borrower’s purchase of assets of Celmet pursuant to a certain Asset Purchase Agreement dated July 9, 2010 made among Borrower, Celmet, and Rodney W. Bohman, and all related transactions, documents and agreements.

“ Change in Control ” means the acquisition of ownership, directly or indirectly, beneficially or of record, by any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of shares representing a majority of the aggregate ordinary voting power in the election of Borrower’s directors represented by the issued and outstanding capital stock of Borrower.

“ Closing Date ” means the date of this Agreement.

“ Commitment ” means the Revolving Line Commitment and the Equipment Line Commitment.

“ Continuation Date ” means the date that Borrower’s election to continue a LIBOR Loan for another Interest Period becomes effective in accordance with this Agreement.

“ Controls ” (including the terms “Controlled By” or “Under Common Control”) means, but shall not be limited to, (i) the ownership of a majority of the outstanding shares of capital stock of any corporation having voting power for the election of directors, whether or not at the same time stock of any other class or classes has or might have voting power by reason of the happening of any contingency, (ii) ownership of a majority of any interest in any Person, or (iii) any other interest by reason of which a controlling influence over the affairs of the Person may be exercised.

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“ Copyright Security Agreements ” means the Copyright Security Agreement listed on Schedule 1.1(A) , and any similar document delivered by any Credit Party, as amended, modified or restated from time to time.

“ Credit Party(ies) ” means the Borrower and each Guarantor.

“ Current Assets ” means as of the date of measurement current assets of the applicable Person on a consolidated basis determined in accordance with GAAP.

“ Current Liabilities ” means all liabilities of the applicable Person treated as current liabilities in accordance with GAAP, including all obligations payable on demand or within one year after the applicable measurement date as well as installment, reimbursement, or sinking fund payments payable within one year after the applicable measurement date. Current Liabilities shall include outstanding principal amounts under the Revolving Credit Facility.

“ Daily LIBOR Loan ” means a LIBOR Loan with respect to which the rate is adjusted and determined daily.

“ Debt ” means, as of the measurement date, without duplication, on a consolidated basis, Borrower’s and its Subsidiaries’:

(a) indebtedness or liability for borrowed money, including without limitation Obligations under the Loan Documents, IECW&C Subordinated Debt, the M&T Sale-Leaseback, synthetic leases and any other off-balance sheet financing (but except for the M&T Sale-Leaseback not including operating leases not capitalized under GAAP);

(b) obligations evidenced by bonds, debentures, notes, or other similar instruments;

(c) obligations for the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business);

(d) obligations as lessee under capital leases;

(e) current liabilities in respect of unfunded vested benefits under Plans covered by ERISA;

(f) obligations as an account party under letters of credit and letters of guaranty;

(g) obligations under acceptance facilities;

(h) all guaranties, endorsements (other than for collection or deposit in the ordinary course of business), and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person, or otherwise to assure a creditor against loss, including Debt of any other Person (including any partnership in which such Person is a general partner) to the extent such person is liable therefor as a result of such Person’s ownership interest in or other relationship with such Person;

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(i) obligations secured by (or for which the holder of the obligations has an existing right, contingent or otherwise to be secured by) any Liens on property owned or acquired, whether or not the obligations secured thereby have been assumed;

(j) all purchase money mortgages, and obligations under asset securitization vehicles, conditional sales contracts and similar title retention debt instruments; and

(k) obligations of a Person to purchase securities or other property that arise out of or in connection with the sale of the same or substantially similar securities or property, such as Capital Securities that are subject to mandatory redemption requirements.

“ Debt to EBITDARS Ratio ” means as of the applicable measurement date, the Debt as of such date divided by EBITDARS for the twelve (12) Fiscal Month period ended as of such date.

“ Default ” means any event, action, inaction, occurrence or condition that with notice or passage of time, or both, would constitute an Event of Default.

“ Default Rate ” means, (i) in the case of LIBOR Loans and Base Rate Loans, three (3) percentage points above the LIBOR Rate or the Base Rate, respectively, and (ii) with respect to other Obligations, three (3) percentage points above the interest rate otherwise in effect.

“ Distributions ” means (i) dividends, payments, or distributions of any kind (including without limitation cash or property or the setting aside for payment of either) in respect of Capital Securities of the applicable Person except distributions in the form of such Capital Securities, and (ii) repurchases, redemptions, or acquisitions of Capital Securities.

“ Draw Date ” means in relation to each Loan, the date that such Loan is made or deemed to be made to Borrower pursuant to this Agreement.

“ EBITDA ” 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 GAAP on a consistent basis.

“ EBITDARS ” means, for the applicable period, EBITDA, plus payments due under the M&T Sale-Leaseback and non-cash stock option expense, all on a consolidated basis and determined in accordance with GAAP on a consistent basis.

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“ Eligible Accounts ” means and includes only accounts receivable of a Credit Party (“ Accounts ”), the records and accounts of which are located in all places at which Borrower maintains, or will maintain, records relating to the Accounts, are acceptable to Lender in Lender’s reasonable discretion, arise out of sales in the ordinary course of the business of a Credit Party made by a Credit Party to a Person which is not an Affiliate nor an employee of a Credit Party nor controlled by an Affiliate, which are not in dispute and which do not then violate any warranty with respect to Accounts set forth in any security agreement made by any Credit Party in favor of Lender (“ Lender Security Agreement ”). No Account shall be an Eligible Receivable if more than 60 days have passed since the date the original invoice was due or if more than 120 days have passed since the original invoice date and the inventory covered by such Account was shipped to the customer on or prior to the invoice date, or the services described in such invoice were provided on or prior to the invoice date. Accounts must not be owing by an Account debtor or a group of affiliated Account debtors whose then existing Accounts owing to the Credit Parties individually exceed in aggregate face amount twenty percent (20)%) of the Credit Parties’ total Eligible Receivables and are not owing by an Account debtor or a group of affiliated Account debtors whose then existing Accounts to any or all of the Credit Parties collectively exceed in aggregate face amount twenty percent (20%) of the total Eligible Receivables of all the Credit Parties; provided that the Lender may from time to time, in the exercise of its sole and absolute discretion, consent to a higher concentration limit and provided further that any such Account shall be a non-Eligible Receivable only to the extent of such excess. Lender may treat any Account as ineligible if: (a) any warranty contained in this Agreement or in any Lender Security Agreement with respect to Accounts has been breached; or (b) the Account debtor or any affiliate of the Account debtor has disputed the liability, or made any claim with respect to such Account or with respect to any other Account due from such customer or account debtor to any Credit Party; provided, however, only such portion of the Account which is disputed or subject to a claim shall be treated as ineligible unless Lender reasonably determines in its discretion that there is a material risk of nonpayment (or Lender is unable to assess the risk of nonpayment) of the entire Account or any other Account pending resolution of such dispute or claim, in which case Lender may treat the entire Account or such other Account as ineligible; or (c) the Account debtor or an affiliate of the Account debtor has filed a case for bankruptcy or reorganization under the Bankruptcy Code, or if any case under the Bankruptcy Code has been filed against the Account debtor or any affiliate of the Account debtor, or if the Account debtor or any Affiliate of the account debtor has assigned for the benefit of creditors, or if the Account debtor or any affiliate of the Account debtor has failed, suspended business operations, become insolvent, or had or suffered a receiver or a trustee to be appointed for all or a significant portion of its assets or affairs; or (d) if the Account debtor is also a supplier to or creditor of a Credit Party or if the Account debtor has or asserts any right of offset with respect to any Account or asserts any claim or counterclaim against any Credit Party with respect to any Account or otherwise (the Accounts due from the Account debtor will only be reduced to the extent of the claim or counter claim); or (e) the sale is to an Account debtor outside the United States or Canada, unless the sale is on letter of credit, acceptance or other terms acceptable to Lender; or (f) 50% or more of the Accounts of any Account debtor and its affiliates is ineligible, then all the Accounts of such Account debtor and its affiliates may be deemed ineligible by Lender; (g) it relates to a sale of goods or services to the United States, or any agency or department thereof, unless the applicable Credit Party assigns its right to payment of such Account to Lender in form and substance satisfactory to Lender, so as to comply with the Assignment of Claims Act of 1940, as amended; or (h) it relates to sale of goods or services to a state or local governmental authority or an agency or department thereof; or (i) it relates to intercompany sales, employee sales or is due from an Affiliate; or (j) it consists of a sale to an Account debtor on consignment, bill and hold, guaranteed sale, sale or return, sale on approval, payment plan, scheduled installment plan, extended payment terms or any other repurchase or return basis; or (k) the Account debtor is located in a state in which the applicable Credit Party is deemed to be doing business under the laws of such state and which denies creditors access to its courts in the absence of qualification to transact business in such state or of the filing of any reports with such state, unless the applicable Credit Party has qualified as a foreign corporation authorized to do business in such state or has filed all required reports; or (l) the Account is evidenced by chattel paper or an instrument of any kind, or has been reduced to judgment; or (m) the Account arises from a sale of goods or services to an individual who is purchasing such goods primarily for personal, family or household purposes; or (n) if Lender believes, in its reasonable discretion, that collection of such Account is insecure or that such Account may not be paid by reason of the Account debtor’s financial inability to pay (should availability under the Revolving Line Facility be an issue, the Lender will allow the Borrower thirty (30) days prior to the removal from the Borrowing Base, provided that the Accounts from such Account debtor do not collectively exceed ten percent (10%) of the total Eligible Receivables).

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“ Eligible Inventories ” means inventory owned by a Credit Party (“ Inventory ”) which has been identified and described to the Lender’s reasonable satisfaction, and is represented by the Borrower as meeting all of the following criteria on the date any Revolving Credit Loan based thereon is outstanding: (a) a Credit Party is the sole owner of the Inventory, none of the Inventory is being held or shipped by such Credit Party on a consignment or approval basis, such Credit Party has not sold, assigned or otherwise transferred all or any portion thereof, and none of the Inventory is subject to any claim, lien, or security interest other than in favor of Lender; (b) if any of the Inventory is represented or covered by any document of title, instrument or chattel paper, a Credit Party is the sole owner of all such documents, instruments, and chattel paper, all of which are in the possession of such Credit Party, none thereof has been sold, assigned, or otherwise transferred, and none thereof is subject to any claim, lien or security interest other than in favor of Lender; and (c) the Inventory consists of saleable non-obsolete, commodity type raw materials that are earmarked for specific orders or long-term customer forecasts and is not excess as shown on the Borrower’s Excess Stock Report or determined by the Lender’s collateral audits, and finished goods manufactured or acquired by a Credit Party in the ordinary course of such Credit Party’s business, as conducted on the date hereof, subject to its contract or sole possession and located in places where Credit Parties maintain, or will maintain, Inventory, and at locations for which landlord or bailee waivers in form and substance acceptable to Lender have been executed and delivered by such landlord or bailee to Lender; and any Inventory which the Lender in the good faith exercise of its sole discretion from time to time has deemed to be ineligible because the Lender otherwise considers the collateral value to the Lender to be impaired or its ability to realize such value to be insecure.

“ Energy Loan ” means the term loan made by the Lender to fund energy-related expenditures, referenced in Article 4 hereof.

“ Energy Loan Maturity Date ” means April 2, 2013.

“ Energy Loan Note ” means the Energy Loan Note evidencing the Energy Loan, as such note may be amended, modified or restated from time to time.

“ Environment ” means any water, including, but not limited to, surface water and ground water or water vapor: any land, including land surface or subsurface; stream sediments; air; fish; wildlife; plants; and all other natural resources or environmental media.

“ Environmental Laws ” means all applicable federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances, regulations, codes and rules relating to the protection of the Environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the regulations, rules, ordinances, bylaws, policies, guidelines, procedures, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.

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“ Environmental Permits ” means all licenses, permits, approvals, authorizations, consents or registrations required by any applicable Environmental Laws and all applicable judicial and administrative orders in connection with ownership, lease, purchase, transfer, closure, use and/or operation of the Improvements and/or as may be required for the storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances.

“ Environmental Report ” means written reports provided by Borrower or any other Credit Party to Lender or prepared for the Lender by an environmental consulting or environmental engineering firm, in each case on or prior to the Closing Date.

“ Equipment Line Commitment ” means the discretionary commitment related to the Equipment Line described in Section 5.1.

“ Equipment Line Facility ” means the equipment line facility established pursuant to Section 5.1 of this Agreement.

“ Equipment Line Loan(s) ” means a loan or loans made by the Lender to Borrower under the Equipment Line Facility.

“ Equipment Line Maturity Date ” means December 17, 2011, or such later date as may be agreed by the Lender in its sole discretion in writing.

“ Equipment Line Notes ” means the Equipment Line Notes made from time to time by Borrower in favor of Lender pursuant to Section 5.4 of this Agreement, as such notes may be amended, modified or restated from time to time.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” means any trade or business (whether incorporated or unincorporated) which together with the Borrower is treated as a single employer under Section 414(b), (c), (m) or (o) of the Internal Revenue Code.

“ Event of Default ” means the occurrence of any event described in Section 17.1.

“ Excess Cash Flow ” means, for the applicable period, the sum of:

(a) EBITDA, minus

(b) Taxes based upon income to the extent that such Taxes are paid in cash, minus

(c) Interest Expense to the extent such Interest Expense is paid in cash during such period or within fifteen (15) days after the end of such period, minus

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(d) all principal payments (whether scheduled, voluntary prepayments, or mandatory prepayments) of Debt other than Revolving Credit Loans, minus

(e) all Unfinanced Capital Expenditures, minus (or plus)

(f) any losses or expenses (or gains or income) which are cash items and were added back for the purpose of determining EBITDA, minus

(g) any cash paid in connection with a one-time event or extraordinary item, plus

(h) non- cash stock compensation expense.

“ Federal Funds Rate ” means, for any period, a fluctuating interest rate per annum equal for each day during such period determined by the Lender to equal the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. for such day on such transactions received by the Lender from three Federal funds brokers of recognized standing selected by it.

“ Financial Statements ” means Borrower’s audited consolidated financial statements described in Section 11.6.

“ Fiscal Month ” means a period that constitutes Borrower’s monthly accounting period.

“ Fiscal Quarter ” means any of the quarterly accounting periods of Borrower ending in December, March, June, and September of any Fiscal Year.

“ Fiscal Year ” means the annual accounting period of Borrower ending on September 30 of each year.

“ Fixed Charge Coverage Ratio ” means, as of the applicable measurement date, the ratio of (i) EBITDA, plus non-cash stock option expense, minus Unfinanced Capital Expenditures, minus cash Taxes paid for the four Fiscal Quarters just ended, to (ii) the sum of Interest Expense, plus principal payments due or paid with respect to Debt, plus Distributions during the four Fiscal Quarters just ended.

“ Fixed Rate ” means, with respect to any particular Loan, the Cost of Funds for five years, or such shorter period matching any shorter original length to maturity of any loan made under the Equipment Line Facility (the “Base Term”), plus three percentage points (3%), but not less than a floor Fixed Rate of five percent (5%) per annum. “Cost of Funds’ means the most recent yield on United States Treasury Obligations adjusted to a constant maturity to match the Base Term in effect two (2) Business Days prior to the date on which the Fixed Rate will first be applicable to the respective Loan, as published by the Board of Governors of the Federal Reserve System in the Federal Reserve Statistical Release H.15(519), or by such other quoting service, index, or commonly available source utilized by the Lender, plus the “ask” side of the like term swap spread. For the avoidance of doubt, nothing in this definition is intended to prevent the Borrower from entering into Rate Management Transactions with any financial institution.

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“ Fixed Rate Loan ” means any Loan when and to the extent that the interest rate for such Loan is determined by reference to a Fixed Rate.

“ Fixed Rate Period ” means the period selected by the Borrower during which a particular Fixed Rate shall be applicable.

“ Forfeiture Action ” means any action, including investigations, hearings, and other legal proceedings, before any court, tribunal, commission, or governmental authority, agency, or instrumentality, whether domestic or foreign, that may result in seizure of any property or asset.

“ GAAP ” and “ Generally Accepted Accounting Principles ” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession in the United States of America, which are applicable to the circumstances as of the date of determination.

“ GTC ” means General Technology Corporation.

“ GTC Term Loan ” means the $5,000,000 aggregate original outstanding principal balance term loan described in Article 6 hereof.

“ GTC Term Loan Maturity Date ” means December 16, 2014.

“ GTC Term Loan Note ” means the GTC Term Loan Note evidencing the GTC Term Loan.

“ GTC Transaction ” means the acquisition by Borrower of the Capital Securities of GTC pursuant to the Stock Purchase Agreement, dated as of December 16, 2009, made among Borrower, Crane International Holdings, Inc., and GTC.

“ Guaranties ” means, collectively, the continuing guaranties executed and delivered to Lender by each Guarantor which guaranty payment of the Obligations, as amended, modified or restated from time to time, and “Guaranty” means any of the Guaranties.

“ Guarantor(s) ” means IECW&C, GTC, SCB, and each Subsidiary which becomes a Guarantor pursuant to Section 13.12.

“ Hazardous Substances ” means, without limitation, any explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances and any other material defined as a hazardous substance in any Environmental Laws, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et. seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sections 1801, et. seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901, et. seq.; Articles 15 and 27 of the New York State Environmental Conservation Law or any other applicable federal, state, or local law, regulation, rule, ordinance, by-law, policy, guideline, procedure, interpretation, decision, order, or directive, whether existing as of the date hereof, previously enforced or subsequently enacted.

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“ IECW&C ” means IEC Electronics Wire and Cable, Inc., formerly known as Val-U-Tech, Inc.

“ IECW&C Subordinated Debt ” means Debt owed to the Shareholder of IECW&C in connection with the closing of the acquisition by the Borrower of the stock of Val-U-Tech Corp. pursuant to the Agreement and Plan of Merger among Borrower, VUT Merger Corp., Val-U-Tech, Inc. and the Shareholders of Val-U-Tech, Inc. dated May 23, 2008.

“ Improvements ” means any and all real property and improvements owned or used by any of the Credit Parties.

“ Intellectual Property ” means the property described in Section 11.13.

“ Interest Expense ” means, for the applicable period, all interest paid, capitalized, or accrued, and amortization of debt discount with respect to all Debt determined after giving effect to the net cost or benefit associated with Rate Management Transactions.

“ Interest Period ” means, (i) with respect to any LIBOR Loan other than a Daily LIBOR Loan, the period commencing on the Draw Date or Continuation Date for such LIBOR Loan and ending on the date that shall be the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) of the calendar month that is one (1), two (2), three (3) or six (6) months after the commencement of such period, in accordance with Borrower’s election made pursuant to the terms of this Agreement; provided, however, that if an Interest Period would end on a day that is not a LIBOR Business Day, such Interest Period shall be extended to the next succeeding LIBOR Business Day, unless such next succeeding LIBOR Business Day would fall in the next calendar month, in which case such Interest Period shall end on the immediately preceding LIBOR Business Day, and (ii) with respect to a Daily LIBOR Loan, one day, provided, however, that if an Interest Period would end on a day that is not a LIBOR Business Day, such Interest Period shall be extended to the next succeeding LIBOR Business Day.

“ Inventory Overline Advance Rate ” means 70% of Borrower’s Eligible Inventory.

“ Investment ” of any Person means (a) acquisition of any Capital Security, evidence of Debt or other security or instrument issued by any other Person, (b) any loan, advance or extension of credit to (including guaranties of liabilities of), or any contribution to the capital of, any other Person, (c) any acquisition of assets (other than inventory or Capital Expenditures in the ordinary course of business) or business from or Capital Security of any other Person, (d) acquisition of a futures contract, or becoming liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, and (e) any other investment in any other Person. An Investment shall be deemed to be “outstanding”, except to the extent that it has been paid or otherwise satisfied in cash or the Person making such Investment has received cash in consideration for the sale thereof, notwithstanding the fact that such Investment may otherwise have been forgiven, released, canceled or otherwise nullified.

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“ Lender ” means Manufacturers and Traders Trust Company, and its successors, legal representatives, and assigns.

“ LIBOR ” means, the rate per annum (rounded upward, if necessary, to the nearest 1/16th of 1%) that is the London Interbank Offered Rate, as applicable in accordance with the LIBOR Rate selected by Borrower for each Loan, or in the case of Daily LIBOR each day (or if such day is not a LIBOR Business Day, as fixed in the same manner on the immediately preceding LIBOR Business Day, which day’s rate shall, unless otherwise provided for, apply to the immediately succeeding non-LIBOR Business Days), fixed by the British Bankers Association for United States dollar deposits in the London interbank market at approximately 11:00 a.m. London, England time (or as soon thereafter as practicable) as determined by the Lender from any broker, quoting service or commonly available source utilized by the Lender. Notwithstanding any provision above, the practice of rounding to determine LIBOR may be discontinued at any time in the Lender’s sole discretion.

“ LIBOR Business Day ” means any day on which dealings in United States dollar deposits are carried on by banking institutions in London that is also a Business Day.

“ LIBOR Loan ” means any Loan when and to the extent that the interest rate for such Loan is determined by reference to LIBOR.

“ LIBOR Rate ” means, as selected by the Borrower for the respective LIBOR Loan, the one-month, two-month, three-month, or six-month LIBOR, each with an Interest Period of equal duration, or for Daily LIBOR Loans, one-month LIBOR, adjusting daily, calculated on the basis of a 360-day year for the actual number of days of each year (365 or 366), and then in each case plus the Applicable Margin.

“ Lien ” means any mortgage, pledge, security interest, encumbrance, lien, assignment or charge of any kind or description and shall include, without limitation, any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof including any lease or similar arrangement with a public authority executed in connection with the issuance of industrial development revenue bonds or pollution control revenue bonds, and the filing of or agreement to give any financing statement under the Uniform Commercial Code (or comparable law) of any jurisdiction naming the owner of the asset to which such lien applies as a debtor (other than a filing which does not evidence an outstanding secured obligation, or a commitment to make advances or to incur any other obligation of any kind).

“ Linked Deposit Program ” shall mean the Empire State Development Linked Deposit Program, in which the Lender is, as of the date hereof, a participant.

“ Loan(s) ” means, (without duplication) any amount disbursed by Lender to or on behalf of the Borrower under the Loan Documents, whether such amount constitutes an original disbursement of funds, or the continuation of any amount outstanding, under the Revolving Credit Facility, the 2008 Term Loan, the Energy Loan Note, the GTC Term Loan, the Mortgage Secured Term Loan, the Equipment Line Facility, the Celmet Term Loan, or the SCB Term Loan.

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“ Loan Documents ” means the Agreement, the Notes, the Security Documents, all documents and agreements related to the M&T Sale-Leaseback, and all other agreements, documents and certificates executed with or in favor of the Lender in connection with the Agreement (including any predecessor agreement) or any amendment to the Agreement or to any other Loan Document.

“ M&T Sale-Leaseback ” means the sale-leaseback arrangement between the Lender and the Borrower evidenced in part by the Master Equipment Lease dated May 30, 2008.

“ Mandatory Prepayment ” means a prepayment required by Section 10.12(d) or 10.12(e).

“ Material Adverse Effect ” means (i) a material adverse effect on the financial condition, performance, business, operations or prospects of the Credit Parties, taken as a whole, (ii) material impairment of the legal ability of any of the Credit Parties to perform their obligations under this Agreement or any of the Loan Documents in any material respect, (iii) any material adverse effect on the binding nature, validity or enforceability of any Loan Document as an obligation of any Credit Party that is a party thereto, and (iv) material impairment of the rights and remedies of the Lender under this Agreement or any of the Loan Documents, including without limitation impairment or unenforceability of the perfection or priority of any Lien held by the Lender.

“ Minimum Loan Amoun t” shall mean (i) for any Daily LIBOR Loan, any whole dollar increment, (ii) for Equipment Line Loans, $100,000, with minimum increments thereafter of $100,000, (iii) for the Celmet Term Loan, $100,000 with minimum increments thereafter of $100,000, (iii) for the SCB Term Loan, $1,000,000 with minimum increments thereafter of $100,000 and (v) for other LIBOR Loans, $1,000,000, with minimum increments thereafter of $500,000.

“ Money Market Investments ” means (a) any security issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof or having a remaining maturity of not more than 270 days, (b) any certificate of deposit, eurodollar time deposit and banker’s acceptance with remaining maturity of not more than 270 days, any overnight bank deposit, any demand deposit account, in each case with Lender or with any United States commercial bank having capital and surplus in excess of $500,000,000 and rated B or better by Thomson Bankwatch Inc., (c) any repurchase obligation with a term of not more than seven days for underlying securities of the types described in clauses (a) and (b) above entered into with any financial institution meeting the qualifications specified in clause (b) above, and (d) any commercial paper issued by Lender and any other commercial paper rated A-1 by Standard & Poor’s Rating Group of Prime-1 by Moody’s Investors Service, Inc. and in any case having a remaining maturity of not more than 270 days.

“ Mortgage ” means the mortgage in favor of the Lender made by GTC covering its interest in property and improvements located at premises commonly known as 1450 Mission Avenue NE, Albuquerque, New Mexico held pursuant to a Lease Agreement between the City of Albuquerque, New Mexico and GTC dated as of March 1, 1999.

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“ Mortgage Secured Term Loan ” means the $4,000,000 aggregate original outstanding principal balance term loan described in Article 7 hereof.

“ Mortgage Secured Term Loan Maturity Date ” means December 16, 2014.

“ Mortgage Secured Term Loan Note ” means the Mortgage Secured Term Loan Note evidencing the Mortgage Secured Term Loan.

“ Mortgaged Property ” means the property and improvements covered by the Mortgage.

“ Multiemployer Plan ” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA as to which any of the Credit Parties or any ERISA Affiliate is obligated to make, has made, or will be obligated to make contributions on behalf of participants who are or were employed by any of them.

“ Net Cash Proceeds ” shall mean (a) in the case of any Casualty Event, the aggregate cash proceeds of insurance (excluding however any insurance proceeds for business interruption or time element loss), condemnation awards and other compensation received by any Person in respect of such Casualty Event less (i) reasonable fees and expenses incurred by such Person in connection therewith, and (ii) contractually required payments of Debt to the extent secured by Liens on the property subject to such Casualty Event and any income or transfer Taxes paid or reasonably estimated by such Person to be payable by such Person as a result of such Casualty Event, and (b) in the case of any Asset Disposition, the aggregate amount of all cash payments and proceeds (including any cash payments made from time to time in respect to the principal amount of any note or similar instrument or agreement providing for or evidencing debt as the deferred purchase price owing from the purchaser of such asset to the applicable Person) received by any Person in connection therewith less (i) reasonable fees and expenses incurred by such Person in connection therewith, (ii) Debt to the extent the amount thereof is secured by a Lien on the property that is the subject of such Asset Disposition and the transferee (or holder of the Lien on) such property requires that such Debt be repaid as a condition of such Asset Disposition, and (iii) any income or transfer Taxes paid or reasonably estimated by the Person to be payable by such Person as a result of such Asset Disposition.

“ Net Income ” means for the applicable period, the net earnings of the Borrower on a consolidated basis, determined in accordance with GAAP on a consistent basis, but excluding:

(a) any gain or loss arising from the sale of capital assets;

(b) any non-cash gain or non-cash loss arising from any write-up of assets;

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(d) net earnings or losses of any Person, substantially all the assets of which have been acquired in any manner by Borrower, realized by such Person prior to the date of such acquisition;

(e) net earnings or losses of any Person in which Borrower has an ownership interest, except any such net earnings which have actually been received by Borrower in the form of cash distributions and except the net earnings or losses of any Guarantor;

(f) any portion of the net earnings of any Subsidiary of Borrower which for any reason is unavailable for payment of dividends to Borrower;

(g) the net earnings or losses of any Person to which any assets of Borrower shall have been sold, transferred or disposed of after the date of such transaction,

(h) the net earnings or losses of any Person into which Borrower shall have merged, or been a party to any consolidation or other form of reorganization, prior to the date of such transaction;

(i) any gain arising from the acquisition of any securities of Borrower; and

(j) any gain or loss arising from extraordinary items.

“ Note(s) ” means the Revolving Credit Note, the 2008 Term Loan Note, the Energy Loan Note, the GTC Term Loan Note, the Mortgage Secured Term Loan Note, the Equipment Line Notes, the Celmet Term Loan Note, and the SCB Term Loan Note, and “Note” means any of the Notes.

“ Obligations ” means and shall include all of the Credit Parties’ obligations to the Lender and/or to any of Lender’s affiliates of any kind or nature, arising now or in the future under or related to this Agreement and/or the Loan Documents including obligations related to the Notes, the M&T Sale-Leaseback, overdrafts, obligations related to Rate Management Transactions, credit card transactions, automated transfer transactions, electronic funds transfers, other transactions related to the Credit Parties’ dealings with the Lender, interest accruing after the filing of any petition or assignment in bankruptcy or for reorganization by or against the Credit Parties (whether or not such a claim for such post-petition interest is allowed in the proceedings), fees, charges, expenses, and amount payable with respect to guaranties.

“ Organizational Documents ” means, as applicable to the particular Person, the certificate or articles of incorporation or formation, bylaws, operating agreement, certificate of partnership, partnership agreement, and other similar documents and agreements related to formation and governance.

“ Overline Advance ” means any portion of a Loan under the Revolving Line Facility that is available under the Borrowing Base only if the Inventory Overline Advance Rate is in effect.

“ PBGC ” means the Pension Benefit Guarantee Corporation and any successor thereto.

“ Permitted Debt ” means Debt described in Section 14.1.

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“ Permitted Liens ” means the following Liens:

(a) liens imposed by any governmental authority for Taxes or charges not yet due or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Borrower subject to such lien in accordance with GAAP on a consistent basis, provided no tax lien filing, levy, or execution exists in connection therewith;

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days, or which are being contested in good faith and by appropriate proceedings;

(d) deposits to secure the performance of bids, trade contracts (other than borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(e) Liens in favor of Lender; and

(f) Liens listed on Schedule 14.1(b) .

“ Person ” means any individual, sole proprietorship, or other entity of any kind or nature including any corporation, partnership, trust, unincorporated organization, limited liability company, unlimited liability company, mutual company, joint stock company, estate, union, employee organization, government or any agency or political subdivision thereof.

“ Plan ” means any employee benefit plan, program, arrangement, practice or contract, maintained by or on behalf of a Borrower or an ERISA Affiliate, which provides benefits or compensation to or on behalf of employees or former employees, whether formal or informal, whether or not written, including but not limited to the following types of plans:

(a) Executive Arrangements - any bonus, incentive compensation, stock option, deferred compensation, commission, severance, “golden parachute”, “rabbi trust”, or other executive compensation plan, program, contract, arrangement or practice;

(b) ERISA Plans - any “employee benefit plan” as defined in ERISA, including, but not limited to, any defined benefit pension plan, profit sharing plan, money purchase pension plan, savings or thrift plan, stock bonus plan, employee stock ownership plan, Multiemployer Plan, or any plan, fund, program, arrangement or practice providing for medical (including post-retirement medical), hospitalization, accident, sickness, disability, or life insurance benefits; and

(c) Other Employee Fringe Benefits - any stock purchase, vacation, scholarship, day care, prepaid legal services, severance pay or other fringe benefit plan, program, arrangement, contract or practice.

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“ Prepayment Premium ” means a payment by the Borrower with respect to any prepayment in whole or in part of any Fixed Rate Loan equal to the greater of (a) one percent (1%) of the principal sum prepaid, or (b) an amount equal to the present value of the difference between (i) the amount of interest that would have accrued on the principal sum prepaid from the date of the prepayment to the end of the applicable Fixed Rate Period, at the interest rate applicable to the Note in effect on the date of prepayment and (ii) the amount of interest that would have accrued on the principal sum prepaid from the date of the prepayment to the end of the applicable Fixed Rate Period of the applicable Note at the Current Market Rate. “ Current Market Rate ” shall mean the most recent yield on United States Treasury Obligations adjusted to a constant maturity having a term most nearly corresponding to Fixed Rate Period remaining from the date of prepayment to the last day of the applicable Fixed Rate Period, in effect two (2) Business Days prior to the prepayment date as published by the Board of Governors of the Federal Reserve System in the Federal reserve Statistical Release H.15 (519), or by such other quoting service, index, or commonly available source utilized by the Lender. The “present value” calculation shall use the Current Market Rate as the discount rate and shall be calculated as if each installment of the principal sum had been made when due during the remainder of the applicable Fixed Rate Period.

“ Prime Rate ” means the rate of interest announced by the Lender from time to time at its Principal Office as its prime commercial lending rate, which rate is not intended to be the lowest rate of interest charged by Lender to its borrowers.

“ Principal Office ” means the Lender’s office at 255 East Avenue, Rochester, New York 14604.

“ Prior Closing Date ” means July 30, 2010.

“ Quarterly Covenant Compliance Sheet ” or “QCC Sheet” means the covenant compliance sheet delivered on a quarterly basis by Borrower to Lender, in substantially the form of Exhibit A attached hereto, including a certificate of the Chief Financial Officer of Borrower certifying that no Event of Default or Default has occurred (or if one has occurred, identifying the same) and certifying to the accuracy of an attached schedule showing computation of financial covenants contained in Article 15 hereof.

“ Rate Management Transaction ” means any transaction (including an agreement with respect thereto) now existing or hereafter entered into by any Credit Party which is an interest rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

“ Release ” has the same meaning as given to that term in Section 101(22) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601(22), and the regulations promulgated thereunder.

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“ Revolving Credit Commitment ” means the Revolving Credit Commitment described in Section 2.1.

“ Revolving Credit Facility ” means the revolving credit facility established pursuant to Section 2.1 of this Agreement.

“ Revolving Credit Loan(s) ” means a Loan or Loans made by the Lender to Borrower under the Revolving Credit Facility.

“ Revolving Credit Note ” means the Amended and Restated Revolving Credit Note described in Section 2.4.

“ Revolving Credit Termination Date ” means December 17, 2013.

“ SCB Assets ” means the assets purchased by Borrower in the SCB Transaction.

“ SCB ” means CSCB, Inc.

“ SCB Term Loan ” means the $20,000,000 aggregate original outstanding principal balance term loan described in Article 9 hereof.

“ SCB Term Loan Maturity Date ” means December 17, 2015.

“ SCB Term Loan Note ” means the term loan note evidencing the SCB Term Loan.

“ SCB Transaction ” means the Borrower’s purchase of substantially all of the assets of Southern California Braiding Co., Inc., a California corporation, pursuant to a certain Asset Purchase Agreement dated as of December 17, 2010 made among Southern California Braiding Co., Inc., Leo P. McIntyre, certain other shareholders thereof and CSCB, Inc., and all related transactions, documents and agreements.

“ Security Agreemen t” means the Amended and Restated General Security Agreement dated as of December 16, 2009, made by Borrower, IECW&C and GTC in favor of Lender, including any supplements thereto, as the same may be amended, modified, supplemented or replaced from time to time.

“ Security Documents ” means those documents listed on Schedule 1.1(A) , as each may be amended, modified, supplemented or replaced from time to time.

“ Subsidiary ” means any Person, the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements in accordance with GAAP (including among others consolidated subsidiaries of consolidated subsidiaries).

“ Tax ” means any federal, state, provincial, or foreign tax (including withholding tax), assessment, or other governmental charge (including penalties and interest) upon a Person or upon its assets, revenues, income, or profits.

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“ Trademark Security Agreements ” means the Trademark Collateral Security and Pledge Agreement listed on Schedule 1.1(A) , and any similar document delivered by any Credit Party, as amended, modified or restated from time to time.

“ Unfinanced Capital Expenditures ” means all capital expenditures other than (i) capital expenditures financed by the Lender (but excluding for this definition any capital expenditures financed with the proceeds of a Revolving Credit Loan), and (ii) capital expenditures financed with Debt (other than the Loans) permitted under this Agreement or Debt to which the Lender consents in writing.

1.2 Interpretation . This Agreement has been prepared in cooperation by counsel for each of the parties, and shall not be construed as against any particular party as drafter. Unless otherwise expressly provided in this Agreement, the following interpretations shall apply:

(a) references in this Agreement to statutes shall include any amendments of the same and any rules and regulations promulgated thereunder,

(b) references to Persons include their permitted successors and assigns, and in the case of any governmental authority, any Person succeeding to its functions and capacities,

(c) references to agreements (including exhibits and schedules thereto) include amendments, assignments, and restatements provided that such amendments, assignments, and restatements are not prohibited by the Loan Documents,

(d) references to specific sections, articles, annexes, schedules, and exhibits are to this Agreement,

(e) words importing gender include the other gender,

(f) the singular includes the plural and the plural includes the singular,

(g) the words, “including”, “include”, and “includes” shall be deemed to be followed by the words “without limitation”,

(h) each authorization herein shall be deemed irrevocable and coupled with an interest,

(i) obligations or liabilities of the Credit Parties, or any of them, to which this Agreement makes reference shall be joint and several,

(j) accounting terms shall be interpreted, and all determinations relating thereto shall be made, in accordance with GAAP, and

(k) captions and headings are for ease of reference only and shall not affect the construction hereof.

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ARTICLE 2 - REVOLVING CREDIT FACILITY

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 $20,000,000 (the “ Revolving Credit Commitment ”). During the period from the Closing 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.

2.2 Borrowing Base; Overline Advances . Notwithstanding the provisions of Section 2.1, the aggregate principal amount of all outstanding Revolving Credit Loans shall not exceed the lesser of the Borrowing Base and the Revolving Credit Commitment.

Upon Borrower’s request the Inventory Overline Advance Rate shall apply and the Lender will make Overline Advances from time to time; provided, however no new Overline Advance shall be available unless no Overline Advances have been outstanding in the immediately prior thirty (30) consecutive days and no Event of Default then exists.

At any time that the Borrower becomes aware or receives notice (oral or written) that the aggregate principal amount of all outstanding Revolving Credit Loans exceeds the lesser of the Borrowing Base or the Revolving Credit Commitment, the Borrower shall immediate prepay a portion of the Revolving Credit Loans that is at least the amount of such excess pursuant to Section 2.5 hereof.

2.3 Interest .

(a) Interest shall accrue each day on each LIBOR Loan from and including the first day of each Interest Period applicable thereto until, but not including, the last day of each such Interest Period or the day the LIBOR Loan is paid in full (if sooner) at a rate per annum equal to the LIBOR Rate, as determined using LIBOR in effect on the following dates, as applicable:

(i) for LIBOR Loans other than Daily LIBOR Loans, (A) for new LIBOR Loans, two (2) LIBOR Business Days before the Draw Date; (B) for continuations of and conversions to LIBOR Loans, the LIBOR Business Day the Lender receives (or is deemed to receive) the required Notice in accordance with the terms of this Agreement; (C) for LIBOR Loans where the Automatic Continuation Option is in effect, the applicable Automatic Adjustment Rate Determination Date for such LIBOR Loan, and

(ii) for Daily LIBOR Loans, at a rate per annum equal to the LIBOR Rate in effect each day (or if such day is not a LIBOR Business Day, as fixed in the same manner on the immediately preceding LIBOR Business Day, which day’s rate shall, unless otherwise provided for, apply to the immediately succeeding non-LIBOR Business Days).

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(b) After any conversion to a Base Rate Loan, interest shall accrue on the Base Rate Loan from and including the first date a Loan becomes a Base Rate Loan to, but not including, the day such Base Rate Loan is paid in full or converted back to a LIBOR Loan, at the rate per annum equal to the Base Rate. Any change in the Base Rate shall be effective on the date of such change.

2.4 Revolving Credit Note . Borrower’s obligation to repay the Revolving Credit Loans shall be evidenced by a Revolving Credit Note in substantially the form of Exhibit B to this Agreement, in favor of Lender in the aggregate principal amount of Lender’s Revolving Credit Commitment.

2.5 Payments .

(a) Interest shall be paid, in the case of LIBOR Loans other than Daily LIBOR Loans on the earlier of the last day of the applicable Interest Period or three (3) months after the Draw Date or continuation or conversion date as the case may be, and in the case of Daily LIBOR Loans and Base Rate Loans in arrears on the first day of every month. Interest on any Base Rate Loans shall be paid on the first day of each month. All accrued and unpaid interest shall be due and payable on the Revolving Credit Termination Date.

(b) Each Overline Advance shall be repaid in full no later than the sixtieth (60th) day after the making of such Overline Advance.

(d) At any time that the Borrower becomes aware or receives notice (oral or written) that the outstanding principal amount of all Revolving Credit Loans exceeds the Borrowing Base, Borrower shall immediately prepay that portion of the Revolving Credit Loans that is necessary to comply with the provisions of Section 2.2.

2.6 Unused Commitment Fee . Borrower agrees to pay to the Lender the Applicable Unused Fee on the average amount of the Revolving Credit Commitment unused during each Fiscal Quarter. Such fee shall be payable quarterly and (i) during the period auto-deduct is elected by Borrower, the Lender is hereby authorized to charge Borrower’s account with Lender for the amount of such fee, and the Lender will deliver to Borrower an invoice setting forth the amount of such fee and the basis upon which it was calculated no later than two (2) Business Days after such fee is so charged, and (ii) if auto-deduct is not elected by Borrower, the Lender will deliver to Borrower an invoice setting forth the amount of such fee and the basis upon which it was calculated and such fee will be due and payable within five Business Days after delivery of such invoice.

2.7 Use of Proceeds . Proceeds of the Revolving Credit Loans were and shall be used for the Borrower’s general corporate purposes including purchase of the assets of Southern California Braiding Co., Inc.

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ARTICLE 3 - 2008 TERM LOAN FACILITY

3.1 2008 Term Loan . Lender previously made, and shall continue, a term loan (the “ 2008 Term Loan ”) in the original principal amount of $1,700,000 and having a principal balance on December 15, 2010 of $349,980, for the benefit of Borrower on the terms and conditions hereinafter set forth.

3.2 2008 Term Loan Note . Borrower’s obligation to repay the 2008 Term Loan is evidenced by its promissory note which is in substantially the form of Exhibit C to this Agreement.

3.3 Principal Payments on 2008 Term Loan . Borrower agrees to pay the principal amount of the 2008 Term Loan in consecutive installments of $28,334 on the first day of each month. The entire unpaid principal amount of the 2008 Term Loan shall be due and payable on the 2008 Term Loan Maturity Date.

3.4 Interest .

(a) Borrower shall pay interest on the outstanding principal amount of the 2008 Term Loan at the Fixed Rate of six and seven-tenths percent (6.7%) per annum. Interest on the 2008 Term Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed.

(b) Interest on the 2008 Term Loan shall be paid in immediately available funds to the Lender on the first day of each month. All remaining accrued interest shall be due and payable on the 2008 Term Loan Maturity Date.

ARTICLE 4 - ENERGY LOAN

4.1 Energy Loan Note . Borrower’s obligation to repay the Energy Loan is evidenced by its promissory note with attached rider which is in substantially the form of Exhibit D to this Agreement.

4.2 Energy Loan Payments . Borrower shall make payments of principal and interest as provided in the Energy Loan Note. All remaining unpaid principal and accrued interest on the Energy Loan shall be due and payable in full on the Energy Loan Maturity Date.

4.3 Interest . Borrower shall pay interest on the outstanding principal amount of the Energy Loan as provided in the Energy Loan Note.

4.4 Energy Loan Documents . The provisions of this Agreement supersede and replace the Agreement (Affirmative Agreements) containing financial covenants executed by and between the Borrower and Lender in connection with the original closing of the Energy Loan.

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ARTICLE 5 - EQUIPMENT LINE OF CREDIT FACILITY

5.1 Equipment Line of Credit . Subject to Section 5.2 and the other terms and conditions hereinafter set forth, the Lender has established the Equipment Line Facility, available in the discretion of the Lender to the Borrower from time to time during the period from the Prior Closing Date up to but not including the Equipment Line Maturity Date, in an aggregate principal amount of $1,500,000, less the amount of Equipment Line Loans made under the Prior Agreement (the “ Equipment Line Commitment ”). No reborrowing is available under the Equipment Line Facility. The Lender will consider Borrower’s requests for Equipment Line Loans, but shall have the sole and absolute discretion whether to make any Loan (or any portion of any Loan) requested by Borrower, regardless of any general availability under the Equipment Line Facility.

5.2 Notice and Manner of Borrowing . Borrower may make requests for Equipment Line Loans, in minimum amounts of $100,000, to the Lender specifying: (a) the date of each such Loan; (b) the amount of such Loan; (c) whether such Loan will be a Fixed Rate Loan or LIBOR Loan; (d) in the case of a LIBOR Loan, the duration of the Interest Period applicable thereto, and (e) the purpose of the Loan including copies of invoices for equipment being purchased and other supporting documentation reasonably requested by Lender. Subject to the terms of this Agreement including Section 5.1, and upon fulfillment of the applicable conditions set forth in Article 12, the Lender shall credit the amount of such Equipment Line Loan, in immediately available funds, to the account of the Borrower maintained with the Lender for that purpose.

5.3 Interest .

(a) The Equipment Line Loans may be outstanding as LIBOR Loans or Fixed Rate Loans (in which case the rate shall be fixed for the duration of the term of the Equipment Line Loan), as elected with respect to each Equipment Line Loan at least three (3) Business Days before the date on which such Equipment Line Loan is made. Borrower shall pay interest to the Lender on the outstanding and unpaid principal amount of each Equipment Line Loan at the LIBOR Rate or the Fixed Rate, whichever may have been elected by the Borrower. Each LIBOR Rate shall be effective for the applicable Interest Period. Interest on each Equipment Line Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed.

(b) Provided that the Lender remains a participant in the Linked Deposit Program and approval is received from New York Empire State Development for Borrower’s participation in such program at the level provided herein, the Lender will provide the Borrower with the interest rate benefit under the Linked Deposit Program for up to an aggregate of $1,000,000 in Equipment Line Loans. Borrower must elect a Fixed Rate for any Equipment Line Loan for the period in which Linked Deposit Program benefits are received, which period may not exceed forty-eight months, and the other terms and conditions of general application to the Linked Deposit Program must be satisfied.

(c) Interest shall accrue each day on each LIBOR Loan from and including the first day of each Interest Period applicable thereto until, but not including, the last day of each such Interest Period or the day the LIBOR Loan is paid in full (if sooner) at a rate per annum equal to the LIBOR Rate, as determined using LIBOR in effect on the following dates, as applicable:

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(d) After any conversion to a Base Rate Loan, interest shall accrue on the Base Rate Loan from and including the first date a Loan becomes a Base Rate Loan to, but not including, the day such Base Rate Loan is paid in full or converted back to a LIBOR Loan, at the rate per annum equal to the Base Rate. Any change in the Base Rate shall be effective on the date of such change.

5.4 Equipment Line Notes . Borrower’s obligation to repay each Equipment Line Loan shall be evidenced by an Equipment Line Note in substantially the form of Exhibit E to this Agreement, with blanks appropriately completed, in favor of Lender in the principal amount of such Equipment Line Loan. In addition, for any Equipment Line Note to which the Linked Deposit Program applies, the Borrower has executed and delivered to Lender a Linked Deposit Program Equipment Line Note Rider which is in substantially the form of Exhibit F to this Agreement.

5.5 Payments .

(a) Accrued interest on outstanding Equipment Line Loans shall be paid to Lender on the first day of each month. All accrued and unpaid interest shall be due and payable on the Revolving Credit Termination Date.

(b) The principal of each Equipment Line Loan shall be repaid in consecutive monthly installments on the first day of each month, each equal to one-sixtieth of the original principal amount of the particular Equipment Line Loan. All Equipment Line Loans shall be repaid in full on the Revolving Credit Termination Date.

5.6 Use of Proceeds . Proceeds of the Equipment Line Loans shall be used to finance the purchase price of capital equipment.

ARTICLE 6 - GTC TERM LOAN FACILITY

6.1 GTC Term Loan . Lender previously made, and shall continue a term loan (the “ GTC Term Loan ”) to Borrower on December 16, 2009 in the original principal amount of Five Million Dollars ($5,000,000).

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6.2 Interest .

(a) The GTC Term Loan shall be outstanding and bear interest as a LIBOR Loan, initially as a Daily Rate LIBOR Loan. Each LIBOR Rate shall be effective for the applicable Interest Period. Interest on the GTC Term Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed.

(b) Interest shall accrue each day on each LIBOR Loan from and including the first day of each Interest Period applicable thereto until, but not including, the last day of each such Interest Period or the day the LIBOR Loan is paid in full (if sooner) at a rate per annum equal to the LIBOR Rate, as determined using LIBOR in effect on the following dates, as applicable:

(c) After any conversion to a Base Rate Loan, interest shall accrue on the Base Rate Loan from and including the first date a Loan becomes a Base Rate Loan to, but not including, the day such Base Rate Loan is paid in full or converted back to a LIBOR Loan, at the rate per annum equal to the Base Rate. Any change in the Base Rate shall be effective on the date of such change.

6.3 Payments on GTC Term Loan .

(a) The Borrower shall repay the principal amount of the GTC Term Loan in consecutive monthly principal installments of $83,333 each.

(b) Accrued Interest on the GTC Term Loan shall be paid to the Lender on the first day of each month.

(c) The entire remaining unpaid principal amount of the GTC Term Loan and all accrued interest thereon shall be due and payable on the GTC Term Loan Maturity Date, or sooner as otherwise provided in this Agreement.

6.4 GTC Term Loan Note . Borrower’s obligation to repay the GTC Term Loan is evidenced by the GTC Term Loan Note which is in substantially the form of Exhibit G to this Agreement.

6.5 Use of Proceeds . The proceeds of the GTC Term Loan were used by Borrower for the GTC Transaction.

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ARTICLE 7 - MORTGAGE SECURED TERM LOAN FACILITY

7.1 Mortgage Secured Term Loan . Lender previously made, and shall continue a term loan (the “ Mortgage Secured Term Loan ”) to Borrower on December 16, 2009 in the original principal amount of Four Million Dollars ($4,000,000).

7.2 Interest .

(a) The Mortgage Secured Term Loan shall be outstanding and bear interest as a LIBOR Loan, initially as a Daily Rate LIBOR Loan. Each LIBOR Rate shall be effective for the applicable Interest Period. Interest on the Mortgage Secured Term Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed.

7.3 Payments on Mortgage Secured Term Loan .

(a) The Borrower shall repay the principal amount of the Mortgage Secured Term Loan in consecutive monthly principal installments of $22,222 each.

(b) Accrued interest on the Mortgage Secured Term Loan shall be paid to the Lender on the first day of each month.

(c) The entire remaining unpaid principal amount of the Mortgage Secured Term Loan and all accrued interest thereon shall be due and payable on the Mortgage Secured Term Loan Maturity Date, or sooner as otherwise provided in this Agreement.

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7.4 Mortgage Secured Term Loan Note . Borrower’s obligation to repay the Mortgage Secured Term Loan is evidenced by the Mortgage Secured Term Loan Note which is in substantially the form of Exhibit H to this Agreement.

7.5 Use of Proceeds . The proceeds of the Mortgage Secured Term Loan were used by Borrower for the GTC Transaction.

ARTICLE 8 - CELMET TERM LOAN

8.1 Celmet Term Loan . Lender previously made, and shall continue a term loan (the “ Celmet Term Loan ”) to Borrower, in the original principal amount on the Prior Closing Date of Two Million Dollars ($2,000,000).

8.2 Interest .

(a) The Celmet Term Loan shall be outstanding and bear interest as a LIBOR Loan, initially as a Daily Rate LIBOR Loan. Each LIBOR Rate shall be effective for the applicable Interest Period. Interest on the Celmet Term Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed.

8.3 Payments on Celmet Term Loan .

(a) The Borrower shall repay the principal amount of the Celmet Term Loan in consecutive monthly principal installments of $33,333.33 each.

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(b) Accrued interest on the Celmet Term Loan shall be paid to the Lender on the first day of each month.

(c) The entire remaining unpaid principal amount of the Celmet Term Loan and all accrued interest thereon shall be due and payable on the Celmet Term Loan Maturity Date, or sooner as otherwise provided in this Agreement.

8.4 Celmet Term Loan Note . Borrower’s obligation to repay the Celmet Term Loan is evidenced by the Celmet Term Loan Note which is in substantially the form of Exhibit J to this Agreement.

8.5 Use of Proceeds . The proceeds of the Celmet Term Loan were used by Borrower for the Celmet Transaction.

ARTICLE 9 - SCB TERM LOAN

9.1 SCB Term Loan . Lender agrees, on the date of this Agreement, on the terms and conditions hereinafter set forth, to make a term loan (the “ SCB Term Loan ”) to Borrower in the original principal amount of Twenty Million Dollars ($20,000,000).

9.2 Interest .

(a) The SCB Term Loan shall be outstanding and bear interest as a LIBOR Loan, initially as a Daily Rate LIBOR Loan. Each LIBOR Rate shall be effective for the applicable Interest Period. Interest on the SCB Term Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed.

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9.3 Payments on SCB Term Loan .

(a) The Borrower shall repay the principal amount of the SCB Term Loan in sixty (60) consecutive monthly principal installments of $333,333.33 each with the first such payment to be due on the first day of the month following the date hereof. All remaining principal and interest on the SCB Term Loan, if any, shall be due and payable in full on the SCB Term Loan Maturity Date.

(b) Accrued interest on the SCB Term Loan shall be paid to the Lender on the first day of each month.

(c) The entire remaining unpaid principal amount of the SCB Term Loan and all accrued interest thereon shall be due and payable on the SCB Term Loan Maturity Date, or sooner as otherwise provided in this Agreement.

9.4 SCB Term Loan Note . Borrower’s obligation to repay the SCB Term Loan shall be evidenced by the SCB Term Loan Note in substantially the form of Exhibit K to this Agreement, with blanks appropriately completed.

9.5 Use of Proceeds . The proceeds of the SCB Term Loan shall be used by Borrower for the purchase of the SCB Assets.

9.6 Origination Fee . Borrower will pay a commitment/origination fee of $125,000.00 in connection with the SCB Term Loan, due upon execution of this Agreement.

ARTICLE 10 - CERTAIN GENERAL PROVISIONS

10.1 Notice and Manner of Borrowing; Continuations, Conversions and; Funding .

(a) General Requirements .

(i) Each Revolving Credit Loan advanced hereunder shall be in the form of a LIBOR Loan, and as elected by the Borrower each Equipment Line Loan may be in the form of LIBOR Loans. The GTC Term Loan, the Mortgage Secured Term Loan, the Celmet Term Loan and the SCB Term Loan shall be in the form of LIBOR Loans.

(ii) The Lender may make any Revolving Credit Loan in reliance upon any oral, telephonic, written, teletransmitted or other request (the “ Request(s) ”) that the Lender in good faith believes to be valid and to have been made by Borrower or on behalf of Borrower by an authorized person. The Lender may act on the Request of any authorized person until the Lender shall have received from Borrower, and had a reasonable time to act on, written notice revoking the authority of such authorized person. The Lender shall incur no liability to Borrower or to any other person as a direct or indirect result of making any Revolving Credit Loan pursuant to this subsection.

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(iii) Not including Daily LIBOR Rate Loans, at any one time no more than five (5) LIBOR Rate tranches may be outstanding under the Revolving Credit Facility, no more than two (2) LIBOR Rate tranches may be outstanding with respect to the 2008 Term Loan, no more than two (2) LIBOR Rate tranches may be outstanding with respect to the GTC Term Loan, no more than two (2) LIBOR Rate tranches may be outstanding with respect to the GTC Mortgage Secured Term Loan, no more than two (2) LIBOR Rate tranches may be outstanding with respect to the Celmet Term Loan, and no more than two (2) LIBOR Rate tranches may be outstanding with respect to the SCB Term Loan.

(b) Requests for LIBOR Loans . Borrower shall give the Lender its irrevocable Request for each LIBOR Loan specifying:

(i) the Draw Date for the LIBOR Loan, which may be the same day for Daily LIBOR Loans and which must be at least two (2) LIBOR Business Days following the date of the Request for other LIBOR Loans;

(ii) the aggregate amount of such LIBOR Loan, which amount shall not be less than the Minimum Borrowing Amount;

(iii) the applicable LIBOR Rate selection and corresponding Interest Period duration unless the Request is for a Daily LIBOR Loan; and

(iv) whether the Automatic Continuation Option will be in effect for such LIBOR Loan unless the Request is for a Daily LIBOR Loan. The Automatic Continuation Option shall be in effect for each Daily LIBOR Loan and for each other LIBOR Loan unless otherwise specified by Borrower in writing.

(c) Delivery of Requests and Notices . Delivery of a Notice or Request for a LIBOR Loan shall be made to the Lender at the address for notices in Section 18.4, or such other address designated by the Lender from time to time.

(d) Continuation Elections . An authorized Person may, upon irrevocable Request to the Lender in accordance with Section 10.1(e) below, elect to continue, as of the last day of the applicable Interest Period, any portion (subject to the Minimum Borrowing Amount limitation) or all of any LIBOR Loan with the same or a different Interest Period, provided no partial continuation of a LIBOR Loan with a different Interest Period shall reduce the outstanding principal amount of the remaining LIBOR Loan with the same Interest Period to less than the Minimum Borrowing Amount.

(e) Notice of Continuation .

(i) For an election under Section 10.1(d) above, an authorized person must deliver to the Lender, by 2:00 p.m. (New York time) on a Business Day, a written notice for an election under Section 10.1(d) (a “ Notice ”), specifying:

(A) the aggregate amount of each LIBOR Loan to be continued;

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(B) the applicable LIBOR Rate selection and corresponding Interest Period duration for each LIBOR Loan to be continued; and

(C) whether the Automatic Continuation Option will be in effect for each such LIBOR Loan. The Automatic Continuation Option shall be in effect for each LIBOR Loan, unless otherwise specified by Borrower in writing.

(ii) For any election in accordance with Section 5.1(d) above, the Continuation Date shall be the later of (A) the last day of the applicable Interest Period, or (B) two (2) LIBOR Business Days (unless a shorter period is permitted by Lender in its sole discretion) following the date the Lender receives the Notice of Continuation. If a Notice is received after 2:00 p.m. (New York time) on any Business Day, such Notice will be deemed to have been received on the next Business Day. Accordingly, as an example, if Borrower has a LIBOR Loan with a one-month Interest Period ending on June 15 and wants to continue the LIBOR Loan with a two- month Interest Period, Borrower must deliver to the Lender an appropriate Notice of Continuation by no later than 2:00 p.m. (New York time) on June 13 (assuming that June 13 is a Business Day and June 14 and 15 are LIBOR Business Days).

(iii) For LIBOR Loans with the Automatic Continuation Option in effect, the Lender shall, at the end of each Interest Period, automatically continue such LIBOR Loan with the same Interest Period unless a contrary Notice has been received.

(iv) The Lender may take action on any Notice in reliance upon any oral, telephonic, written or teletransmitted Notice that the Lender in good faith believes to be valid and to have been made by Borrower or on behalf of Borrower by an authorized person. No Notice may be delivered by e-mail. The Lender may act on the Notice from any authorized person until the Lender shall have received from Borrower, and had a reasonable time to act on, written notice revoking the authority of such authorized person. The Lender shall incur no liability to Borrower or to any other person as a direct or indirect result of acting on any Notice under this Agreement. The Lender, in its sole discretion, may reject any Notice that is incomplete.

(f) Expiration of Interest Period . With respect to any LIBOR Loan for which an Automatic Continuation Option is not in effect, if Borrower does not deliver to the Lender an appropriate Notice of Continuation (in accordance with the terms hereof) at least two (2) LIBOR Business Days before the end of an Interest Period, the Lender shall have the right (but not the obligation) to immediately, and without notice, convert such LIBOR Loan into a Daily LIBOR Loan and such Loan shall continue as a Daily LIBOR Loan until two (2) LIBOR Business Days after the Lender receives an appropriate Notice under Section 9.1(e) electing a different Interest Period. A Notice of Continuation received one (1) LIBOR Business Day before the end of an Interest Period may not effectuate a continuation of such Loan as a LIBOR Loan as of the last day of the Interest Period. Rather, such LIBOR Loan may be converted (in the manner described above) to a Daily LIBOR Loan on the last day of the Interest Period. Such Notice of Continuation, however, will be deemed to be a Notice that will be effective two (2) LIBOR Business Days from the date it is received (or deemed to be received) by the Lender.

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(g) Conversion upon Default . Unless the Lender shall otherwise consent in writing, if (i) Borrower fails to pay when due, in whole or in part, the Obligations, or (ii) there exists any Event of Default or other Default with respect to which Lender has given a required notice of default as a precondition to the occurrence of an Event of Default, no conversion or continuation elections by the Borrower shall be permitted, and the Lender, in its sole discretion, may (i) permit any outstanding LIBOR Loan to continue until the last day of the applicable Interest Period at which time such Loan shall automatically be converted into a Base Rate Loan or (ii) convert any outstanding LIBOR Loan into a Base Rate Loan before the end of the applicable Interest Period applicable to such LIBOR Loan. Nothing herein shall be construed to be a waiver by the Lender to have any Loan accrue interest at the Default Rate or the right of the Lender to charge and collect Breakage Costs.

10.2 Method of Payment . Borrower shall make each payment under this Agreement and the Notes not later than 3:00 p.m. (New York time) on the date when due in lawful money of the United States to the Lender at its Principal Office in immediately available funds. Borrower hereby authorizes the Lender, if and to the extent payment is not made when due under this Agreement and the Notes, to charge from time to time against any account of Borrower with the Lender any amount as due.

10.3 Illegality . If the Lender shall determine that the introduction of any law (statutory or common), treaty, rule, regulation, guideline or determination of an arbitrator or of a governmental authority or in the interpretation or administration thereof, has made it unlawful, or that any central bank or other governmental authority has asserted that it is unlawful for the Lender to make LIBOR Loans, then, on notice thereof by the Lender to Borrower, the Lender may suspend the making of LIBOR Loans until the Lender shall have notified Borrower that the circumstances giving rise to such determination shall no longer exist. If the Lender shall determine that it is unlawful to maintain any LIBOR Loans, Borrower shall prepay in full all LIBOR Loans then outstanding, together with accrued interest, either on the last date of the Interest Period thereof if the Lender may lawfully continue to maintain such LIBOR Loans to such day, or immediately, if the Lender may not lawfully continue to maintain such LIBOR Loans. If Borrower is required to prepay any LIBOR Loan immediately as set forth in this subsection, then concurrently with such prepayment, Borrower may borrow from the Bank, in the amount of such repayment, a Base Rate Loan

10.4 Inability to Determine Rates . If the Lender shall determine that for any reason adequate and reasonable means do not exist for ascertaining LIBOR for any requested Interest Period with respect to a proposed LIBOR Loan, the Lender will give notice of such determination to Borrower. Thereafter, the Lender may not make or maintain LIBOR Loans, as the case may be, hereunder until the Lender revokes such notice in writing. Upon receipt of such notice, Borrower may revoke any pending Request or notice with respect to a LIBOR Loan. If Borrower does not revoke such Request or notice, the Lender may make, or continue the Loans, as proposed by Borrower, in the amount specified in the applicable request or notice submitted by Borrower, but such Loans shall be made or continued as Base Rate Loans instead of LIBOR Loans, as the case may be

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10.5 Increased Cost . If the Lender shall determine that due to either (a) the introduction of any change (other than any change by way of imposition of or increase in reserve requirements included in the calculation of the LIBOR) in or in the interpretation of any requirement of law, or (b) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to the Lender of agreeing to make or making, funding or maintaining any LIBOR Loans, then Borrower shall be liable for, and shall from time to time, upon demand therefor by the Lender, pay to the Lender such additional amounts as are sufficient to compensate the Lender for such increased costs. Without limitation, the LIBOR Rate shall be adjusted by dividing LIBOR by a percentage equal to 100% minus the stated maximum rate of all reserves, if any, required to be maintained against “Eurocurrency Liabilities” as specified in Regulation D (or against any other category of liabilities which includes deposits by reference to which the interest rate on LIBOR Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States’ office of a bank to United States residents) on the applicable date by any member bank of the Federal Reserve System.

10.6 Breakage Costs . Upon notice to Borrower from the Lender, Borrower shall pay to the Lender such amount or amounts as shall be sufficient (in the reasonable opinion of the Lender) to compensate it for any loss, cost, liability, funding loss, or expense (in each case whether by reason of any reduction in yield, the liquidation or reemployment of any deposit or other funds acquired by the Lender, the fixing of any interest rate payable on LIBOR Loans, or otherwise) (“ Breakage Costs ”) incurred directly or indirectly as a result of:

(a) any payment of a LIBOR Loan on a date other than the last day of the Interest Period for such Loan including, but not limited to acceleration of the Loans; or

(b) any failure by Borrower to borrow or convert a LIBOR Loan on the date for borrowing or conversion specified in the relevant notice under Section 10.1, or

(c) any failure by Borrower to pay a LIBOR Loan on any date for payment specified in Borrower’s written notice of intention to pay such LIBOR Loan, or

(d) other event pursuant to which a LIBOR Loan is converted to a Base Rate Loan.

10.7 Administrative Expenses . Borrower shall pay any reasonable fees, expenses and disbursements, including reasonable legal fees, of the Lender related to this Agreement, the Obligations, the perfection and protection of any collateral security required hereunder, the transactions contemplated by this Agreement, and the administration of this Agreement and the Obligations. Such payments shall be due on the Closing Date and thereafter as incurred by the Lender.

10.8 Collection Costs . At the request of the Lender, Borrower shall promptly pay any reasonable fees, expenses and disbursements, including reasonable legal fees, of the Lender in connection with collection of any of the Obligations or enforcement of any of the Lender’s rights hereunder or under the Loan Documents. This obligation shall survive the payment of any Notes executed hereunder. The Lender may apply any payments of any nature received by it first to the payment of Obligations under this Section 10.8, notwithstanding any conflicting provision contained in this Agreement or any other agreement with the Borrower.

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10.9 Default Interest Rate . Upon the occurrence of an Event of Default, notwithstanding anything else herein, the rate of interest on each of the Obligations shall be automatically increased to a rate at all times equal to three percentage points (3%) above the rate of interest otherwise in effect unless otherwise agreed by Lender in its sole discretion in writing, such increased rate to remain in effect through and including the satisfaction and payment in full of all of the Obligations and the termination of the Commitment, or written waiver of such Event of Default by the Lender.

10.10 Late Payment Fees . Payments of principal and/or interest not made in full before the date five (5) Business Days after the date due shall be subject to a processing charge of five percent (5%) of the payment due.

10.11 Payment of Fees . Borrower hereby authorizes the Lender to withdraw an amount equal to the fees which are due and payable hereunder from any of its accounts with the Lender if not paid on the due date for such fees. The Lender shall make a good faith effort to advise the Borrower of any such withdrawals in advance, provided, however, that failure by the Lender to give the Borrower such advice shall not prevent the Lender from making any such withdrawals under this Section 10.11 or subject the Lender to any liability hereunder.

10.12 Prepayments .

(a) LIBOR Loans are prepayable only at the end of the respective applicable Interest Periods, and Breakage Costs will apply to any payment of principal for any reason during an applicable Interest Period, including without limitation by reason of acceleration. Prepayments of Fixed Rate Loans are subject to payment of the Prepayment Premium. Prepayments of Base Rate Loans may be made without premium or penalty.

(b) The Lender reserves the right to require reasonable advance notice for all prepayments of Loans.

(c) Voluntary principal prepayments of the 2008 Term Loan or the Celmet Term Loan must be in minimum amounts of $100,000 each, and voluntary principal prepayments of the GTC Term Loan, Mortgage Secured Term Loan or SCB Term Loan, respectively, must be in minimum amounts of $500,000 each.

(d) Mandatory principal prepayments of first the SCB Term Loan, then the Celmet Term Loan, then the GTC Term Loan, then the Mortgage Secured Term Loan, then the 2008 Term Loan, and then any Equipment Line Loans shall be made within five Business Days after the date received by any Credit Party of and in an amount equal to (i) one hundred percent (100%) of Net Cash Proceeds of any Asset Disposition outside of the ordinary course of business if the aggregate Net Cash Proceeds exceed $100,000 (cumulatively and in the aggregate), and (ii) one hundred percent (100%) of the Net Cash Proceeds from any Casualty Event, provided , however , that any of the foregoing Loans to which a Rate Management Transaction applies at the time of such prepayment shall, to the extent of such Rate Management Transaction, not be subject to mandatory prepayment unless an Event of Default has occurred and is then continuing. In the event of a mandatory prepayment, the Lender will waive any Prepayment Premium related to such prepayment of any Fixed Rate Loan.

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(e) Mandatory principal prepayments, each equal to fifty percent (50%) of Excess Cash Flow for the Fiscal Year last ended, shall be made within ninety (90) days after the end of each Fiscal Year, except for the Fiscal Year ended September 30, 2010, and shall be applied, subject to the proviso in Section 10.12(d), first to the SCB Term Loan, then to the Celmet Term Loan, then to the GTC Term Loan, then to the Mortgage Secured Term Loan and then to the 2008 Term Loan.

(f) Prepayments of the 2008 Term Loan, GTC Term Loan, Celmet Term Loan, SCB Term Loan, Mortgage Secured Term Loan and Equipment Line Notes pursuant to Section 10.12(d) or (e) above shall be applied to the principal installments of the applicable Loan(s) in the inverse order of their maturities.

(g) If by reason of an Event of Default the Lender elects to declare the Obligations to be immediately due and payable and/or to reduce or terminate the Commitment, then any Breakage Costs and the Prepayment Premium shall become due and payable in the same manner as though the Borrower had voluntarily prepaid the Notes.

10.13 Obligations Related to Rate Management Transactions . In the event that the Borrower enters into any Rate Management Transaction with the Lender, any obligations of Borrower to Lender pursuant to such agreement shall be treated as part of the Obligations and secured by all collateral for and covered by all guarantees of the Obligations to the full extent thereof, and may be included in any judgment in any proceeding instituted by the Lender.

10.14 Payments Due on Non-Business Days . Whenever any payment to be made under this Agreement or under the Notes shall be stated to be due on a day other than a Business Day, such payments shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of the payment of interest and the commitment fee, as the case may be, except, in the case of a LIBOR Loan, if the result of such extension would be to extend such payment into another calendar month, such payment shall be made on the immediately preceding LIBOR Business Day.

ARTICLE 11 - REPRESENTATIONS OF BORROWER

The Borrower represents and warrants to the Lender as follows:

11.1 Organization and Power .

(a) Each of the Credit Parties is duly organized, validly existing and in good standing under the laws of its state of incorporation and is duly qualified to transact business and in good standing in all other states and jurisdictions in which it is required to qualify or in which failure to qualify could have a Material Adverse Effect. The jurisdictions of formation and qualification for each of the Credit Parties are described in Schedule 11.1 .

(b) Each of the Credit Parties has full power and authority to own its properties, to carry on its business as now being conducted, to execute, deliver and perform the Agreement and all related documents and instruments, and to consummate the transactions contemplated hereby.

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11.2 Proceedings of Borrower .

(a) All necessary action on the part of the Credit Parties relating to authorization of the execution and delivery of this Agreement and all related documents and instruments, and the performance of the Obligations of the Credit Parties, hereunder and thereunder has been taken. This Agreement and all related documents and instruments constitute legal, valid and binding obligations of the Credit Parties, as applicable, enforceable in accordance with their respective terms.

(b) The execution and delivery by the Borrower of this Agreement and all related documents and agreements, and the performance by each of the Credit Parties of their respective obligations under this Agreement, the Security Documents and all related documents and agreements will not violate any provision of law or their respective Organization Documents. The execution, delivery and performance of this Agreement, the Security Documents and all related documents and agreements, and the consummation of the transactions contemplated hereby will not violate, be in conflict with, result in a breach of, or constitute a default under any agreement to which any of the Credit Parties is a party or by which any of its properties is bound, or any order, writ, injunction, or decree of any court or governmental instrumentality, and will not result in the creation or imposition of any lien, charge or encumbrance upon any of its properties, and do not require the consent or approval of any governmental authority.

11.3 Approvals . No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except for those that have otherwise been obtained or made on or prior to the date of this Agreement or as otherwise required hereby and which remain in full force and effect on the date of this Agreement), or exemption by, any Governmental Authority, is required to be obtained or made by, or on behalf of, any Credit Party to authorize, or is required to be obtained or made by, or on behalf of, any Credit Party in connection with, the execution, delivery and performance of any Loan Document or the legality, validity, binding effect or enforceability of any such Loan Document.

11.4 Capitalization . All of the outstanding Capital Securities of Borrower are duly authorized, validly issued and fully paid. All of the Capital Securities of each of Borrower’s Subsidiaries are owned by Borrower or a Subsidiary of Borrower.

11.5 Litigation . Except as set forth on Schedule 11.5 , as of the date hereof there is no action, suit or proceeding at law or in equity by or before any court or any federal, state, municipal or other governmental department, commission, board, bureau, instrumentality or other agency, domestic or foreign, pending or, to the knowledge of the Credit Parties, threatened against or affecting the Credit Parties that brings into question the legality, validity or enforceability of this Agreement or the transactions contemplated hereby or that, if adversely determined, is not adequately covered by insurance or would have a Material Adverse Effect.

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11.6 Financial Statements and Condition .

(a) The audited consolidated balance sheets of Borrower as of the Fiscal Year ended September 30, 2010, and the related statements of operation, stockholders equity and cash flows (including supporting footnote disclosures) for the Fiscal Years then ended, with the opinion of EFP Rotenberg, LLC, all heretofore furnished to the Lender, have been prepared in accordance with GAAP consistently applied throughout the periods indicated, are all true and correct in all material respects and present fairly the financial condition of IEC, IECW&C and GTC at the date of said financial statements and the results of operations for the Fiscal Year then ended. The financial statements described in this Section 11.6 are collectively called the “Financial Statements”. The Credit Parties as of such dates did not have any significant liabilities, contingent or otherwise, including liabilities for taxes or any unusual forward or long-term commitments which were not disclosed by or reserved against in the Financial Statements, and at the present time there are no material unrealized or anticipated losses from any unfavorable commitments of the Credit Parties.

(b) On and as of the date of this Agreement, and after giving effect to all Debt (including the Loans) and Liens created by the Credit Parties in connection therewith and the GTC Transaction, the Celmet Transaction and the SCB Transaction, (i) the sum of the assets, at a fair valuation, of the Borrower (standing alone) and the Credit Parties (taken as a whole) will exceed its and their debts, (ii) the Borrower (standing alone) and the Credit Parties (taken as a whole) has and have not incurred and does or do not intend to incur, and does or do not believe that it or they will incur, debts beyond its or their ability to pay such debts as such debts mature, and (iii) the Borrower (standing alone) and the Credit Parties (taken as a whole) will have sufficient capital with which to conduct its and their respective businesses. For purposes of this Section 11.6(b), “debt” means any liability on a claim, and “claim” means (i) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, legal, equitable, secured, or unsecured or (ii) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, secured or unsecured. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

11.7 Material Adverse Changes . As of the date of this Agreement, since the respective dates of the Financial Statements there has been no Material Adverse Effect, except for changes disclosed prior to the date of this Agreement by the Borrower either (i) in writing to the Lender or (ii) in the Borrower’s filings with the Securities and Exchange Commission.

11.8 Taxes . Each of the Credit Parties has filed or caused to be filed when due all federal tax returns or extensions and all state and local tax returns or extensions that are required to be filed, and has paid or caused to be paid all Taxes as shown on said returns or any assessment received. The filed returns accurately reflect in all material respects all liability for Taxes of the Credit Parties, as applicable, for the periods covered thereby. Each of the Credit Parties has paid all material Taxes payable by it which have become due, other than those that are being contested in good faith and adequately disclosed and fully provided for on the consolidated financial statements of the Credit Parties in accordance with GAAP. None of the Credit Parties’ tax returns are being audited and none of the Credit Parties have been notified of any intention by any taxing authority to conduct such an audit, with the exception of the New York State sales tax audit for years 2007-2010 which is scheduled to commence in January 2011.

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11.9 Properties; Liens . Except as would not have a Material Adverse Effect, (a) the Credit Parties have good and marketable title to all of their properties and assets, including without limitation, the properties and assets reflected in the Financial Statements free and clear of all Liens, except for Permitted Liens, and (b) the Credit Parties have a valid leasehold estate and undisturbed peaceable possession under all leases under which they are operating, all of which are in full force and effect and none of which contain unusual or burdensome provisions that may materially adversely affect the operations of the Credit Parties.

11.10 Debt . Except for Permitted Debt, the Credit Parties have no outstanding Debt.

11.11 Franchises; Permits . Each of the Credit Parties has obtained and is in compliance with all licenses, permits, franchises, and governmental authorizations necessary for the ownership of its properties and the conduct of its business, for which failure to comply could reasonably be expected to have a Material Adverse Effect.

11.12 Compliance With Law .

(a) None of the Credit Parties is in violation of any laws, ordinances, governmental rules, requirements, or regulations, or any order, writ, injunction or decree of any court or federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, to which it is subject which violation could reasonably be expected to have a Material Adverse Effect.

(b) To the extent applicable, each of the Credit Parties is in compliance with the (i) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) the Patriot Act, except in each case such noncompliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(c) Neither the Borrower nor any of the Credit Parties, nor, to the knowledge of the Borrower, any director, officer, agent, employee (whether full time or contract), representative or other person acting on behalf of the Credit Parties has, in the course of its actions for, or on behalf of, the Credit Parties, (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government Person or employee (whether full time or contract) from corporate funds, (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government Person or employee (whether full time or contract).

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11.13 Intellectual Property; Authorizations . The Credit Parties own, possess or have licenses for all of the patents, trademarks, service marks, trade names, copyrights, licenses, authorizations, trade secrets, proprietary information and know-how, and all rights with respect to the foregoing (collectively, the “ Intellectual Property ”), necessary to the conduct of their business as now conducted. A complete list of all such Intellectual Property with respect to which registrations have been issued by the U.S. Patent and Trademark Office, the U.S. Copyright Office, or any comparable foregoing governmental authority is set forth on Schedule 11.13 . Except as disclosed in Schedule 11.5 , to the knowledge of the Credit Parties, no product, process, method, substance, part or other material presently contemplated to be sold by or employed by any of the Credit Parties in connection with its business infringes or may infringe any patent, trademark, service mark, trade name, copyright, license or other right owned by any other person. Except as disclosed in Schedule 11.5 , there is no pending or threatened claim or litigation against or affecting any of the Credit Parties contesting its right to sell or use any such product, process, method, substance, part or other material. There is not pending or proposed any patent, invention, device application or principle or any statute, law, rule, regulation, standard or code which would prevent, inhibit or render obsolete the production or sale of any products of, or substantially reduce the projected revenues of, any Credit Party or otherwise have a Material Adverse Effect.

11.14 Contracts and Agreements . None of the Credit Parties is a party to any contract or agreement that has or could reasonably be expected to have a Material Adverse Effect, and each of the Credit Parties is in compliance in all material respects with all material contracts and agreements to which it is a party.

11.15 Subsidiaries and Affiliates . Except Affiliates and Subsidiaries listed on Schedule 11.15 and Subsidiaries permitted by Section 14.10 below, Borrower has no Subsidiaries or Affiliates. The jurisdiction of formation and ownership of each of the Subsidiaries listed on Schedule 11.15 is set forth on such Schedule.

11.16 Governmental Contracts .

(a) None of the Credit Parties has knowledge of (i) an existing Organizational Conflict of Interest, as defined by the Federal Acquisition Regulation (“ FAR ”) 2.101, that has not been resolved through an appropriate mitigation plan or (ii) circumstances that could be reasonably likely to negatively affect in any material respects the Credit Parties’ ability to be awarded government contracts similar to those which any of the Credit Parties is currently performing.

(b) None of the Credit Parties has knowledge of any payment by any Credit Party to any Person in connection with any material government contract made in violation of applicable procurement statutes, regulations or the provisions of any of the Credit Parties’ material government contracts.

(c) With respect to each government contract to which any of the Credit Parties is a party or bound, (i) neither the United States Government nor any prime contractor, subcontractor or other Person has notified any of the Credit Parties, in writing or otherwise, that any of the Credit Parties has breached or violated any requirement of law, or material certificate or representation, or any clause which has resulted in a cure notice which in each case, either individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect and (ii) solely with respect to material government contracts, no termination for default is currently in effect pertaining to any such material government contract.

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(d) (i) Neither any of the Credit Parties or any of their respective directors or officers is (or during the last five (5) years has been) under civil investigation by the United States Department of Justice or a state attorney general or under criminal investigation by any Governmental Authority, or is under indictment by any Governmental Authority with respect to any irregularity, misstatement or omission arising under or relating to any activities of the Credit Parties under a government contract and (ii) during the last five (5) years, none of the Credit Parties has made a voluntary disclosure to the United States Government with respect to any irregularity, misstatement or omission arising under or relating to a government contract, except, in each case, for any such investigation, indictment, voluntary disclosure, irregularity, misstatement or omission which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(e) There exist (i) no outstanding material claims against the Credit Parties, either by the United States Government or by any prime contractor, subcontractor, vendor or other third party, arising under or relating to any government contract and (ii) no disputes between any of the Credit Parties and the United States Government under the Contract Disputes Act or any other Federal statute or between any of the Credit Parties and any prime contractor, subcontractor or vendor arising under or relating to any government contract, which, either individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

(f) None of the Credit Parties or any of their respective directors, officers, owners, partners, or to the knowledge of the foregoing, employees, is (or during the last five (5) years has been) suspended or debarred from doing business with the United States Government or is (or during such period was) the subject of a finding of non-responsibility or ineligibility for United States Government contracting.

(g) No notice of suspension, debarment, cure notice, show cause notice or notice of termination for default is in effect which, either individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect has been issued by the United States Government to any of the Credit Parties and none of the Credit Parties is a party to any pending, or to the Borrower’s knowledge threatened, suspension, debarment, termination for default issued by the United States Government or other adverse United States Government action or proceeding in connection with any contract with the United States Government which, either individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

(h) No cost incurred pertaining to any government contract of any of the Credit Parties has been disallowed by the United States Government or any of its agencies or, to the knowledge of any of the Credit Parties, is the subject of any investigation or which, either individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

(i) On the date hereof the cost accounting systems and government property management systems with respect to the material government contracts of the Credit Parties comply in all material respects with the applicable cost accounting standards set forth in FAR Sections 30 and 45 respectively.

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11.17 ERISA . Except as set forth on Schedule 11.17 :

(a) Identification of Plans . (i) Neither any Credit Party, nor any ERISA Affiliate, maintains or contributes to, or has maintained or contributed to, any Plan that is an ERISA Plan, and (ii) none of the Credit Parties and their ERISA Affiliates maintains or contributes to, or have maintained or contributed to, any Plan that is an Executive Arrangement, except, in both cases, Plans that are adopted after the Closing Date and either have been disclosed in writing to the Lender or have been disclosed in Borrower’s SEC filings.

(b) Compliance . Each Plan has at all times been maintained, by its terms and in operation, in accordance with all applicable laws, except such noncompliance (when taken as a whole) that will not have a Material Adverse Effect.

(c) Liabilities . Neither any of the Credit Parties, nor any ERISA Affiliate, is currently, or has in the last six (6) years been, obligated to make contributions (directly or indirectly) to a Multiemployer Plan, and none of the Credit Parties or ERISA Affiliates is currently subject to any liability (including withdrawal liability), tax or penalty whatsoever to any person whomsoever with respect to any Plan including, but not limited to, any tax, penalty or liability arising under Title I or Title IV or ERISA or Chapter 43 of the Internal Revenue Code, except such liabilities (when taken as a whole) as will not have a Material Adverse Effect.

(d) Funding . Each Credit Party and each ERISA Affiliate has made full and timely payment of all amounts (i) required to be contributed under the terms of each Plan and applicable law and (ii) required to be paid as expenses of each Plan. No Plan has an “amount of unfunded benefit liabilities” (as defined in Section 4001(a)(18) of ERISA).

11.18 Employment and Labor Relations . None of the Credit Parties is engaged in any unfair labor practice that could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect. There is (i) no unfair labor practice complaint pending against any of the Credit Parties or, to the knowledge of the Borrower, threatened against any of them, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against any of the Credit Parties or, to the knowledge of the Borrower, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against any of the Credit Parties or, to the knowledge of the Borrower, threatened against any of the Credit Parties, (iii) no union representation question existing with respect to the employees of any of the Credit Parties, (iv) no equal employment opportunity charges or other claims of employment discrimination pending or, to the Borrower’s knowledge, threatened against any of the Credit Parties, (v) no wage and hour department investigation which has been made of any of the Credit Parties, except (with respect to any matter specified in clauses (i) through (v) above, either individually or in the aggregate) such as could not reasonably be expected to have a Material Adverse Effect, and (vi) the Credit Parties have in place all current affirmative action plans applicable to their respective business operations and are in material compliance with all laws and regulations governing such affirmative action plans, including, without limitation, compliance with the terms set forth in such plans.

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11.19 Security Documents . The Security Documents are effective to create in favor of the Lender legal, valid and enforceable (subject to bankruptcy and creditors’ rights generally) security interests in all non-real estate property and assets of the Credit Parties, all of which are part of the Collateral. When (i) financing statements in appropriate form are filed in the applicable offices required by the Uniform Commercial Code and (ii) upon the taking of possession or control by the Lender of any Collateral in which a security interest may be perfected only by possession or control (which possession or control shall be given to the Lender to the extent possession or control by the Lender is required by the Security Documents), the Lender shall have a fully perfected first priority Lien on, and security interest in, all right, title and interest of the Credit Parties in the Collateral to the extent such Lien and security interest can be perfected by the filing of a financing statement pursuant to the UCC or by possession or control by the Lender, in each case prior and superior in right to any other Person, other than any holder of Permitted Liens. Without limitation to the foregoing, no consent of any Person including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary in connection with the creation, perfection or first priority status of the security interest of the Lender in any equity interests pledged to the Lender under the Security Documents or the exercise by the Lender of the voting or other rights provided for in the Security Documents or the exercise of remedies in respect thereof.

11.20 Disclosure . Neither this Agreement, any Loan Document nor any other document, certificate or statement furnished to the Lender by or on behalf of any Credit Party in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading, if, in either case, such fact is material to an understanding of the financial condition, performance or prospects of the Credit Parties, taken as a whole or their business or operations, taken as a whole, or the ability of the Credit Parties to fulfill their obligations under this Agreement or under any Loan Documents to which they are parties.

ARTICLE 12 - CONDITIONS OF LENDING

12.1 Loans . The following conditions must be satisfied before the Lender shall have any obligation to make Loans on the Closing Date under this Agreement:

(a) Performance . Borrower shall have performed and complied with all agreements and conditions required to be performed or complied with by it prior to or at the time each Loan is made.

(b) Opinion of Counsel . As of the Closing Date, the Credit Parties shall have delivered to the Lender a favorable opinion of their counsel, in form and substance satisfactory to the Lender.

(c) Documents to be Delivered . Borrower shall have executed and delivered or have caused to be executed and delivered to the Lender all Loan Documents in form and substance satisfactory to Lender, and all Loan Documents shall be in full force and effect.

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(d) Certified Resolutions . As of the Closing Date the Borrower and each Guarantor shall have delivered a certificate of its corporate secretary certifying (i) resolutions duly adopted by its Board of Directors authorizing the SCB Transaction, in the case of Borrower and SCB only, and the execution, delivery and performance of the Loan Documents to which each is a party and the consummation of the transactions contemplated hereby and thereby, as applicable, which resolutions shall remain in full force and effect so long as any of the Obligations are outstanding or the Commitment has not been terminated, (ii) as to all except SCB, that the true and complete copies of the respective Certificates of Incorporation and By-Laws of the Credit Parties delivered to the Lender on the Prior Closing Date or earlier have not been modified or replaced, and remain in full force and effect, (iii) as to SCB, true and complete copies of its Certificate of Incorporation and By-Laws and (iv) the incumbency of the Credit Parties’ respective officers authorized to execute, deliver and perform this Agreement or the Loan Documents, as applicable.

(e) Fees and Taxes . Borrower shall have paid all filing fees, taxes, and assessments related to the borrowings and the perfection of any interests in collateral security required hereunder.

(f) Insurance . Borrower shall have delivered evidence satisfactory to the Lender of the existence of insurance required hereby, including evidence of property and liability insurance required for the SCB Assets.

(g) Other Documents and Agreements . On or before the date of this Agreement, the Borrower shall have executed and/or delivered such other documents, instruments, and agreements as the Lender and its legal counsel may reasonably require in connection with the transactions contemplated hereby. The foregoing shall include, without limitation (i) a copy, certified by Borrower as true and correct, of the final purchase and sale agreement and any other relevant documents evidencing SCB’s contemplated purchase of substantially all of the assets of Southern California Braiding Co., Inc., all of which shall be satisfactory to the Bank in all material respects, and evidence satisfactory to the Bank of the consummation thereof on the terms and conditions of the final purchase and sale agreement and (ii) a copy, certified by Borrower as true and correct, of an executed employment agreement between Borrower or SCB and Craig A. Pfefferman, the current President of Southern California Braiding Co., Inc., which shall be satisfactory to the Bank in all material respects.

(h) Searches . As of the Closing Date, Borrower shall have delivered to the Lender (a) a certificate of good standing from appropriate state officials to the effect that each of SCB and Southern California Braiding Co., Inc. was in good standing in its state of incorporation as well as in all other states in which qualification was necessary to carry on its businesses as presently conducted, all as in effect immediately prior to the SCB Transaction and (b) UCC, judgment, bankruptcy and tax searches covering each of SCB and Southern California Braiding Co., Inc. in all jurisdictions deemed necessary by the Lender, the results of all of which shall be satisfactory to the Lender in all respects.

(i) Representations . The representations and warranties of the Credit Parties contained herein shall be true and correct in all material respects.

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(j) Consents and Approvals . The Lender shall have received evidence of receipt of all governmental, shareholder and other, if any, consents and approvals necessary in connection with the related financings and other transactions contemplated under this Agreement, except where the failure to obtain such consents or approvals would not, individually or in the aggregate, have a Material Adverse Effect.

(k) Litigation . The Lender shall have been informed of any suit, investigation or proceeding pending in any court or before any arbitrator or governmental authority that would reasonably be expected either to have a Material Adverse Effect or to materially adversely affect the ability of any of the Credit Parties to perform its respective obligations under this Agreement, and no such suits, investigations, or proceedings shall be pending.

(l) Patriot Act . To the extent applicable, each Credit Party is in compliance, in all material respects, with the (i) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001). To the knowledge of the Borrower, no part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

(m) Landlord Waivers . The Lender shall have received a waiver in form and substance satisfactory to Lender from each landlord of premises on which the SCB Assets are located.

(n) SCB Transaction . On or before the Closing Date, the Lender shall have reviewed and approved the final form, substance, terms, and conditions of the SCB Transaction.

(o) Continued Subordination . The IECW&C Subordinated Debt shall remain subordinated to the Obligations on terms satisfactory to the Lender.

(p) Financial Statements . (i) The Lender shall have received a report from the independent accounting firm of Kushner, Smith, Joanou & Gregson LLP based on their review of inventory accounts of Southern California Braiding Co., Inc., which shall be satisfactory to Lender and (ii) the add-backs necessary to obtain “Normalized EBITDA” for the year to date period ending November 30, 2010 shall be delivered to and satisfactory to the Lender.

(q) No Material Adverse Effect . There shall have been no Material Adverse Effect with respect to the Credit Parties since the date of the Financial Statements except as was disclosed in the Financial Statements.

12.2 Subsequent Loans and Letters of Credit . The obligation of the Lender to make any Revolving Credit Loans or Equipment Line Loans shall at all times be subject to the following continuing conditions:

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(a) Representations and Warranties . The representations and warranties of the Credit Parties contained herein shall be true and correct in all material respects as of the date of making of each such advance (except those which are specific as to a date certain), with the same effect as if made on and as of such date.

(b) No Material Adverse Effect . Since the date of the Financial Statements, there shall have been no Material Adverse Effect.

12.3 Notice of Borrowing Representation . Each Notice of Borrowing given by a Borrower in accordance with Section 10.1 hereof and the acceptance by Borrower of the proceeds of a Revolving Credit Loan and/or Equipment Line Loan shall constitute a representation and warranty by the Borrower, made as of the time of the making of such Loan, that the conditions specified in Sections 12.1 and 12.2 have been fulfilled as of such time.

ARTICLE 13 - AFFIRMATIVE COVENANTS OF BORROWER

So long as any Obligations shall be outstanding, the Commitment shall be in effect, or this Agreement remains in effect, unless the Lender otherwise consents in writing, the Credit Parties shall:

13.1 Financial Statements; Other Information .

(a) Furnish to the Lender as soon as available, but in no event later than ninety (90) days after the close of each Fiscal Year in which this Agreement remains in effect, copies of annual consolidated financial statements of the Borrower in reasonable detail satisfactory to the Lender prepared in accordance with GAAP on a consistent basis audited by and with an unqualified opinion from an independent certified public accountant satisfactory to the Lender, in Lender’s reasonable discretion. Said financial statements shall include at least a consolidated and consolidating balance sheet and consolidated and consolidating statements of operations, stockholders’ equity and cash flow, and shall be accompanied by a copy of any management letter prepared by such accountants. Such financial statements shall be accompanied by a certificate of the Chief Financial Officer of Borrower to the effect that no Event of Default or Default has occurred.

(b) Furnish to the Lender unaudited financial statements not more than forty-five (45) days after the close of each Fiscal Quarter. Said statements shall be in reasonable detail satisfactory to the Lender, shall be prepared in accordance with GAAP, shall include at least a consolidated and consolidating balance sheet and a consolidated and consolidating statements of operations, stockholders’ equity and cash flow. Said financial statements shall be certified to be true and correct to the best knowledge of the Chief Financial Officer of Borrower. Such financial statements shall be accompanied by a certificate of the Chief Financial Officer of Borrower to the effect that no Event of Default or Default has occurred.

(c) Provide to the Lender monthly borrowing base reports (“ Borrowing Base Reports ”), in substantially the form of Exhibit I attached hereto, each accompanied by an accounts receivable aging, accounts payable aging, and inventory report. At any time Overline Advances are outstanding, weekly Borrowing Base Reports must be provided.

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(d) Provide to the Lender an annual operating budget for the Credit Parties, including a balance sheet, statement of operations, and cash flow statement, with supporting assumptions, in detail reasonably satisfactory to Lender, within thirty (30) days after the end of each Fiscal Year of Borrower.

(e) Permit the Lender at reasonable times and, prior to an Event of Default, upon reasonable notice, to perform full field audits of the Credit Parties’ accounts receivable and inventories with the reasonable cost thereof to be paid by the Borrower.

(f) Furnish to the Lender such additional information, reports, or financial statements as the Lender may, from time to time, reasonably request, including, without limitation, lists of vendors and suppliers and information necessary to monitor Revolving Loans.

(g) Permit any Person designated by the Lender to inspect the property, assets and books of the Credit Parties at reasonable times and, prior to an Event of Default, upon reasonable notice, provided that such Person is bound by a confidentiality agreement reasonably acceptable to Borrower. The Credit Parties shall discuss their affairs, finances and accounts with the Lender, and Persons designated by Lender that are bound by a confidentiality agreement reasonably acceptable to Borrower, at reasonable times and from time to time as often as may be reasonably requested.

(h) Notify the Lender promptly upon addition of any new location at which it conducts business or maintains assets, and of any new warehousing or distributorship agreement.

(i) Report immediately to the Lender in writing upon becoming aware of any noncompliance with any covenant in this Agreement or any Default, including without limitation becoming aware of any noncompliance with Article 15 in advance of the date on which the corresponding quarterly financial statements are due to be delivered to the Lender.

13.2 SEC Reports . Furnish to the Lender, as applicable, copies of all proxy statements, financial statements and reports which Borrower sends to its stockholders, and copies of all regular, periodic and current reports, and all comment letters and responses thereto, which Borrower files with the Securities and Exchange Commission (“ SEC ”) or any governmental authority which may be substituted therefore, or with any national securities exchange; provided, however, in lieu of such copies Borrower may advise Lender in writing (including by fax of email) that any such proxy statement, financial statement and report, as the case may be, is available on the SEC’s Edgar database.

13.3 Taxes . Pay and discharge all taxes, assessments, levies and governmental charges upon the Credit Parties, their income and property, prior to the date on which penalties are attached thereto; provided, however, that the Credit Parties may in good faith contest any such taxes, assessments, levies or charges so long as such contest is diligently pursued and no lien or execution exists or is levied against any of the Credit Parties’ assets related to the contested items.

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13.4 Insurance . Maintain or cause to be maintained insurance, of kinds and in amounts reasonably satisfactory to the Lender, with responsible insurance companies on all of the Credit Parties’ real and personal properties in such amounts and against such risks as are prudent, including, but not limited to, all-risk property insurance coverage (co-insurance not being permitted without the prior written consent of the Lender), business interruption or loss of rents coverage, worker’s compensation insurance, and general liability and products liability insurance. The Credit Parties also shall maintain flood insurance covering any real properties located in flood zones as may be required by governmental requirements to which Lender is subject. The Credit Parties shall provide to the Lender upon its request (and will endeavor to deliver annually, but shall not be in Default for failure to make such annual delivery unless a request has been made by the Lender), a detailed list and evidence reasonably satisfactory to the Lender of their insurance carriers and coverage and shall obtain such additional insurance as the Lender may reasonably request. Insurance policies shall name the Lender as additional insured, as its interests may appear, with respect to liability insurance, and mortgagee/lender loss payee with respect to property insurance, and all policies shall provide for at least thirty (30) days prior notice of cancellation to the Lender.

13.5 Maintenance of Business Assets . At all times maintain, preserve, protect, and keep the Credit Parties’ assets in good repair, working order, and condition and, from time to time, make all needed and proper repairs, renewals, replacements, betterments and improvements thereto, so that the business of the Credit Parties may be properly and advantageously conducted at all times and the value of the Lender’s collateral shall be preserved.

13.6 Notification of Material Changes, Judgments etc . Notify the Lender promptly of:

(a) any material adverse change in the financial condition of any of the Credit Parties, and of any event, circumstance, or condition that has had or could reasonably be expected to have a Material Adverse Effect, including the filing of any suits, judgments or liens which, if adversely determined, could reasonably be expected to have a Material Adverse Effect,

(b) the existence of any Default of which a Credit Party has actual knowledge, and

13.7 ERISA Compliance . Comply in all material respects with the provisions of ERISA and regulations and interpretations related thereto with respect to all of the Credit Parties’ Plans.

13.8 Franchises; Permits; Laws . Preserve and keep in full force and effect the existence of the Credit Parties and all franchises, permits, licenses and other authority as are necessary to enable them to conduct their businesses as being conducted on the date of this Agreement, after giving effect to the SCB Transaction, and comply in all material respects with all laws, regulations and requirements now in effect or hereafter promulgated by any properly constituted governmental authority having jurisdiction over them.

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13.9 Performance of Obligations . The Borrower will, and will cause each of the Credit Parties to, perform all of its obligations under the terms of each mortgage, indenture, security agreement, loan agreement or credit agreement and each other agreement, contract or instrument by which it is bound (taking into account any grace, notice, or cure periods applicable thereto), except in each case such non-performances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

13.10 Deposits; Bank Services . Maintain at the Lender all of the Credit Parties’ primary depository accounts, with exceptions permitted for accounts maintained for convenience in other geographical locations for the temporary deposit of receipts or accounts justified by Credit Parties’ need for services that Lender cannot reasonably provide.

13.11 Amendments . Give the Lender prompt written notice of an amendment or modification to any of the Credit Parties’ Organizational Documents.

13.12 Additional Guarantors . Notify the Lender of the acquisition or creation of any new Subsidiary and cause each domestic Subsidiary created or acquired after the Prior Closing Date to execute and deliver to the Lender a continuing guaranty, general security agreement, and other agreements in form and substance satisfactory to Lender subjecting all of the assets of the Subsidiary to the Lien held by the Lender, together with approvals and legal opinions in form and substance satisfactory to the Lender opining to the authorization, validity and enforceability of such Guaranty, and to such other matters at the Lender may reasonably request.

13.13 Further Assurances . Cooperate with the Lender and execute such further instruments and documents as the Lender shall reasonably request to carry out the transactions contemplated by this Agreement and the other Loan Documents.

13.14 Mortgage Related Matters . GTC shall not cause or permit a reconveyance to GTC of fee title to the premises commonly known as 1450 Mission Avenue NE, Albuquerque, New Mexico held pursuant to a Lease Agreement between the City of Albuquerque, New Mexico and GTC dated as of March 1, 1999 unless (i) GTC gives the Lender at least 15 Business Days prior notice of its intention to cause the reconveyance, (ii) at the time of such reconveyance GTC delivers to the Lender an executed mortgage (the “ Fee Mortgage ”) in favor of Lender, in form substantially the same as the Mortgage (modified to create a mortgage covering the fee title interest of GTC), and (iii) at the time of such reconveyance GTC delivers to the Lender a mortgagee title insurance policy covering the Fee Mortgage free of exceptions, encumbrances and Liens other than Permitted Exceptions and other exceptions approved in writing in advance by Lender.

ARTICLE 14 - NEGATIVE COVENANTS OF BORROWER

So long as any Obligations shall be outstanding, the Commitment shall be in effect, or this Agreement shall remain in effect, unless the Lender otherwise consents in writing, none of the Credit Parties shall, directly or indirectly, jointly or severally:

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14.1 Debt, Mortgages and Liens . Create, incur, assume or allow to exist, voluntarily or involuntarily, any Debt or Liens, excluding only (a) Debt to and interests held by the Lender under this Agreement, (b) Debt described in Schedule 14.1(a) attached hereto and made a part hereof, which Debt may not be renewed, extended, amended or modified, (c) Permitted Liens, (d) Debt and interests to which the Lender consents in writing, (e) Debt of Borrower to any Guarantor or of any Guarantor to Borrower, and (f) debt to the sellers of IECW&C to Borrower, covered by subordination agreements satisfactory to Lender.

14.2 Loans and Investments . Make any Investment in any Person, or purchase or own a futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, except for (i) Investments in (including for the avoidance of doubt transfers of machinery and equipment to) any Person that is already a Credit Party, (ii) Money Market Investments, and (iii) Investments received in connection with the bankruptcy or reorganization of suppliers and customers and in good faith settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business.

14.3 Mergers, Dissolutions; Sales and Acquisitions; Change in Ownership Interests . Except for the GTC Transaction, the Celmet Transaction, and the SCB Transaction, enter into any partnership, joint venture, merger or consolidation, or wind up, liquidate, or dissolve its affairs, or enter into a sale-leaseback except with Lender or its affiliates, or acquire all or substantially all the Capital Securities or assets of any Person, or sell, lease, transfer, or otherwise dispose of any its assets, except, for (a) (i) dispositions of inventory in the ordinary course of business or (ii) the disposition of any asset not material to the respective Credit Party or its business and not exceeding $100,000 in value, and (b) the merger of Borrower into any Guarantor or of any Guarantor into Borrower after giving written notice to the Lender of the intended merger, so long as any security interests granted to the Lender in the assets so transferred shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such transfer) and all actions required to maintain said perfected status have been taken.

14.4 Amendments . Allow the amendment or modification of its Organizational Documents in any material respect without the prior written consent of the Lender.

14.5 Distributions . Make any Distributions, except Distributions from a Guarantor to Borrower, without the prior consent of Lender.

14.6 Material Changes . Permit any material change to be made in the character of the business of any of the Credit Parties, or in the nature of their operations as carried on at the date hereof.

14.7 Compensation . Compensate any Person, including, without limitation, salaries, bonuses, consulting fees, or otherwise, in excess of amounts reasonably related to services rendered to the Credit Parties.

14.8 Judgments . Allow to exist any judgments against any of the Credit Parties in excess of $250,000 in the aggregate which are not fully covered by insurance or for which an appeal or other proceeding for the review thereof shall not have been taken and for which a stay of execution pending such appeal shall not have been obtained, or allow to exist any judgment in any amount against GTC that creates a Lien against any GTC real property or GTC real property interest.

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14.9 Margin Securities . Directly or indirectly, use any part of the proceeds of the Obligations for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or to extend credit to any person for the purpose of purchasing or carrying any such margin stock, or for any purpose which violates, or is inconsistent with, Regulation X of such Board of Governors.

14.10 Subsidiaries .

(a) Form, or permit to be formed, any Subsidiary unless such Subsidiary guarantees all Obligations to the Lender, which guarantee must be secured by all of its assets pursuant to a guaranty and a security agreement in form and substance acceptable to the Lender in its sole discretion.

(b) Directly or indirectly, and will not permit any of its Subsidiaries to directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Subsidiary to (i) make Distributions on its Capital Securities owned by the Borrower or any of its Subsidiaries, or pay any Indebtedness owed to the Borrower or any of its Subsidiaries, (ii) make loans or advances to the Borrower or any of its Subsidiaries or (iii) transfer any of its properties or assets to the Borrower or any of its Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (A) applicable law, (B) this Agreement and the other Loan Documents, (C) customary provisions restricting subletting or assignment of any lease governing any leasehold interest of the Borrower or any of its Subsidiaries, (D) customary provisions restricting assignment of any licensing agreement (in which the Borrower or any of its Subsidiaries is the licensee) or other contract entered into by the Borrower or any of its Subsidiaries in the ordinary course of business, and (E) restrictions on the transfer of any asset pending the close of the sale of such asset.

14.11 Transactions with Credit Parties . Enter into any transaction or series of related transactions with any Affiliate of any of the Credit Parties, other than in the ordinary course of business and on terms and conditions substantially as favorable to the Credit Party as would reasonably be obtained by the Credit Party at that time in a comparable arm’s-length transaction with a Person other than an Affiliate.

ARTICLE 15 - FINANCIAL COVENANTS

So long as any Obligations shall be outstanding or this Agreement remains in effect, unless the Lender otherwise consents in writing, the Borrower shall:

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

Closing Date through and including 9/29/2011	< 3.50 to 1.00
9/30/2011 through and including 9/29/2012	< 3.25 to 1.00
9/30/2012 through and including 9/29/2013	< 3.00 to 1.00
9/30/2013 and thereafter	<2.75 to 1.00

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For purposes of calculating the Borrower’s consolidated Debt to EBITDARS ratio from and after the date of this Agreement for periods ending on or before October 1, 2011, EBITDARS related to SCB for the period December 26, 2009 through December 31, 2010 shall be added to Borrower’s EBITDARS at a rate of $1,592,000 per Fiscal Quarter for each of the four Fiscal Quarters in the period.

15.2 Minimum Quarterly EBITDARS . Maintain at all times minimum EBITDARS for the trailing three months, on a consolidated basis, equal to or greater than $1,500,000, reported at each Fiscal Quarter end.

15.3 Fixed Charge Coverage Ratio . Maintain at all times a Fixed Charge Coverage Ratio, on a consolidated basis, equal to or greater than 1.25 to 1.00, reported at each Fiscal Quarter end. For purposes of calculating the Borrower’s Fixed Charge Coverage Ratio from and after the date of this Agreement for periods ending on or before September 30, 2011, EBITDARS related to SCB for the period December 26, 2009 through December 31, 2010 shall be added to Borrower’s EBITDARS at a rate of $1,592,000 per Fiscal Quarter for each of the four Fiscal Quarters in the period.

15.4 Quarterly Covenant Compliance Sheet . Provide the Quarterly Covenant Compliance Sheet to Lender within thirty (30) days after the close of each of its Fiscal Quarters (which shall include a certificate of the Chief Financial Officer of the Borrower certifying that no Event of Default or Default has occurred (or if one has occurred, identifying the same) and certifying the accuracy of an attached schedule showing computation of financial covenants contained in this Article 15.

ARTICLE 16 - ENVIRONMENTAL MATTERS; INDEMNIFICATION

16.1 Environmental Representations . Borrower represents and warrants that to the best of Borrower’s knowledge and except as disclosed in (i) the Environmental Report delivered to Lender related to the Mortgaged Property, (ii) the Phase II Environmental Site Assessment prepared for Celmet by LCS Inc. dated December 7, 2009, (iii) the Landfill Methane Gas Evaluation Report prepared for Celmet by Bergmann Associates dated March 10, 2010, and (iv) the IEC Electronics Corp. Final Phase I Environmental Site Assessment and Limited Compliance Review Southern California Braiding Company, Inc. prepared by ERM and dated December 13, 2010:

(a) Neither the Improvements nor any property adjacent to the Improvements is being or has been used for, and none of the Credit Parties are engaged in, the storage, treatment, generation, transportation, processing, handling, production or disposal of any Hazardous Substance or as a landfill or other waste disposal site or for the storage of petroleum or petroleum based products except in compliance with all Environmental Laws.

(b) Underground storage tanks are not and have not been located on the Improvements except in compliance with all Environmental Laws

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(c) The soil, subsoil, bedrock, surface water and groundwater of the Improvements are free of any Hazardous Substances, except as permitted by Environmental Laws.

(d) There has been no Release, nor is there the threat of a Release of any Hazardous Substance on, at or from the Improvements or any property adjacent to or within the immediate vicinity of the Improvements which through soil, subsoil, bedrock, surface water or groundwater migration could come to be located on the Improvements, and the Credit Parties have not received any form of notice or inquiry from any federal, state or local governmental agency or authority, any operator, tenant, subtenant, licensee or occupant of the Improvements or any property adjacent to or within the immediate vicinity of the Improvements or any other person with regard to a Release or the threat of a Release of any Hazardous Substance on, at or from the Improvements or any property adjacent to the Improvements.

(e) All Environmental Permits relating to the Credit Parties and the Improvements have been obtained and are in full force and effect.

(f) No event has occurred with respect to the Improvements which, with the passage of time or the giving of notice, or both, would constitute a violation of any applicable Environmental Law or non-compliance with any Environmental Permit.

(g) There are no agreements, consent orders, decrees, judgments, license or permit conditions or other orders or directives of any federal, state or local court, governmental agency or authority relating to the past, present or future ownership, use, operation, sale, transfer or conveyance of the Improvements which require any change in the present condition of the Improvements or any work, repairs, construction, containment, clean up, investigations, studies, removal or other remedial action or capital expenditures with respect to the Improvements.

(h) There are no actions, suits, claims or proceedings, pending or threatened, which could cause the incurrence of expenses or costs of any name or description or which seek money damages, injunctive relief, remedial action or any other remedy that arise out of, relate to or result from (i) a violation or alleged violation of any applicable Environmental Law or noncompliance or alleged non-compliance with any Environmental Permit, (ii) the presence of any Hazardous Substance or a Release or the threat of a Release of any Hazardous Substance on, at or from the Improvements or any property adjacent to or within the immediate vicinity of the Improvements or (iii) human exposure to any Hazardous Substance, noises, vibrations or nuisances of whatever kind to the extent the same arise from the condition of the Improvements or the ownership, use, operation, sale, transfer or conveyance thereof.

16.2 Environmental Covenants . Borrower covenants and agrees with the Lender that, until the Obligations have been fully satisfied and paid and the Commitment has been terminated, the Borrower shall:

(a) Comply with, and shall cause all operators, tenants, subtenants, licensees and occupants of the Improvements to comply with all applicable Environmental Laws and shall obtain and comply with, and shall cause all operators, tenants, subtenants, licensees and occupants of the Improvements to obtain and comply with, all Environmental Permits.

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(b) Not cause or permit any change to be made in the present or intended use of the Improvements which would (i) violate any applicable Environmental Law, (ii) constitute non-compliance with any Environmental Permit or (iii) materially increase the risk of a Release of any Hazardous Substance.

(c) Promptly provide the Lender with a copy of all notifications which it gives or receives with respect to any past or present Release or the threat of a Release of any Hazardous Substance on, at or from the improvements or any property adjacent to the Improvements.

(d) Undertake and complete all investigations, studies, sampling and testing and all removal and other remedial actions required by law to contain, remove and clean up all Hazardous Substances that are determined to be present at the Improvements in accordance with all applicable Environmental Laws and all Environmental Permits.

(e) At all reasonable times and, prior to an Event of Default upon reasonable prior notice, allow the Lender and its officers, employees, agents, representatives, contractors and subcontractors access to the Improvements for the purposes of ascertaining site conditions, including, but not limited to, subsurface conditions.

(f) Deliver promptly to the Lender: (i) copies of any documents received from the United States Environmental Protection Agency, or any state, county or municipal environmental or health agency concerning a Credit Party’s operations or the Improvements; and (ii) copies of any documents submitted by any of the Credit Parties to the United States Environmental Protection Agency or any state, county or municipal environmental or health agency concerning its operations or the Improvements.

(g) If at any time the Lender obtains any reasonable evidence or information which suggests that a material potential environmental problem may exist at the improvements, the Lender may require that a full or supplemental environmental inspection and audit report with respect to the Improvements of a scope and level of detail satisfactory to the Lender, in Lender’s reasonable discretion, be prepared by an environmental engineer or other qualified person acceptable to the Lender at the Borrower’s expense. Such audit may include a physical inspection of the Improvements, a visual inspection of any property adjacent to or within the immediate vicinity of the Improvements, personnel interviews and a review of all Environmental Permits. If the Lender requires, such inspection shall also include a records search and/or subsurface testing for the presence of Hazardous Substances in the soil, subsoil, bedrock, surface water and/or groundwater. If such audit report indicates the presence of any Hazardous Substance or a Release or the threat of a Release of any Hazardous Substance on, at or from the Improvements, the Credit Parties shall promptly undertake and diligently pursue to completion all legally required investigative, containment, removal, clean up and other remedial actions, using methods recommended by the engineer or other person who prepared said audit report and acceptable to the appropriate federal, state and local agencies or authorities.

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16.3 Indemnity . Borrower agrees to indemnify, defend and hold harmless the Lender from and against any and all liabilities, claims, damages, penalties, expenditures, losses or charges, including, but not limited to, all costs of investigation, monitoring, legal representation, remedial response, removal, restoration or permit acquisition of any kind whatsoever, which may now or in the future be undertaken, suffered, paid, awarded, assessed, or otherwise incurred by the Lender (or any other Person affiliated with the Lender or representing or acting for the Lender or at the Lender’s behest, or with a claim on the Lender or to whom the Lender has liability or responsibility of any sort related to this Section 16.3) relating to, resulting from or arising out of (a) the use of the Improvements for the storage, treatment, generation, transportation, processing, handling, production or disposal of any Hazardous Substance or as a landfill or other waste disposal site, (b) the presence of any Hazardous Substance or a Release or the threat of a Release of any Hazardous Substance on, at or from the Improvements, (c) the failure to promptly undertake and diligently pursue to completion all necessary, appropriate and legally authorized investigative, containment, removal, clean up and other remedial actions with respect to a Release or the threat of a Release of any Hazardous Substance on, at or from the Improvements, (d) human exposure to any Hazardous Substance, noises, vibrations or nuisances of whatever kind to the extent the same arise from the condition of the Improvements or the ownership, use, operation, sale, transfer or conveyance thereof, (e) a violation of any applicable Environmental Law, (f) non-compliance with any Environmental Permit or (g) a material misrepresentation or inaccuracy in any representation or warranty or a material breach of or failure to perform any covenant made by Borrower in this Agreement. Such costs or other liabilities incurred by the Lender, or other Person described in this Section 16.3 shall be deemed to include, without limitation, any sums which the Lender deems it necessary or desirable to expend to protect the Lender’s security interests and liens.

16.4 No Limitation . The liability of the Borrower to Lender (or any other Person affiliated with the Lender or representing or acting for the Lender or at the Lender’s behest, or with a claim on the Lender or to whom the Lender has liability or responsibility of any sort related to Section 16.3) under this Article 16 shall in no way be limited, abridged, impaired or otherwise affected by (a) any amendment or modification of this Agreement or any other document relating to the Obligations by or for the benefit of the Credit Parties or any subsequent owner of the Improvements except for an amendment or modification which expressly refers to this Article 16, (b) any extensions of time for payment or performance required by this Agreement or any other document relating to the Obligations, (c) the release of any of the Credit Parties or any other person from the performance or observance of any of the agreements, covenants, terms or conditions contained in this Agreement or any other document relating to the Obligations by operation of law, or the Lender’s voluntary act or otherwise, (d) the invalidity or unenforceability of any of the terms or provisions of this Agreement or any other document relating to the Obligations, (e) any exculpatory provision contained in this Agreement or any other document relating to the Obligations limiting the Lender’s recourse, to property encumbered by any mortgage or to any other security or limiting the Lender’s rights to a deficiency judgment against the Borrower, (f) any applicable statute of limitations, (g) any investigation or inquiry conducted by or on behalf of the Lender or any information which the Lender may have or obtain with respect to the environmental or ecological condition of the Improvements, (h) the sale, assignment or foreclosure of any interest in collateral for the Obligations, (i) the sale, transfer or conveyance of all or part of the Improvements, (j) the dissolution and liquidation of Borrower, (k) the death or legal incapacity of any individual, (l) the release or discharge, in whole or in part, of Borrower in any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or similar proceeding, or (m) any other circumstances which might otherwise constitute a legal or equitable release or discharge of Borrower, in whole or in part.

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16.5 Survival . Notwithstanding anything to the contrary contained herein, the liability and obligations of the Borrower under Section 16.3 shall survive the discharge, satisfaction or assignment of this Agreement and the payment in full of all of the Obligations, unless such liability and obligations are terminated with express reference to this Section 16.5.

16.6 Investigations . If an Event of Default occurs, or Borrower defaults on any of its Obligations pursuant to this Article 16, the Lender or its designee shall have the right at reasonable times, and prior to an Event of Default upon reasonable notice to the Borrower, to enter upon the Improvements and conduct such tests, investigation and sampling, including, but not limited to, installation of monitoring wells, as shall be reasonably necessary for the Lender to determine whether any Release of Hazardous Substances has occurred on, at or near the Improvements. The costs of all such tests, investigations and samplings shall be considered as additional Debt secured by all collateral for the Obligations and shall become immediately due and payable upon being invoiced to Borrower and with interest thereon at the highest rate then borne by any of the Obligations.

16.7 No Warranty Regarding Information . Borrower agrees that the Lender shall not be liable in any way for the completeness or accuracy of any Environmental Report or the information contained therein. The Borrower further agrees that the Lender has no duty to warn any of the Credit Parties or any other Person about any actual or potential environmental contamination or other problem that may have become apparent or will become apparent to the Lender.

ARTICLE 17 - DEFAULTS

17.1 Defaults . The following events (hereinafter called “ Events of Default ”) shall constitute defaults under this Agreement:

(a) Nonpayment . (i) failure of Borrower to make any payment of principal or interest under the terms of this Agreement, any of the Notes, or of any of the Loan Documents, within ten (10) days after the same becomes due and payable, except that there shall be no ten (10) day grace period for the Borrower’s obligation to reduce the principal balance of the Revolving Credit Facility if the outstanding principal balance of the Revolving Credit Facility exceeds the Revolving Credit Commitment or the Borrowing Base under Sections 2.1 and 2.2 of this Agreement, and (ii) failure of Borrower to make any payment of any type other than principal or interest under the terms of this Agreement, any of the Notes, or of any of the Loan Documents which is not cured within five (5) Business Days after notice of such failure is given by the Lender.

(b) Performance . Failure of any of the Credit Parties to observe or perform, as applicable,

(i) any of the financial covenants in Article 15 of this Agreement,

(ii) Sections 13.1(a), 13.1(b), 13.1(c), 13.4, and 13.14,

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(iii) Sections 13.1(e), 13.1(i), 13.6, and 13.12 within ten days after the date on which performance was required, or

(iv) any condition, covenant or term of this Agreement or any Loan Document not covered by Section 17.1(a), Section 17.1(b)(i), Section 17.1(b)(ii), or Section 17.1(b)(iii) which is not cured within thirty (30) days after notice of such failure is given by the Lender, and provided that during such thirty (30) day period the Credit Parties are diligently and in good faith curing such failure.

(c) Other Obligations to Lender . Failure of any Credit Party to observe or perform any condition or covenant of any other agreement or instrument with the Lender, or any of its affiliates not covered by Section 17.1(a) or Section 17.1(b) after any applicable cure or grace period related thereto.

(d) Obligations to Third Parties . Default by any Credit Party under:

(i) any agreement or instrument involving Debt in excess of $100,000 (except as covered by Section 17.1(a), Section 17.1(b), or Section 17.1(c)) unless and so long as such default is being contested reasonably diligently and in good faith and no judgment has been taken against the respective Credit Party or restraint, levy, or similar action with respect to any assets of the Credit Party has occurred, or

(ii) any other agreement with any third Person, which is not terminable on thirty (30) days or less notice, or provides for payment of consideration of more than $100,000 by any party thereafter unless and so long as such default is being contested reasonably diligently and in good faith.

(e) Representations . Failure of any representation or warranty made by any Credit Party in connection with the execution and performance of any Loan Document or any certificate of officers pursuant thereto, to be truthful, accurate or correct in all material respects; provided such failure in the case of representations and warranties specific as to a date certain must be as of such date certain.

(f) Financial Difficulties . Financial difficulties of any Credit Party as evidenced by:

(i) any admission in writing of inability to pay debts as they become due; or

(ii) the filing of a voluntary, or sixty (60) days after a filing of an involuntary, petition in bankruptcy, or under any chapters of the Bankruptcy Code, or under any federal or state statute providing for the relief of debtors unless, in the case of the filing of an involuntary petition, it is dismissed within such sixty (60) day period; or

(iii) making an assignment for the benefit of creditors; or

(iv) consenting to the appointment of a trustee or receiver for all or a major part of any of its property; or

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(v) the entry of a court order appointing a receiver or a trustee for all or a major part of its property which is not bonded, discharged or stayed within sixty (60) days;

(vi) the occurrence of any event, action, or transaction that could give rise to a lien or encumbrance on the assets of any Credit Party as a result of application of relevant provisions of ERISA; or

(vii) the occurrence of any Forfeiture Action.

(g) Change in Control . The occurrence of a Change in Control.

(h) Security Documents . Any Credit Party, as signatory under any of the Security Documents, shall cause the Security Documents at any time to, or if for any reason the Security Documents: (i) cease to create a valid and perfected Lien in and to the property purported to be subject to the same for any reason other than the failure of the secured parties thereunder to continue any UCC financing statement, or (ii) cease to be in full force and effect or shall be declared null and void, or (iii) the validity or enforceability of any Security Document shall be contested by any party thereto or any party thereto shall deny it has any further liability or obligations to the secured parties thereunder.

(i) ERISA . Any event occurs or condition exists which, with notice or lapse of time or both, would make any Plan of any Credit Party subject to termination under subsections (1), (2) and (3) of Section 4042(a) of ERISA, or any Credit Party or any of their respective plan administrators shall have received notice from the PBGC indicating that it has made a determination that any Plan of any Credit Party is subject to termination under Section 4042(a)(4) of ERISA, or any Credit Party is subject to employer’s liability under Section 4062, 4063, or 4064 of ERISA, in each case under ERISA as now or hereafter amended.

(j) Government Contracts . (i) any notice of debarment, notice of suspension or termination for default shall have been issued under any United States government contract, or (ii) any of the Credit Parties is debarred or suspended from contracting with any part of the United States Government or any state, local or foreign government, or (iii) a United States Government or any state, local or foreign government investigation shall have resulted in criminal or civil liability, suspension, debarment or any other adverse administrative action arising by reason of alleged fraud, willful misconduct, neglect, default or other wrongdoing, or (iv) the actual termination of any government contract due to alleged fraud, willful misconduct, neglect, default or any other wrongdoing and the effect of any of the events described in subclauses (i), (ii), (iii) and (iv), either individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect.

(k) Any failure of GTC to be able to, or to, cause reconveyance of fee title to the premises covered by the Mortgage in strict accordance with Section 13.14 of this Agreement at such time as the tax benefits available through the City of Albuquerque expire, it being the intention of the parties that this Event of Default shall be an event of default under the Mortgage entitling the Lender to its remedies, including foreclosure, thereunder.

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17.2 Remedies .

(a) If any one or more Events of Default listed in Section 17.1(f)(i)-(vi) occur, (a) the Commitment and any further commitments or obligations of the Lender shall be deemed to be automatically and without need for further action terminated, and (b) all Obligations of the Borrower to the Lender, automatically and without need for further action, shall become forthwith due and payable without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived. If any one or more Events of Default other than those listed in Section 17.1(f)(i)-(vi) occur, the Lender may, at its option, take either or both of the following actions at the same or different times: (i) terminate the Commitment and any further commitments or obligations of the Lender, and (ii) declare all Obligations of the Borrower to the Lender, automatically and without need for further action, to be forthwith due and payable without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived.

(b) In case any such Events of Default shall occur, the Lender shall be entitled to recover judgment against the Borrower for all Obligations of the Borrower to the Lender either before, or after, or during the pendency of any proceedings for the enforcement, of any Security Document and, in the event of realization of any funds from any security or guarantee and application thereof to the payment of the Obligations due, the Lender shall be entitled to enforce payment of and recover judgment for all amounts remaining due and unpaid on such Obligations.

(c) The Lender shall be entitled to exercise any other legal or equitable right which it may have, and may proceed to protect and enforce its rights by any other appropriate proceedings, including action for the specific performance of any covenant or agreement contained in this Agreement and the Loan Documents.

(d) In the case of an Event of Default caused by a failure of compliance with Section 13.14, without limitation of any other right and remedy of the Lender, the Borrower shall deliver to Lender a mortgage in form satisfactory to Lender covering the premises located at 105 Norton Street, Newark, Wayne County, New York, together with a mortgagee title insurance policy in form satisfactory to the Lender insuring the same and a survey, environmental report, and appraisal covering such property, all in form satisfactory to the Lender.

ARTICLE 18 - MISCELLANEOUS

18.1 Waiver . No delay or failure of the Lender to exercise any right, remedy, power or privilege hereunder shall impair the same or be construed to be a waiver of the same or of any Event of Default or an acquiescence therein. No single or partial exercise of any right, remedy, power or privilege shall preclude other or further exercise thereof by the Lender. All rights, remedies, powers, and privileges herein conferred upon the Lender shall be deemed cumulative and not exclusive of any others available.

18.2 Survival of Representations . All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the execution and delivery of other agreements hereunder.

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18.3 Additional Security; Setoff . The Lender shall have a security interest in and right of setoff with respect to all deposits or other sums credited by or due from the Lender to Borrower and a security interest in all securities or other property of Borrower in any of the Lender’s possession for safekeeping or otherwise. The Lender’s security interest shall secure payment of the Obligations. In the event of any Event of Default under this Agreement, regardless of the adequacy of collateral, without any demand or notice, except as required by applicable law, any Lender may apply or setoff such deposits or other sums and may sell or dispose of any or all of such securities or other property and may exercise any and all rights it may have under the New York Uniform Commercial Code, as in effect from time to time. The rights of the Lender under this Agreement are in addition to, and not exclusive of, any other rights it may have with respect to such deposits, sums, securities, or other property under other agreements or applicable principles of law. The Lender shall have no duty to take steps to preserve rights against prior parties as to such securities or other property.

18.4 Notices . Any notice or demand upon any party hereto shall be deemed to have been sufficiently given or served for all purposes hereof when delivered in person, the Business Day after delivery to a nationally recognized overnight courier marked for next Business Day delivery, or three (3) Business Days after it is mailed certified mail postage prepaid, return receipt requested, addressed as follows:

If to Lender:

Manufacturers and Traders Trust Company

255 East Avenue

Rochester, New York 14604

Attention: J. Theodore Smith/Brett Rawlings

Facsimile: (585) 325-5105

Email: jtsmith@mtb.com and brawlings@mtb.com

with a copy to:

Nixon Peabody LLP

40 Fountain Plaza, Suite 500

Buffalo, New York 14202

Attention: Martha M. Anderson, Esq.

Facsimile: (716) 853-8105

Email: manderson@nixonpeabody.com

If to Borrower:

IEC Electronics Corp.

105 Norton Street

Newark, New York 14513

Attention: W.Barry Gilbert, CEO and

Susan E. Topel-Samek, CFO

Facsimile: (315) 331-3547

Email: wbgilbert@iec-electronics.com and stopel@iec-electronics.com

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with a copy to:

Harris Beach PLLC

99 Garnsey Road

Pittsford, NY 14534

Attention: Beth Ela Wilkens, Esq.

Facsimile: 585-419-8817

Email: BWilkens@HarrisBeach.com

Any party may change, by notice in writing to the other parties, the address to which notices to it shall be sent. Email addresses are provided for convenience only and notice is not effective if given only by email unless also given by another means provided by this Section.

18.5 Entire Agreement . This Agreement and the Loan Documents embody the entire agreement and understanding among the parties and supersede all prior agreements and understandings relating to the subject matter hereof. This Agreement shall not be changed or amended without the written agreement of all parties hereto. This Agreement embodies all commitments to lend between the Lender and the Borrower and supersedes any prior commitments.

18.6 Parties in Interest .

(a) All the terms and provisions of this Agreement shall inure to the benefit of and be binding upon and be enforceable by the parties and their respective successors and assigns and shall inure to the benefit of and be enforceable by any holder of any of the Notes. Upon any transfer of any Obligation or any interest therein any Lender may deliver or otherwise transfer or assign to the holder any collateral or guarantees for the Obligation, which holder shall thereupon have all the rights of the Lender.

(b) The rights, remedies, and benefits of and in favor of the Lender under this Agreement shall inure to the benefit of, and be enforceable by, any or all of the Lender and each of its affiliates.

18.7 Indemnity .

(a) Nothing in this Section 18.7 shall be deemed or shall be construed to relieve or release the Lender from any liability for breach of contract arising from any failure by the Lender to perform its contractual obligations hereunder. The Borrower shall indemnify and hold harmless the Lender and its affiliates, directors, officers, employees, agents, and representatives from and against any and all claims, damages, liabilities, and expenses (including, without limitation, attorneys’ fees, whether incurred in a third party action or in an action to enforce this Agreement) that may be incurred by or asserted against such indemnified party in connection with the Loan Documents and the transactions contemplated thereby including in connection with the investigation of, preparation for, or defense of any pending or threatened claim, action, or proceeding; provided, however, that the Borrower shall not be liable to any indemnified party for such claims, damages, liabilities, and expenses resulting from such indemnified party’s own gross negligence or willful misconduct. The indemnification obligations of the Credit Parties hereunder include obligations to indemnify and hold harmless the Lender for any cost, expense, or liability (including among others reasonable attorneys fees) incurred in connection with actions taken (including if applicable foreclosure of the Mortgage), and payments made, by the Lender reasonably necessary to assure that the Lender’s Mortgage, and at such time as the tax benefits available through the City of Albuquerque expire the Lender’s interest in the premises covered by the Fee Mortgage, are subject to no Liens other than Permitted Liens.

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(b) To the extent, if at all, New Mexico NMSA 1978, Section 56-7-1, as amended, is applicable to any Loan Document, any agreement to indemnify, hold harmless, insure or defend another party contained therein shall not extend to liability, claims, damages, losses or expenses, including attorneys’ fees, arising out of bodily injury to persons or damage to property caused by or resulting from, in whole or in part, the negligent act or omission of the indemnitee, its officers, employees or agents.

18.8 Usury . The Loan Documents are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration or maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to Lender for the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible under applicable law. As used in this Section 18.8, the term “ applicable law ” shall mean the law in effect as of the date hereof, provided, however that in the event there is a change in the law which results in a higher permissible rate of interest, then the Loan Documents shall be governed by such new law as of its effective date. If, under or from any circumstances whatsoever, fulfillment of any provision hereof or of any of the Loan Documents at the time performance of such provision shall be due, shall involve transcending the limit of such validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limits of such validity, and if under or from any circumstances whatsoever the Lender should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest. This provision shall control every other provision of all Loan Documents.

18.9 Severability . In the event that any one or more of the provisions contained in this Agreement or any other Loan Document shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or such other Loan Document.

18.10 Governing Law . This Agreement and the Loan Documents (except as otherwise expressly provided therein), together with all of the rights and obligations of the parties hereto, shall be construed, governed and enforced in accordance with the laws of the State of New York, without giving effect to the principles of conflict of laws thereof.

18.11 Electronic Communications . Borrowing base and compliance certificates submitted to the Lender electronically by a representative of the Borrower shall be deemed to have been submitted and signed by the representative sending the electronic communication.

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18.12 Patriot Act . The Lender hereby notifies the Credit Parties that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 signed into law October 26, 2001 and for purposes of this Section 18.12 called the “ Act ”), it is required to obtain, verify, and record information that identifies the Credit Parties, which information includes the name and address of the Credit Parties and other information that will allow the Lender to identify the Credit Parties in accordance with the Act.

18.13 Counterparts . This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same agreement, and any party hereto may execute this Agreement by signing any such counterpart.

18.14 Survival . All indemnities set forth herein shall survive the execution, delivery, and termination of this Agreement and the Loan Documents and the making and repayment of the Obligations.

18.15 Jurisdiction . Borrower hereby irrevocably and unconditionally consents to jurisdiction and service of process, which may be effected by certified mail in accordance with the certified mail provisions contained in Section 18.4, in the Supreme Court of the State of New York sitting in Monroe County, or of the United States District Court for the Western District of New York. Borrower hereby irrevocably and unconditionally waives any objection it may have to the laying of venue of any such action, suit or proceeding in any such court referred to in this Section 18.15. Borrower hereby irrevocably waives the defense of an inconvenient forum to the maintenance of any such action, suit or proceeding in any such court.

18.16 Waiver of Trial by Jury . BORROWER WAIVES TRIAL BY JURY OF ANY CLAIMS OR PROCEEDINGS WITH RESPECT TO THIS AGREEMENT, THE LOAN DOCUMENTS, THE OBLIGATIONS AND ALL MATTERS RELATED HERETO TO THE FULLEST EXTENT ALLOWED BY LAW.

[Signature Pages Follow]

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[Signature Page to Credit Agreement]

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives by their signatures below.

MANUFACTURERS AND TRADERS TRUST COMPANY,

By:
	Brett W. Rawlings
	Assistant Vice President

IEC ELECTRONICS CORP.

By:
	Susan E. Topel-Samek
	Vice President and Chief Financial Officer

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EXHIBIT A

FORM OF QUARTERLY COVENANT COMPLIANCE SHEET

See attached.

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EXHIBIT B

FORM OF REVOLVING CREDIT NOTE

AMENDED AND RESTATED REVOLVING CREDIT NOTE

$20,000,000.00

December 17, 2010

IEC ELECTRONICS CORP. (“ Borrower ”), a corporation organized under the laws of Delaware, for value received, hereby promises to pay to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“ Lender ”) the principal sum of Twenty Million Dollars ($20,000,000.00) or, if less, the amount of the Revolving Credit Loans loaned by the Lender to Borrower pursuant to the Agreement referred to below, in lawful money of the United States of America and in immediately available funds on the date(s) and in the manner provided in said Agreement and with a final payment on the Revolving Credit Termination Date. Borrower also promises to pay interest on the unpaid principal balance hereof, for the period such balance is outstanding, in like money, at the rates of interest as provided in the Agreement described below, on the date(s) and in the manner provided in said Agreement.

The date and amount of each Revolving Credit Loan made by the Lender to the Borrower under the Agreement referred to below, maturity date and each payment of principal thereof, shall be recorded by the Lender on its books. The Lender’s records shall be presumed to be accurate absent manifest error.

This is the Revolving Credit Note referred to in that certain Third Amended and Restated Credit Facility Agreement (as amended, supplemented, or restated from time to time, the “ Agreement ”) dated as of December 17, 2010, made among Borrower and Lender, and evidences the Revolving Credit Loans made thereunder. All capitalized terms not defined herein shall have the meanings given to them in the Agreement.

Borrower waives presentment, notice of dishonor, protest and any other notice or formality with respect to this Revolving Credit Note.

This Revolving Credit Note shall be governed by the laws of the State of New York.

This Revolving Credit Note evidences in part the obligations evidenced by, and amends, restates, and replaces in its entirety the Amended and Restated Revolving Credit Note made by the Borrower in favor of the Lender dated December 16, 2009.

	IEC ELECTRONICS CORP.

	By:

	Title:

EXHIBIT C

FORM OF 2008 TERM LOAN NOTE

AMENDED AND RESTATED 2008 TERM LOAN NOTE

Original Principal Amount - $1,700,000

Principal Amount As of Date of this Note - $689,988

December 16, 2009

IEC ELECTRONICS CORP. (“ Borrower ”), a corporation organized under the laws of Delaware, for value received, hereby promises to pay to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“ Lender ”) the principal sum of Six Hundred Eighty-Nine Thousand Nine Hundred Eighty-Eight Dollars ($689,988), in lawful money of the United States of America and in immediately available funds in consecutive installments of principal on the first day of each month in the amount of $28,334 each. The entire unpaid principal amount of this Amended and Restated 2008 Term Loan Note (“ 2008 Term Loan Note ”) shall be due and payable on the 2008 Term Loan Maturity Date. Borrower also promises to pay interest on the unpaid principal balance hereof, for the period such balance is outstanding, in like money, at the rates of interest as provided in the Agreement described below, on the date(s) and in the manner provided in said Agreement.

This is the 2008 Term Loan Note referred to in that certain Amended and Restated Credit Facility Agreement (as amended, supplemented, and restated from time to time, the “ Agreement ”) dated as of December 16, 2009, made among Borrower and Lender, and evidences the 2008 Term Loan described therein. All capitalized terms not defined herein shall have the meanings given to them in the Agreement.

Borrower waives presentment, notice of dishonor, protest and any other notice or formality with respect to this 2008 Term Loan Note.

This 2008 Term Loan Note shall be governed by the laws of the State of New York.

This 2008 Term Loan Note evidences in part the obligations evidenced by, and amends, restates, and replaces in its entirety the Term Loan Note made by the Borrower in favor of the Lender dated May 30, 2008.

	IEC ELECTRONICS CORP.

	By:

	Title:

EXHIBIT D

FORM OF ENERGY LOAN NOTE WITH RIDER

See attached

EXHIBIT E

FORM OF EQUIPMENT LINE NOTE

EQUIPMENT LINE NOTE

$________________

_________________, 20__

IEC ELECTRONICS CORP. (“ Borrower ”), a corporation organized under the laws of Delaware, for value received, hereby promises to pay to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“ Lender ”) the principal sum of __________________ Dollars ($_____________), in lawful money of the United States of America and in immediately available funds in consecutive installments of principal on the first day of each month in the amount of $__________ each. The entire unpaid principal amount of the Equipment Line Loan evidenced hereby shall be due and payable on the Revolving Credit Line Termination Date. Borrower also promises to pay interest on the unpaid principal balance hereof, for the period such balance is outstanding, in like money, at the rates of interest as provided in the Agreement described below, on the date(s) and in the manner provided in said Agreement. The initial interest rate hereunder shall be [the LIBOR Rate for a LIBOR Interest Period of _______ months/the Fixed Rate of ________% per annum.

This is an Equipment Line Note referred to in that certain Amended and Restated Credit Facility Agreement (as amended from time to time, the “Agreement”) dated as of December 16, 2009, made among Borrower and Lender, and evidences an Equipment Line Loan made thereunder. All capitalized terms not defined herein shall have the meanings given to them in the Agreement.

Borrower waives presentment, notice of dishonor, protest and any other notice or formality with respect to this Equipment Line Note.

This Equipment Line Note shall be governed by the laws of the State of New York.

[The Linked Deposit Program Rider attached to this Equipment Line Note is incorporated herein by reference.]

	IEC ELECTRONICS CORP.

	By:

	Title:

EXHIBIT F

FORM OF LINKED DEPOSIT PROGRAM RIDER

LINKED DEPOSIT PROGRAM RIDER

THIS RIDER is made as _______________, 20___ by IEC ELECTRONICS CORP. (“Borrower”) in favor of Manufacturers and Traders Trust Company (“Lender”) in connection with and as an addendum to the Equipment Line Note dated on even date herewith in the original principal amount of $_____________ (‘ Note ”). Unless otherwise defined herein, all capitalized terms used herein shall have the meanings as set forth in the Note and the Agreement referenced therein. To the extent that the terms of this Rider are inconsistent with other terms in the Note, the terms of this Rider shall control.

1. Definitions .

“ Adjusted Rate ” shall mean on any given day the rate selected by the Borrower pursuant to Section 5.1 of the Agreement as in effect on the Closing Date, or any successor section thereto.

“ Program Rate ” shall mean the rate equal to _____ percentage points below the initial Fixed Rate applicable to the Note.

“ Reset Date ” shall mean:

Not Applicable (the Note is to mature without a Reset Date.)

the date _____ months from the date of the Note (which under no circumstances shall be more than forty-eight (48) months from the date of this Note).

2. Interest . The unpaid principal of this Note shall earn interest from and including the date the proceeds of this Note are disbursed, to, but not including, the earlier of the Reset Date (if applicable) or the final maturity date of the Note, at a rate per year (“ Interest Rate ”) which shall on each day be the Program Rate; provided, however, the applicable Interest Rate prior to the earlier of the Reset Date (if applicable) or the final maturity date of the Note shall automatically and immediately (without further notice to Borrower) be adjusted to the Adjusted Rate if (i) the Lender terminates its participation in the Linked Deposit Program, (ii) the Linked Deposit Program is canceled or otherwise terminated, (iii) Borrower’s right to participate in the Linked Deposit Program is canceled, revoked or is otherwise not authorized, or (iv) all requirements of the Linked Deposit Program have not been satisfied (as determined by the Lender in its discretion) with respect to the Loan evidenced by the Note. Under any of the above scenarios, the Lender reserves the right to charge Borrower for the amount of any interest that would have accrued, or other amounts that would otherwise have been due to the Lender, if the Adjusted Rate had been in effect from the date the proceeds of the Note were disbursed, and the Lender will waive any applicable Prepayment Premium.

[From and including the Reset Date (if applicable), to, but not including the date all amounts hereunder are paid in full, the applicable Interest Rate shall be the Adjusted Rate.]

3. Recalculation of Principal and Interest Installments . To the extent (if at all) that the Note contemplates repayment by Borrower in consecutive level installments of principal and interest over the term of the Note until the Maturity Date, the amount of each installment of principal and interest due and payable under the Note may be adjusted by the Lender at any time to account for any change in the applicable Interest Rate as described herein. Absent manifest error, the Lender’s calculation of the adjustment and determination of the ongoing installment amounts shall be conclusive of the amounts due and payable by Borrower. Any such adjustment may affect the amount of the final installment of principal due at the final maturity date of the Note.

	IEC ELECTRONICS CORP.

	By:

	Title:

- 2 -

EXHIBIT G

FORM OF GTC TERM LOAN NOTE

GTC TERM LOAN NOTE

$5,000,000

December 16, 2009

IEC ELECTRONICS CORP. (“ Borrower ”), a corporation organized under the laws of Delaware, for value received, hereby promises to pay to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“ Lender ”) the principal sum of Five Million Dollars ($5,000,000), in lawful money of the United States of America and in immediately available funds in consecutive installments of principal on the first day of each month in the amount of $83,333 each. The entire unpaid principal amount of this GTC Term Loan Note (“ GTC Term Loan Note ”) shall be due and payable on the GTC Term Loan Maturity Date. Borrower also promises to pay interest on the unpaid principal balance hereof, for the period such balance is outstanding, in like money, at the rates of interest as provided in the Agreement described below, on the date(s) and in the manner provided in said Agreement.

This is the GTC Term Loan Note referred to in that certain Amended and Restated Credit Facility Agreement (as amended, supplemented, and restated from time to time, the “Agreement”) dated as of December 16, 2009, made among Borrower and Lender, and evidences the GTC Term Loan described therein. All capitalized terms not defined herein shall have the meanings given to them in the Agreement.

Borrower waives presentment, notice of dishonor, protest and any other notice or formality with respect to this GTC Term Loan Note.

This GTC Term Loan Note shall be governed by the laws of the State of New York.

	IEC ELECTRONICS CORP.

	By:

	Title:

EXHIBIT H

FORM OF MORTGAGE SECURED TERM LOAN NOTE

MORTGAGE SECURED TERM LOAN NOTE

$4,000,000

December 16, 2009

IEC ELECTRONICS CORP. (“ Borrower ”), a corporation organized under the laws of Delaware, for value received, hereby promises to pay to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“ Lender ”) the principal sum of Four Million Dollars ($4,000,000), in lawful money of the United States of America and in immediately available funds in consecutive installments of principal on the first day of each month in the amount of $22,222 each. The entire unpaid principal amount of this Mortgage Secured Term Loan Note (“ Mortgage Secured Term Loan Note ”) shall be due and payable on the Mortgage Secured Term Loan Maturity Date. Borrower also promises to pay interest on the unpaid principal balance hereof, for the period such balance is outstanding, in like money, at the rates of interest as provided in the Agreement described below, on the date(s) and in the manner provided in said Agreement.

This is the Mortgage Secured Term Loan Note referred to in that certain Amended and Restated Credit Facility Agreement (as amended, supplemented, and restated from time to time, the “Agreement”) dated as of December 16, 2009, made among Borrower and Lender, and evidences the Mortgage Secured Term Loan described therein. All capitalized terms not defined herein shall have the meanings given to them in the Agreement.

Borrower waives presentment, notice of dishonor, protest and any other notice or formality with respect to this Mortgage Secured Term Loan Note.

This Mortgage Secured Term Loan Note shall be governed by the laws of the State of New York.

	IEC ELECTRONICS CORP.

	By:

	Title:

EXHIBIT I

FORM OF BORROWING BASE REPORT

See attached

EXHIBIT J

CELMET TERM LOAN NOTE

$2,000,000

July 30, 2010

IEC ELECTRONICS CORP. (“ Borrower ”), a corporation organized under the laws of Delaware, for value received, hereby promises to pay to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“ Lender ”) the principal sum of Two Million Dollars ($2,000,000), in lawful money of the United States of America and in immediately available funds in consecutive installments of principal on the first day of each month in the amount of $33,333.33 each. The entire unpaid principal amount of this Celmet Term Loan Note (“ Celmet Term Loan Note ”) shall be due and payable on the Celmet Term Loan Maturity Date. Borrower also promises to pay interest on the unpaid principal balance hereof, for the period such balance is outstanding, in like money, at the rates of interest as provided in the Agreement described below, on the date(s) and in the manner provided in said Agreement.

This is the Celmet Term Loan Note referred to in that certain Second Amended and Restated Credit Facility Agreement (as amended, supplemented, and restated from time to time, the “Agreement”) dated as of July 30, 2010, made among Borrower and Lender, and evidences the Celmet Term Loan described therein. All capitalized terms not defined herein shall have the meanings given to them in the Agreement.

Borrower waives presentment, notice of dishonor, protest and any other notice or formality with respect to this Celmet Term Loan Note.

This Celmet Term Loan Note shall be governed by the laws of the State of New York.

	IEC ELECTRONICS CORP.

	By:

	Title:

EXHIBIT K

SCB TERM LOAN NOTE

$20,000,000.00

December 17, 2010

IEC ELECTRONICS CORP. (“ Borrower ”), a corporation organized under the laws of Delaware, for value received, hereby promises to pay to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“ Lender ”) the principal sum of Twenty Million Dollars ($20,000,000.00), in lawful money of the United States of America and in immediately available funds in consecutive installments of principal on the first day of each month in the amount of $333,333.33 each. The entire unpaid principal amount of this SCB Term Loan Note (“ SCB Term Loan Note ”) shall be due and payable on the SCB Term Loan Maturity Date. Borrower also promises to pay interest on the unpaid principal balance hereof, for the period such balance is outstanding, in like money, at the rates of interest as provided in the Agreement described below, on the date(s) and in the manner provided in said Agreement.

This is the SCB Term Loan Note referred to in that certain Third Amended and Restated Credit Facility Agreement (as amended, supplemented, and restated from time to time, the “ Agreement ”) dated as of December 17, 2010, made among Borrower and Lender, and evidences the SCB Term Loan described therein. All capitalized terms not defined herein shall have the meanings given to them in the Agreement.

Borrower waives presentment, notice of dishonor, protest and any other notice or formality with respect to this SCB Term Loan Note.

This SCB Term Loan Note shall be governed by the laws of the State of New York.

IEC ELECTRONICS CORP.

By:
	Susan E. Topel-Samek
	Vice President and Chief Financial
	Officer

SCHEDULE 1.1(A)

SECURITY DOCUMENTS

Security Agreement

Amended and Restated Negative Pledge Agreement dated December 16, 2009 between Borrower and Lender.

Second Amended and Restated Pledge Agreement dated December 17, 2010.

Trademark Security Agreement dated as of May 30, 2008 by Borrower in favor of Lender

Trademark Security Agreement dated as of December 17, 2010 by SCB in favor of Lender

Mortgage

General Assignment of Rents given by GTC to Lender and dated December 16, 2009

Environmental Compliance and Indemnification Agreement given by GTC and Borrower to Lender and dated December 16, 2009

SCHEDULE 11.1

CREDIT PARTIES; JURISDICTIONS

Credit Party Name	Jurisdiction of Formation	Jurisdictions of Qualification
IEC Electronics Corp.	Delaware	New York
IEC Electronics Wire and Cable, Inc.	New York	None
General Technology Corporation	New Mexico	California
CSCB, Inc.*	Delaware	California*

*CSCB, Inc.’s name will be changed to Southern California Braiding, Inc. within ten days after closing of the SCB Transaction, and it will then file for qualification to do business in California

SCHEDULE 11.5

LITIGATION

None

SCHEDULE 11.13

INTELLECTUAL PROPERTY

Registered Trademarks :

1. “IEC”

Registration Number: 1646272

2. IEC Logo

Registration Number: 1650337

3. “SCB” [with design]

California State Registration Number 00064779

4. SCB [with design]

California State Registration Number 00064780

Registered Copyrights :

1. Type of Work: Text

Registration Number: TXu000800909

Application Title: The IEC UCW Menu System.

SCHEDULE 11.15

SUBSIDIARIES AND AFFILIATES

Subsidiary Name	Jurisdiction of Formation	Jurisdictions of Qualification
IEC Electronics Wire and Cable, Inc.	New York	None
General Technology Corporation	New Mexico	California
CSCB, Inc.*	Delaware	California*

*CSCB, Inc.’s name will be changed to Southern California Braiding, Inc. within ten days after closing of the SCB Transaction, and it will then file for qualification to do business in California

SCHEDULE 11.17

ERISA MATTERS

IEC Electronics Corp. :

IEC Electronics Corp. Corporate 401k Plan

Employee Profit Sharing Plan

2001 Stock Option and Incentive Plan, which covers employees of the Company and the Subsidiaries [a proposal will be made for shareholder approval at the annual meeting in 2011 of an updated incentive plan]

Management Incentive Plan

Cafeteria Plan (Medical/Dental/Flex Spending/Health Reimbursement)

Long Term Disability Plan/Short Term Disability Plan

Life Insurance Plan

IEC Electronics Wire and Cable, Inc. :

IEC Electronics Corp. Corporate 401k Plan

Management Incentive Plan

Cafeteria Plan (Medical/Dental/Flex Spending/Health Reimbursement)

Long Term Disability Plan/Short Term Disability Plan

Life Insurance Plan

General Technology Corporation:

IEC Electronics Corp. Corporate 401k Plan

Management Incentive Plan

Cafeteria Plan (Medical/Dental/Flex Spending/Health Reimbursement)

Long Term Disability Plan/Short Term Disability Plan

Life Insurance Plan

CSCB, Inc. :

IEC Electronics Corp. Corporate 401k Plan

Management Incentive Plan

Cafeteria Plan (Medical/Dental/Flex Spending/Health Reimbursement)

Long Term Disability Plan/Short Term Disability Plan

Life Insurance Plan

SCHEDULE 14.1 (a)

DEBT

$100,000 Bond held by Crane Fund for Widows and Children

SCHEDULE 14.1 (b)

PERMITTED LIENS

Lien in favor of USBancorp. on the following equipment:

Xerox 6204 1 Roll 36” Copier/Printer

Xerox 6204 5D Speed Key Upgrade

1 Xerox 6204 2 nd Drawer Upgrade