Exhibit 10.28

                                 LOAN AGREEMENT
                                     between
                              IEC ELECTRONICS CORP.
                                       and
                          KELTIC FINANCIAL PARTNERS, LP

                             Dated: January 14, 2003

                                 LOAN AGREEMENT

     This LOAN  AGREEMENT  is made this 14th day of  January,  2003  between IEC
ELECTRONICS CORP. ("Borrower"), a corporation organized and existing pursuant to
the laws of the  State of  Delaware  having an  address  at 105  Norton  Street,
Newark, New York 14513, and KELTIC FINANCIAL PARTNERS, LP ("Lender"), a Delaware
limited  partnership,  with a place of business at 555  Theodore  Fremd  Avenue,
Suite C-207, Rye, New York 10580 (the "Agreement"). W I T N E S S E T H:

     WHEREAS,  Borrower has requested that Lender extend a $3,850,000 and 00/100
revolving credit facility and two term loans, one in the amount of $600,000, and
a second in the amount of $550,000,  the proceeds of which will be used to repay
existing  indebtedness  and to provide  Borrower with working  capital  support.
WHEREAS,  Lender is willing to extend such  revolving  credit  facility and term
loans on the terms and subject to the conditions set forth in this Agreement.

                                    AGREEMENT

     1.     DEFINITIONS - As used herein, the following terms shall have the
            following meanings (terms defined in the singular to have the same
            meaning when used in the plural and vice versa):

     1.1.   "Account Debtor" - shall mean any Person who is or may become
            obligated under or on account of any Receivable.

     1.2.   "Advance" - shall mean any loan or advance made by Lender in
            connection with the Revolving Loan.

     1.3.   "Affiliate" - with respect to a Person, shall mean any other Person:
            (i) which directly or indirectly through one or more intermediaries
            controls, or is controlled by, or is under common control with, such
            Person; (ii) which beneficially owns or holds 5% or more of any
            class of the voting stock or other equity interest in such Person;
            or (iii) 5% or more of the voting stock or other equity interest of
            which is beneficially owned or held by such Person. For purposes
            hereof, "control" 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 stock
            or other equity interests, by contract or otherwise.

 1.4.   "Authenticate" - shall mean to sign or to execute or otherwise adopt
            a symbol, or encrypt or similarly process a record in whole or in
            part, with the present interest of the authenticating person to
            identify the person and adopt or accept a Record.

     1.5.   "Banking Day" - shall mean any day on which commercial banks are not
            authorized or required to close in New York State.

     1.6.   "Banking Accounts" - as defined in Section 5.24 of this Agreement.

     1.7.   "Borrower" - shall mean IEC Electronics Corp.

     1.8.   "Borrowing Base Certificate" - shall mean a borrowing base
            certificate substantially in the form of Exhibit E attached hereto.

     1.9.   "Capital Expenditure" - shall mean, as determined in accordance with
            GAAP, the dollar amount of gross expenditures (including obligations
            under capital leases) made or incurred for fixed assets, real
            property, plant and equipment, and all renewals, improvements and
            replacements thereto (but not repairs thereof) during any period.

     1.10.  "Carry Forward Amount" - shall mean, as of the end of any fiscal
            quarter, the amount equal to 50% of the dollar amount (not including
            any other Carry Forward Amount), if any, that caused the Fixed
            Coverage Ratio as of the end of the immediately preceding fiscal
            quarter to exceed 1.00 to 1.00.

     1.11.  "Code" - shall mean the Internal Revenue Code of the United States.

     1.12.  "Collateral" - shall mean all of the Property and interests in
            Property described in the General Security Agreement, and all other
            personal property of Borrower and interests of Borrower in personal
            property that now or hereafter secures the payment and performance
            of any of the Obligations pursuant to any of the Loan Documents or
            otherwise including, without limitation, any proceeds and insurance
            proceeds of the foregoing.

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     1.13.  "Contract  Year" - shall  mean,  during the term of the Loans,  each
             consecutive  twelve (12) month period commencing on the date hereof
             and, in each case, ending on the date which is one day prior to the
             applicable  anniversary date hereof.

     1.14.  "Default" - shall mean an event or condition the occurrence of which
            would, with the lapse of time or the giving of notice, or both,
            become an Event of Default, whether or not Lender has declared an
            Event of Default to have occurred.

     1.15.  "EBITDA" - shall mean Borrower's total income before interest
            expense, taxes, depreciation and amortization, all determined on a
            consolidated basis and calculated in accordance with GAAP.
     1.16. "Eligible Inventory" - shall mean Inventory which has been identified
           and described to Lender's  reasonable  satisfaction,  is represented
           by Borrower (by its acceptance of Revolving Loans thereon) as meeting
           all of the following criteria on the date of any Revolving Loan based
           thereon and  thereafter  while any  Obligation  is  outstanding, and
           is in all other respects acceptable to Lender:  (a) Borrower is the
           sole owner of the Inventory;  none of the Inventory is being  held or
           shipped by  Borrower on a consignment or approval basis; Borrower 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. (b) If any of the Inventory is represented or
           covered by any document of title, instrument or chattel paper,
           Borrower is the sole owner of all such documents,  instruments and
           chattel paper,  all thereof are in the possession of Borrower,  none
           thereof has been sold, assigned or otherwise transferred, and none
           thereof is subject to any claim, lien or security interest; and (c)
           The Inventory shall consist of saleable non-obsolete, commodity type
           raw materials that are earmarked for specific orders, is not Arrow
           Inventory and is not excess as shown on the Borrower's Excess Stock
           Report, and finished goods, manufactured or acquired  by  Borrower in
           the ordinary course of Borrower's business, as conducted on the date
           hereof,  subject to its  contract or sole  possession  and located in
           compliance  with Section 5.15 of this  Agreement or 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. "Arrow Inventory" means any Inventory purchased from Arrow
           Electronics,  Inc., or its Affiliates.

     1.17.  "Eligible  Receivables" - shall mean and include only Receivables of
            Borrower, the records and accounts of which are located in
            compliance with Section 5.14 of this Agreement, are acceptable to
            Lender in Lender's reasonable discretion,  arise out of sales in the
            ordinary  course of Borrower's  business, made by  Borrower  to a
            Person  which is not an  Affiliate  of  Borrower  nor an employee of
            Borrower nor  controlled by an Affiliate of Borrower,  which are not
            in dispute and which do not then violate any  warranty  with respect
            to Eligible Receivables set forth in the General Security Agreement.
            No Receivable shall be an Eligible Receivable if more than 90 days
            (except in the case of Motorola Inc., 60 days) have passed since the
            original invoice date and the Inventory covered  by such  Receivable
            were 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. Lender may treat any Receivable as ineligible
            if: (a) any warranty  contained in this Agreement or in the General
            Security  Agreement with  respect to  Eligible  Receivables  or any
            warranty  with  respect to such Receivable  contained in this
            Agreement or in the General Security Agreement has been breached; or
            (b) the Account Debtor or any Affiliate of the Account Debtor has
            disputed  liability, or made any claim with respect to such
            Receivable  or with respect to any other Receivable due from such
            customer or Account Debtor to Borrower; provided, however, only such
            portion  of the  Receivable  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
            Receivable or any other Receivable pending resolution of such
            dispute or claim, in which case Lender may treat the entire
            Receivable or such other Receivable as ineligible; or (c) the
            Account Debtor or any 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 Borrower or if the Account Debtor  has or asserts
            any right of offset  with respect to any Receivable or asserts any
            claim or counterclaim  against Borrower with respect to any

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            Receivable or  otherwise;  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 Receivables of any Account Debtor and its Affiliates
            is ineligible, then all the Receivables of such Account Debtor and
            its Affiliates  may be  deemed ineligible by Lender under this
            Agreement;  or (g) the total unpaid  Receivables of the  Account
            Debtor  for such  Receivable  and its  Affiliates  exceeds  the
            Concentration Cap for such Account Debtor, to the extent of such
            excess. "Concentration  Cap" means for (a) Motorola , Inc., 50% for
            the six month period immediately following the date of this
            Agreement, and thereafter 30%, of the net amount of all Receivables;
            (b) for Teradyne,  Inc.,  30%  (determined  without including the
            Receivables of Teradyne UK) of the net amount of all Receivables ;
            and (c) for any other Account Debtor,  15% of the net amount of all
            Receivables. The higher Concentration Caps are provided for
            Motorola, Inc. and Teradyne, Inc. subject  to the  conditions  that
            (x) Borrower  shall  monitor  closely  their respective  financial
            condition,  (y) Borrower  shall provide  Lender  periodic updates
            with respect to their respective financial condition  and (c) should
            there be any material  deterioration  in their respective  financial
            condition, Lender may lower the  applicable  Concentra  tion Cap
            percentage and may require Borrower to take other steps to  mitigate
            collection  risks.  The  foregoing conditions do not limit any other
            provision of this Agreement  providing a basis for determining  that
            a Receivable  is an  ineligible  Receivable  or otherwise providing
            Lender  rights. (h) it relates to a sale of goods or services to the
            United States of America, or any agency or department  thereof,
            unless Borrower assigns its right to payment of such Receivable to
            Lender, in form and substance satisfactory to Lender, so as to
            comply with the  Assignment  of Claims Act of 1940,  as amended;  or
            (i) it relates to sale of goods or services to a state or local
            governmental  authority  or an agent  or  department thereof; or (j)
            it relates to intercompany  sales, employee  sales or any Receivable
            due from an Affiliate  of  Borrower;  or (k) 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 (l) the Account  Debtor is located in a state in
            which  Borrower is deemed to be doing business under the laws of
            such state and which denies creditors access to its courts in the
            absence of  qualifications to transact business in such state or of
            the filing of any reports with such state, unless Borrower has
            qualified as a foreign corporation authorized to do business in such
            state or has filed  all  required  reports;  or (m) the  Receivable
            is evidenced by chattel  paper or an instrument of any kind, or has
            been reduced to judgment;  or (n) the  Receivable  arises from a
            sale of goods or services to an individual  who is  purchasing  such
            goods  primarily  for  personal,  family or household  purposes;  or
            (o) if Lender believes,  in its reasonable  discretion, that
            collection of such Receivable is insecure or that such Receivable
            may not be paid by reason of the Account  Debtor's  financial
            inability  to pay.

     1.18. "Environment" - shall mean any water or water vapor, any land surface
           or subsurface, air, fish, wildlife, biota and all other natural
           resources.

     1.19.  "Environmental  Laws" - shall  mean all  federal,  state  and  local
            environmental, land use, zoning, health, chemical use, safety and
            sanitation laws, statutes, ordinances and codes 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 rules,
            regulations, policies, guidelines, interpretations, decisions,
            orders  and  directives  of  federal,  state and local  governmental
            agencies and authorities with respect thereto.

     1.20.  "ERISA" - shall mean the Employee  Retirement Income Security Act of
            1974, as amended.

     1.21.  "Events of Default" - shall have the meaning set forth in Article 12
            of this Agreement.
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1.22.  "Excess  Cash Flow" - shall  mean,  with  respect to a Fiscal  Year,
            EBITDA for such Fiscal year, less (a) the portion of capital
            expenditures  for such Fiscal Year Paid in Cash during such Fiscal
            Year,  (b) regularly  scheduled principal and interest payments on
            term debt, (including subordinated notes held by trade creditors)
            Paid in Cash during such Fiscal Year, (c) taxes Paid in Cash during
            such Fiscal Year and (d) non-cash credits included in calculating
            EBITDA. The phrase "Paid in Cash" in the foregoing  definition means
            paid with cash from operations, not from (x) the proceeds of sale of
            any asset, other than inventory in the ordinary course of business,
            or (y) any loan,  capitalized  obligation or lease,  other than the
            Revolving  Loan,  and  determined on a cash basis without regard to
            whether or not the expense was accrued during such Fiscal Year.

     1.23.  "First  Contract  Year" - means  the  period  from  the date of this
            Agreement to but not including January 15, 2004.

     1.24.  "Fiscal Year" - shall mean with respect to any Person, a year of 365
            or 366 days,  as the case may be,  ending on the last day of
            September 30 in any calendar year.

     1.25.  "Fixed Charge Coverage Ratio" - shall mean, with respect to a fiscal
            quarter, the ratio of EBITDA for such fiscal quarter, plus beginning
            with the quarter ending September 30, 2003, the Carry Forward Amount
            for such fiscal quarter,  over the sum of (i) interest and fees on
            Indebtedness,  (ii) principal on  any  loans,  (iii)  principal  on
            any  other  indebtedness,   (iv)  capital expenditures,  (v) taxes,
            (vi) cash dividends,  and (vii)  distributions paid on subordinated
            debt or equity,  in each case paid or payable  during  such fiscal
            quarter.

     1.26.  "GAAP"  -  shall  mean  generally  accepted  accounting   principles
            consistently  applied  and  maintained   throughout  the  period
            indicated  and consistent  with the prior  financial  practice of
            Borrower,  except for changes mandated by the Financial  Accounting
            Standards Board or any similar accounting authority of comparable
            standing.  Whenever any accounting  term is used herein which is not
            otherwise defined, it shall be interpreted in accordance with GAAP.


     1.27.  "General  Security  Agreement"  - shall  mean the  general  security
            agreement dated the date hereof executed and delivered by Borrower
            to Lender.

     1.28.  "Governmental  Rules" - shall have the meaning given to such term in
            Section 5.25 of this Agreement.

     1.29.  "Indebtedness" - shall mean and include all obligations for borrowed
            money of any kind or nature,  including  funded debt and  unfunded
            liabilities, contingent obligations under guaranties or letters of
            credit, and  all obligations for the acquisition or use of any fixed
            asset, including capitalized leases, or improvements which are
            payable over a period longer than one year, regardless  of the term
            thereof  or the  Person or  Persons to whom the same is payable.

     1.30.  "Initial  Success Fee"- shall mean  $250,000,  or if the Texas Real
            Property is sold on or before February 28, 2003, $200,000.

     1.31.  "Inventory"  - shall  have the  meaning  given  to such  term in the
            General Security Agreement.

     1.32.  "Loan  Documents" - shall mean this Agreement,  the General Security
            Agreement,  and all other  documents and instruments to be delivered
            by Borrower or any other Person under this Agreement or in
            connection  with the Loans or any other  Indebtedness or Obligations
            of Borrower to Lender,  as the same may be amended, modified or
            supplemented from time to time.

     1.33.  "Loan Interest Rate" - shall mean, the per annum interest rate equal
            to the prime rate  published  in the  "Money  Rates"  column of The
            Wall Street Journal from time to time or, in the event that The Wall
            Street  Journal is not available at any time, such rate published in
            another  publication as determined by Lender, plus 200 basis points.

     1.34. "Loans" - shall mean the loans and advances made by Lender under this
           Agreement, including all Advances and the Term Loans.

     1.35.  "Lockbox" - shall mean the account  established by Borrower pursuant
            to the lockbox agreement among Borrower, Lender and a financial
            institution with which Borrower maintains a depository account into
            which the proceeds of all Collateral are to be deposited.


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     1.36.  "Material  Adverse Effect" - shall mean any effect, as determined by
            Lender in its  discretion, that could  reasonably  be expected to be
            materially adverse  to (a)  the  business,  assets,  operations,
            prospects  or  condition, financial  or  otherwise,  of  Borrower or
            any  guarantor(s),  if any taken as a whole; (b) Borrower's or any
            guarantor's,  if any, ability to pay or perform the Obligations in
            accordance  with their terms;  (c) the value,  collectability  or
            salability of the Collateral or the perfection or priority of
            Lender's liens; (d) the validity or enforceability of this Agreement
            or any of the Loan Documents; or (e) the practical realization of
            the benefits, rights and remedies inuring to Lender under this
            Agreement or under the Loan Documents.

     1.37. "Maximum Facility" - shall mean $3,850,000.

     1.38.  "Net Proceeds of Sale" - shall mean the gross  purchase price of the
            Texas Real Property less the direct expenses of sale of the Texas
            Real Property.

     1.39.  "Obligations"  - shall mean and  include  all loans  (including  the
            Loans), advances, debts, liabilities, obligations, covenants and
            duties owing by Borrower to Lender or any Affiliate of Lender of any
            kind or nature,  present or future,  whether or not evidenced by any
            note,  guaranty or other  instrument, whether  arising  under this
            Agreement, the other Loan Documents or under any other agreement or
            by operation of law, whether or not for the payment of money,
            whether  arising by reason of an extension of credit,  opening,
            guaranteeing or confirming  of a letter of credit,  loan,  guaranty,
            indemnification  or in any other manner,  whether direct or indirect
            (including those acquired by purchase or  assignment),  absolute  or
            contingent, due or to become due, now due or hereafter arising and
            howsoever  acquired  including,  without  limitation,  all interest,
            charges,  expenses,  commitment, facility,  collateral management or
            other fees, attorneys' fees and expenses, consulting fees and
            expenses and any other sum chargeable to Borrower under this
            Agreement, the other Loan Documents or any other agreement with
            Lender.

     1.40.  "Notice of  Borrowing" - shall mean a borrowing  request in a Record
            substantially in the form of Exhibit D attached hereto.

     1.41. "Person" - shall mean an individual,  partnership,  limited liability
           company, limited liability partnership,  corporation, joint venture,
           joint stock company, land trust, business trust or unincorporated
           organization,  or a government or agency or political subdivision
           thereof.

     1.42.  "Plan" - shall mean an  employee  benefit  plan or other plan now or
            hereafter maintained for employees of Borrower or any subsidiary of
            Borrower and covered by Title IV of ERISA.

     1.43.  "Property"  - shall have the meaning  given such term in the General
            Security Agreement.

     1.44.  "Receivables"  - shall  have the  meaning  given to such term in the
             General Security Agreement.

     1.45. "Reconciliation Report" - shall mean a report in form satisfactory to
           Lender,  reconciling  Borrower's month-end Receivable agings, payable
           agings and Inventory  listings to Borrower's  monthly financial
           statements,  and including bank reconciliations.

     1.46.  "Record" - shall mean  information  that is  inscribed on a tangible
            medium or which is stored in an electronic or other medium and is
            retrievable in perceivable form. If Lender so specifies with respect
            to a particular  type of Record, that type of Record shall be signed
            or  otherwise  authenticated  by Borrowers.

     1.47.  "Remainder  Success Fee" - shall mean 50% of the dollar amount equal
            to the excess of (a) the Net Proceeds of Sale over (b) $800,000.

     1.48.  "Reportable Event" - shall have the meaning assigned to that term in
            Title IV of ERISA.

     1.49.  "Revolving  Loan" - shall mean the  Advances to be made by Lender to
            Borrower pursuant to Section 2.1 of this Agreement, and all interest
            thereon and all fees, costs and expenses payable by Borrower in
            connection therewith.

     1.50.  "Revolving Note" - shall mean, the promissory note  substantially in
            the form annexed hereto as Exhibit A, to be given by Borrower to
            Lender to evidence the Revolving Loan.

     1.51.  "Second  Contract  Year" - means the period  from  January  __, 2004
            Agreement to but not including January __, 2005.

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     1.52.  "Solvent"  - shall  mean when used with  respect to  Borrower,  that
            Borrower,  after giving effect to this Agreement and the concurrent
            closing of a $2.3 million term loan from  Suntrust  Bank,  (i) will
            be able to pay all of its Indebtedness as such Indebtedness matures,
            and (ii) will have sufficient working capital to carry on its then
            existing business.

     1.53. "Term Loans" - shall mean  collectively the term loans made by Lender
           pursuant to the terms of this Agreement as forth in Section 2.2
           below.

     1.54.  "Termination  Date" - shall mean the  earlier of the date which is 3
            years  from  the  date  hereof,  or the date on  which  Lender
            terminates this Agreement pursuant to Section 12.1 of this
            Agreement.

     1.55. "Termination Notice" - as defined in Section 3.6 of this Agreement.

     1.56.  "Texas  Real  Property"  - shall mean the real  property of Borrower
            located in Edinburgh, Texas.

     1.57.  "Third  Contract Year" - shall mean the period from January 15, 2005
            Agreement to but not including  January 15, 2006.

     1.58. "Total Facility" - shall mean $5,000,000.

     1.59.  "UCC" - means the Uniform  Commercial Code as in effect from time to
            time.


2.             THE LOANS.

     2.1.  Advances of the Revolving  Loan.- Subject to the terms and conditions
of this Agreement and relying upon the  representations and warranties set forth
in this Agreement,  for so long as no Default or Event of Default exists, Lender
shall lend to Borrower on its request, a sum ("Borrowing Capacity") equal to the
lesser of: (a) the  Maximum  Facility,  or (b) the sum of (i) up 85 % of the net
face amount of Borrower's  Eligible  Receivables and (ii) the lesser of $750,000
or 25% of the Value of Borrower's  Eligible  Inventory,  but the amount computed
under this  clause  (ii) shall in no event  exceed 40% of the sum of the amounts
computed  pursuant to clause 2.1(b).  Value shall mean the lesser of cost or the
fair  market  value  of such  Inventory.  Within  the  limits  of the  Borrowing
Capacity,  and subject to the limitations set forth in this Agreement,  Borrower
may borrow, repay and reborrow Advances.

     2.2.  Term  Loans.-  Lender  shall make a loan to the  Borrower on the date
hereof in the amount of $600,000 ("Equipment Loan"). The Equipment Loan shall be
payable in accordance  with the terms of a term note attached  hereto as Exhibit
B-1.  Lender shall also make a loan to Borrower on the date hereof in the amount
of  $550,000  ("Real  Estate  Loan").  The Real  Estate Loan shall be payable in
accordance with the terms of a term note attached hereto as Exhibit B-2.

     2.3.  Overline.  - Borrower  acknowledges  that Lender has advised Borrower
that Lender does not intend to permit  Borrower to receive  Advances at any time
in an outstanding  principal amount  exceeding either the Borrowing  Capacity or
the  Maximum  Facility;  however,  it is  agreed  that  should  the  outstanding
principal balance of Advances exceed either then, all such Obligations shall (a)
constitute  Obligations under this Agreement,  (b) be entitled to the benefit of
all security and protection  under this Agreement and the other Loan  Documents,
(c) be secured by the Collateral and (d) be payable  immediately  without notice
or demand by Lender.

     2.4.  Reserves.  - The Borrowing Capacity shall be subject to such reserves
as Lender shall deem necessary and proper in Lender's  discretion.  Reserves may
be established by Lender from time to time in such manner  (including  reduction
of the advance rates set forth in Subsection  2.1(b) above) and for such reasons
as Lender may determine from time to time in Lender's reasonable discretion.  In
addition,  Lender may  establish  a reserve  against the  Borrowing  Capacity to
mitigate  risk if  there is a  material  deterioration  in the  ratio of the net
auction value of Borrower's  equipment to the balance of the Equipment  Loan (as
defined in Section 2.2  hereof),  as  determined  based on an updated  appraisal
obtained by Lender. Payments,  deposits,  guaranties or indemnifications made by
Lender under any reimbursement agreement, guaranty or similar instrument made in
respect of any such  instrument may be treated by Lender as Advances to Borrower
under this Agreement.

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     2.5.  Manner of  Borrowing.  - (a)  Revolving  Loan.  Each Advance shall be
requested  in  an   Authenticated   Record  sent  via  facsimile  or  electronic
transmission including,  without limitation, via e-mail by a Notice of Borrowing
executed by an authorized officer of Borrower, not later than 12:00 p.m. Eastern
Time on any Banking Day on which an Advance is requested. Provided that Borrower
shall have  satisfied  all  conditions  precedent  set forth in this  Agreement,
including the reaffirmation of the  representations and warranties and covenants
as  required  under  Article  10 of this  Agreement,  and  Borrower  shall  have
sufficient  Borrowing  Capacity  to permit an Advance  under this  Agreement  in
accordance with Section 2.1 of this Agreement,  Lender shall make the Advance to
Borrower  in the amount  requested  in the  Record by  Borrower  in  immediately
available  funds for credit to any  account of  Borrower  (other  than a payroll
account)  at a bank in the  United  States of America as  Borrower  may  specify
(provided,  however, that Borrower shall pay Lender its usual and customary fees
for such  transfer).  Lender  shall not be  responsible  for any  failure of any
amount so transferred to be credited to any such account, unless such failure is
due to Lender's gross negligence or willful misconduct. (b) Term Loans. The Term
Loans shall be advanced in a single advance on the date of this Agreement.

     2.6. Evidence of Borrower's Obligations. - Borrower's obligation to pay the
principal of, and interest on, the Advances made to Borrower  shall be evidenced
by the Revolving Note executed by Borrower and delivered to Lender.

     2.7. Payments.  - All payments with respect to the Obligations shall either
be charged  by Lender to  Borrower's  account,  charged as an Advance or made by
Borrower  to  Lender  in U.S.  currency  and  without  any  defense,  offset  or
counterclaim  of any kind, at 555 Theodore Fremd Avenue,  Suite C-207,  Rye, New
York 10580, or to such other address as Lender shall specify,  by 12:00 noon New
York, New York time on the date when due.  Whenever any payment to be made shall
otherwise be due on a day that is not a Banking Day,  such payment shall be made
on the next succeeding  Banking Day and such extension of time shall be included
in computing  interest in connection  with any such payment.  Lender may make an
Advance to reimburse itself for any payments on the Obligations  (including fees
and expenses  payable by Borrower),  which are not paid when due, without notice
or demand to Borrower. Any delay or failure by Lender submitting any invoice for
such interest or fee or in the making of an Advance  against the Re volving Loan
shall not discharge or relieve  Borrower of its obligation to make such interest
or fee payment.

     2.8. Collections/Balance/Statements/etc. (a) Collection and Remittance. (i)
Borrower covenants and agrees to open a Lockbox over which Lender shall have the
sole power of withdrawal.  (ii) All proceeds of Collateral whether cash, checks,
drafts,  notes,  acceptances or other forms of payment, if received by Borrower,
shall be  received  by Borrower  in trust for  Lender,  and  Borrower  agrees to
deliver or cause to be delivered, such payments forthwith, in the identical form
in which  received,  to Lender or to the Lockbox,  as Lender shall  require from
time to time.  (iii) Collected funds in the Lockbox shall be swept daily and the
proceeds  deposited  to an account of Lender or Borrower as Lender  shall elect.
(b) Determination of balance of Loans. In determining the outstanding balance of
the Loans, (i) available funds received from the Lockbox in the Lender's account
at Fleet  Bank,  Account  Name:  Keltic  Financial  Partners,  LP;  Account  No.
9428395446,  ABA #011 900 571 (or such other  account as Lender may direct  from
time to time),  before 2 p.m.  Eastern  Time of a Banking Day will be applied on
that Banking  Day, and if after 2:00 p.m.,  on the next Banking Day, as follows:
(A) First, to unpaid interest, (B) second to unpaid fees and expenses; (C) third
to the  outstanding  principal  balance of the Revolving Loan, and (D) fourth to
all other  Obligations then due and payable in such order as Lender shall elect;
(ii) any other form of funds  received by Lender will be credited on the Banking
Day when Lender has  received  notification  that such funds are  collected  and
available  to Lender if before 2 p.m.  (Eastern  Time),  and  thereafter  on the
following  Banking  Day;  (iii) all  credits  shall be  condition  al upon final
payment to Lender in cash or solvent  credits of the items  giving  rise to them
and, if any item is not so paid,  the amount of any credit given for it shall be
charged to the  balance of the Loans  whether or not the item is  returned;  and
(iv) for the purpose of computing  interest on the Loans and other  Obligations,
interest  shall  continue  to accrue on the  amount of any  payment  applied  to
Borrower's  Loans by Lender,  during the First  Contract Year, for a period of 3
Banking Days after the date so credited,  during the Second Contract Year, for a
period 2 Banking Days after the date so credited,  and during the Third Contract
Year,  for a period of 1 Banking Day after the date so credited

     2.9. Payment on Termination Date. - Notwithstanding  anything herein to the
contrary,  the entire  outstanding  principal  balance  of the  Loans,  plus all
accrued and unpaid interest thereon and all fees and other amounts payable under
this Agreement and the Loan Documents,  shall be due and payable in full, on the
Termination Date.

                                  Page 7 of 21

                                  Page 49 of 79
<PAGE>
3.      LENDER'S  COMPENSATION.

     3.1. Interest on Loans. - Borrower shall pay interest monthly,  in arrears,
on the first day of each month,  commencing January 1, 2003 on the average daily
unpaid principal  amount of the Revolving Loan, and on the principal  balance of
the Term Loans, at a fluctuating  rate which is equal to the Loan Interest Rate.
Notwithstanding the foregoing, on and after the occurrence of a Default or Event
of Default, Borrower shall pay interest on the Loans at a rate which is 3.5% per
annum above the Loan Interest  Rate;  provided,  however,  in no event shall any
interest to be paid under this  Agreement or under any Loan Document  exceed the
maximum rate permitted by law.

     3.2. Commitment and Closing Fee. - Borrower shall have paid to Lender on or
before the date of this  Agreement  $95,500 as a commitment and closing fee, and
shall pay to Lender on the date 6 months following the date of this Agreement an
additional closing and commitment fee of $25,000.

     3.3. Facility Fee. - Borrower shall pay to Lender monthly,  in arrears,  on
the first day of each month a facility  fee in an amount  equal to 1 % per annum
of the Total Facility, which facility fee is deemed earned in full for each year
on the date hereof and on each anniversary hereof.

     3.4. Collateral  Management Fee. - Borrower shall pay to Lender monthly, in
arrears,  on the first day of each  month,  a  collateral  management  fee in an
amount of $1,500.

     3.5. Field Examination Fees. - Borrower shall promptly reimburse Lender for
all costs and expenses  associated  with periodic field  examinations  and fixed
asset  appraisals  performed  by Lender and its agents,  as deemed  necessary by
Lender; provided,  however, the cost of field examinations for which Borrower is
responsible  shall  not  exceed in any one year  $12,000  so long as an Event of
Default has not occurred.

     3.6.  Liquidated  Damages.  - If  Borrower  prepays  the  principal  of the
Revolving Loan to Borrower  (other than from time to time from working  capital)
or if the  outstanding  Obligations  become  due prior to the  Termination  Date
because of a payment  default or other  material  default by Borrower,  Borrower
shall pay to Lender at the time of such  prepayment,  liquidated  damages  in an
amount equal to: (a) 5% of the Total  Facility  less $550,000  ("Adjusted  Total
Facility") if the  prepayment is made during the First  Contract Year; (b) 4% of
the Adjusted Total Facility if the prepayment is made during the Second Contract
Year; and (c) 2% of the Adjusted Total Facility if the prepayment is made during
the Third Contract  Year.  Borrower shall give Lender at least ninety (90) days'
advance  written  notice  ("Termination   Notice")  of  Borrower's  election  to
terminate the  availability of Revolving Loans under this Agreement prior to the
Termination Date. The Termination  Notice shall be irrevocable and shall specify
the effective date of such  termination,  which effective date shall not be less
than ninety (90) days after the giving of the Termination Notice and shall be in
no event later than the Termination  Date.  After the Termination  Date,  Lender
shall have no obligation to make any Advance(s) to Borrower.

     3.7.  Success  Fee. - (a) Lender has earned and is  entitled to the Initial
Success  Fee on the date of this  Agreement.  Borrower's  obligation  to pay the
Initial Success Fee shall be evidenced by a promissory note in form of Exhibit C
("Success  Note").  The Success  Note shall  provide for  interest on the unpaid
principal  amount of the Initial  Success Fee at a rate per annum of 5%, and for
payment of principal and accrued interest in installments as follows: (i) at the
time  Borrower's  annual  financial  statements and compliance  certificate  are
delivered to Lender for fiscal year ending  September 30, 2003, but in any event
on or before  December  31,  2003 , the lesser of (A)  Excess  Cash Flow for the
Borrower's  Fiscal  Year  ending  September  30, 2003 and (B) 1/3 of the Initial
Success Fee; plus all accrued and unpaid  interest;  (ii) at the time Borrower's
annual financial  statements and compliance  certificate are delivered to Lender
for  fiscal  year  ending  September  30,  2004,  but in any  event on or before
December 31, 2004, the lesser of (A) Excess Cash Flow for the Borrower's  Fiscal
Year ending  September 30, 2004 and (B) 2/3 of the Initial Success Fee (less the
amount of any installment  paid to Lender pursuant to Section 3.7 (i)), plus all
accrued  and  unpaid  interest;  and  (iii)  on the  Termination  Date or  early
termination  of the  Facility by Borrower  under  Section 3.6 above,  the unpaid
balance of the Initial  Success Fee, plus any accrued and unpaid  interest.  (b)
Borrower  shall pay to Lender the  Remainder  Success Fee upon sale of the Texas
Real Property,  but no Remainder  Success Fee shall be payable if the Texas Real
Property is sold on or before  February 28, 2003.

                                  Page 8 of 21

                                  Page 50 of 79
<PAGE>

     3.8.  Computation  of Interest and Fees. - All interest and fees under this
Agreement  shall be computed on the basis of a year  consisting of three hundred
sixty (360) days for the number of days actually elapsed.

 4.  APPLICATION  OF PROCEEDS.  - The proceeds of the Advances shall be used
solely by Borrower to repay existing  indebtedness  incurred by Borrower, or for
working capital needed in the normal operation of Borrower's business.

5. INDUCING REPRESENTATIONS. - In order to induce Lender to
make the Loans,  Borrower makes the following  representations and warranties to
Lender:

     5.1.  Organization  and  Qualifications.  - Borrower is a corporation  duly
organized and existing  under the laws of the State of Delaware.  Borrower's tax
identification number is 13-3458955 and its organizational identification number
is 2158409 (not issued in New York State).  Borrower is qualified to do business
in every  jurisdiction  where the nature of its  business  requires  it to be so
qualified.

     5.2. Name and Address. - During the preceding five (5) years,  Borrower has
not been known by nor has used any other name whether  corporate,  fictitious or
otherwise,  except as set forth on  Schedule  5.2  attached  hereto.  Borrower's
office is at the address set forth above.

     5.3. Structure. - Borrower has no subsidiaries or Affiliates, except as set
forth on Schedule 5.3 attached hereto,  and the subsidiaries which are disclosed
are inactive and conduct no business.

     5.4.  Legally  Enforceable  Agreement.   -  The  execution,   delivery  and
performance of this Agreement, each and all of the other Loan Documents and each
and all other  instruments  and  documents  to be  delivered  by Borrower or its
Affiliates  under this  Agreement  and the  creation  of all liens and  security
interests  provided for herein are within Borrower's  corporate power, have been
duly  authorized  by all necessary or proper  corporate  action  (including  the
consent  of  shareholders  where  required),  are  not in  contravention  of any
agreement or indenture to which Borrower is a party or by which it is bound,  or
of the  Certificate  of  Incorporation  or By-Laws of  Borrower,  and are not in
contravention of any provision of law and the same do not require the consent or
approval of any governmental body,  agency,  authority or any other Person which
has not been obtained and a copy thereof furnished to Lender.

     5.5. Solvent Financial Condition. - Borrower is Solvent.

     5.6. Financial  Statements.  - The internally prepared financial statements
of  Borrower  for and as of the fiscal year  ending  September  30, 2002 and the
internally prepared interim financial statements for the two-month period ending
and as of November  30,  2002,  copies of which have been  delivered  to Lender,
fairly present Borrower's and its consolidated subsidiaries' financial condition
and results of  operations  as relevant and as of such dates and there have been
no changes since such dates.  Except as disclosed on Schedule 5.6,  Borrower and
its consolidated  subsidiaries have no contingent  liabilities,  liabilities for
taxes, unusual forward or long-term commitments,  or unrealized or unanticipated
losses  from  any  unfavorable  commitments  which  were not  disclosed  in such
financial  statements or the notes thereto.

     5.7.  Joint  Ventures.  - Borrower is not  engaged in any joint  venture or
partnership with any other Person.

     5.8. Real Estate.  - Attached  hereto as Schedule 5.8 is a list showing all
real property owned or leased by Borrower,  and if leased,  the correct name and
address of the landlord and the date and term of the applicable lease.

     5.9.  Patents,  Trademarks,  Copyrights  and  Licenses.  - Borrower owns or
possesses all the patents,  trademarks,  service marks, trade names,  copyrights
and  licenses  necessary  for the  present  and  planned  future  conduct of its
business without, to the best of its knowledge,  any conflict with the rights of
others. All such patents,  trademarks,  service marks, trade names,  copyrights,
licenses and other similar rights are listed on Schedule 5.9 attached hereto, if
any.

                                  Page 9 of 21


                                  Page 51 of 79
<PAGE>

     5.10. Intentionally Omitted.

     5.11. Investment Company Act: Federal Reserve Board Regulations. - Borrower
is not an "investment  company",  or an "affiliated person" of, or "promoter" or
"principal  underwriter" for, an "investment company", as such terms are defined
in the Investment Company Act of 1940, as amended (15 U.S.C. ss.ss. 80(a)(1), et
seq.).  The making of the Loans under this Agreement by Lender,  the application
of the proceeds and  repayment  thereof by Borrower and the  performance  of the
transactions  contemplated  by this  Agreement will not violate any provision of
such Act, or any rule, regulation or order issued by the Securities and Exchange
Commission thereunder. Borrower does not own any margin security as that term is
defined in Regulation U of the Board of Governors of the Federal  Reserve System
and the proceeds of the Loans made pursuant to this  Agreement will be used only
for the purposes contemplated under this Agreement. None of the proceeds will be
used,  directly or  indirectly,  for the purpose of purcH a sing or carrying any
margin  security or for the purpose of  reducing  or retiring  any  Indebtedness
which was  originally  incurred to purchase or carry margin  security or for any
other purpose  which might  constitute  any of the Loans under this  Agreement a
"purpose  credit" within the meaning of said  Regulation U or Regulations T or X
of the Federal Reserve Board. Borrower will not take, or permit any agent acting
on its behalf to take,  any action  which  might  cause  this  Agreement  or any
document or instrument  delivered  pursuant  hereto to violate any regulation of
the Federal Reserve Board.

     5.12. Tax Returns. - Borrower and the guarantor(s),  if any, have filed all
tax returns  (Federal,  state or local)  required to be filed and paid all taxes
shown  thereon  to be due  including  interest  and  penalties  or has  provided
adequate  reserves  therefor.  No assessments have been made against Borrower or
any  guarantor(s),  if any,  by any  taxing  authority  nor has any  penalty  or
deficiency been made by any such authority. To the best of Borrower's knowledge,
no Federal income tax return of Borrower or any guarantor,  if any, is presently
being examined by the Internal  Revenue Service nor are the results of any prior
examination by the Internal  Revenue Service or any State or local tax authority
being contested by Borrower or any guarantor, if any.

     5.13.  Litigation.  - Except as  disclosed in Schedule  5.13,  no action or
proceeding  is now pending  or, to the  knowledge  of  Borrower,  is  threatened
against  Borrower or any  guarantor,  if any,  at law,  in equity or  otherwise,
before any court, board, commission, agency or instrumentality of the Federal or
state  government  or of any municipal  government or any agency or  subdivision
thereof, or before any arbitrator or panel of arbitrators,  and neither Borrower
nor any  guarantor,  if any,  has  accepted  liability  for any such  action  or
proceeding.  There is no  proceeding  pending  before  any  governmental  agency
(Federal,  state  or  local)  and,  to the  best  of  Borrower's  knowledge,  no
investigation has been commenced before any such governmental  agency the effect
of which, if adversely decided, would or could, have a Material Adverse Effect.

     5.14.  Receivables  Locations.  - Annexed hereto as Schedule 5.14 is a list
showing  all  places at which  Borrower  maintains,  or will  maintain,  records
relating to Receivables.

     5.15.  Inventory  Locations.  - Annexed  hereto as Schedule  5.15 is a list
showing all places where Borrower maintains, or will maintain,  Inventory.  Such
list  indicates  whether the premises are owned or leased by Borrower or whether
the  premises are the premises of a  warehouseman  or other third party,  and if
owned by a third party, the name and address of such third party.

                                  Page 10 of 21

                                  Page 52 of 79
<PAGE>

     5.16. Equipment List and Locations.  - Annexed hereto as Schedule 5.16 is a
list showing all of Borrower's  equipment,  and  describing the places where the
same is located.  Such list indicates  whether such premises are owned or leased
by Borrower or whether the premises are the premises of another third party, and
if leased, the name and address of such third party.

     5.17.  Title/  Liens.  -  Borrower  has  good and  marketable  title to the
Collateral as sole owner thereof. There are no existing liens on any Property of
Borrower,  except for liens in favor of Lender and liens  described  in Schedule
5.17. Except as set forth on Schedule 5.17, none of the Collateral is subject to
any prohibition against  encumbering,  pledging,  hypothecating or assigning the
same or requires notice or consent in connection therewith.

     5.18. Existing Indebtedness. - Borrower has no existing Indebtedness except
the Indebtedness described in Schedule 5.18.

     5.19.  ERISA Matters.  - The Borrower has no Plans, has no liability to the
Pension  Benefit  Guaranty  Corporation  and has not engaged in any  transaction
which  would  subject  Borrower  to tax,  penalty or  liability  for  prohibited
transactions imposed by ERISA or the Code.

     5.20.  O.S.H.A.  - To the  best  of  Borrower's  knowledge,  Borrower,  its
facilities, business, leaseholds, equipment and other property are in compliance
in all material respects with the provisions of the federal  Occupational Safety
and Health Act and all rules and  regulations  thereunder  and all similar state
and local  Governmental  Rules. There are no outstanding  citations,  notices or
orders of  non-compliance  issued to Borrower  or  relating  to its  facilities,
business,  leaseholds,  equipment or other property under any such  Governmental
Rules.

     5.21. Environmental Matters. - Except as disclosed in Schedule 5.21, in the
Phase I and Phase II  environmental  site  assessments  relating  to 105  Norton
Street, Newark, New York and in a Phase I environmental site assessment relating
to 1920 Southeast Industrial Drive, Edinburg,  Texas, true, complete and correct
copies of which has been delivered to Lender,  and to the best of its knowledge,
(a) No  Property  owned  or  used  by  Borrower  is or has  been  used  for  the
generation, manufacture, refining, transportation,  treatment, storage, handling
or disposal of any "hazardous substances" or "hazardous wastes"; (b) Borrower is
in material  compliance  with all applicable  Environmental  Laws; (c) there has
been no  contamination  or release of hazardous  substances  at, upon,  under or
within  any  Property  owned  or  leased  by  Borrower,  and  there  has been no
contamination  (as defined in any  applicable  Environmental  Law) or release of
hazardous  substances  (as defined in any applicable  Environmental  Law) on any
other  Property that has migrated or threatens to migrate to any Property  owned
or leased by Borrower; (d) there are not now and never have been above-ground or
underground storage tanks at any Property owned or leased by Borrower; (e) there
are  no  transformers,   capacitors  or  other  items  of  Equipment  containing
polychlorinated  biphenyls at levels in excess of 49 parts per million, violativ
e of any  applicable  Environmental  Law,  at any  Property  owned or  leased by
Borrower;  (f) no  hazardous  substances  are present at any  Property  owned or
leased by Borrower,  nor will any hazardous  substances be present upon any such
Property  or  in  the  operation  thereof  by  Borrower;  (g)  all  permits  and
authorizations  required under Environmental Laws for all operations of Borrower
have been  duly  issued  and are in full  force and  effect,  including  but not
limited to those for air emissions,  water  discharges  and  treatment,  storage
tanks  and  the  generation,   treatment,  storage  and  disposal  of  hazardous
substances;  (h) there are no pending or threatened environmental claims against
Borrower or any Property owned or leased by Borrower;  and there is no condition
or  occurrence  on any  Property  owned or  leased  by  Borrower  that  could be
anticipated (1) to form the basis of an environmental  claim against Borrower or
its  properties  or (2) to cause any Property  owned or leased by Borrower to be
subject to any restrictions on its ownership, occupancy or transferability under
any  Environmental  Law;  (i) no  portion  of any  Property  owned or  leased by
Borrower  contains  asbestos-containing  material that is or threatens to become
friable;  (j)] the representations and warranties set forth in this Section 5.21
shall survive repayment of the Obligations and the termination of this Agreement
and the other Loan Documents.

     5.22. Labor Disputes.  - There are no pending or, to Borrower's  knowledge,
threatened labor disputes which could have a Material Adverse Effect.

                                  Page 11 of 21

                                  Page 53 of 79
<PAGE>

     5.23.  Intellectual  Property.  - Borrower is the owner of or possesses the
right to use all necessary patents,  trademarks,  service marks,  copyrights and
other  intellectual  property  necessary  or  useful  in  the  operation  of its
business, in each case free of any claims or infringements.

5.24. Location of Banking and Securities  Accounts.  -
Annexed  hereto as Schedule  5.24 hereto sets forth a complete and accurate list
of all  deposit,  checking and other bank  accounts,  all  securities  and other
accounts  maintained  with any  broker  dealer  and all other  similar  accounts
maintained  by  Borrower  (collectively,   "Bank  Accounts"),  together  with  a
description  thereof.

     5.25.  Compliance With Laws. - Except as disclosed on Schedule 5.25, to the
best of Borrower's knowledge,  Borrower is in compliance with all Federal, state
and local governmental rules, ordinances and regulations  ("Governmental Rules")
applicable to its ownership or use of properties or the conduct of its business.

     5.26. No Other Violations. - Except as disclosed on Schedule 5.26, Borrower
is not in violation of any term of its Certificate of  Incorporation  or By-laws
and no event or condition has occurred or is  continuing  which  constitutes  or
results in (or would  constitute or result in, with the giving of notice,  lapse
of time or other  condition) (a) a breach of, or a default under, any agreement,
undertaking  or instrument to which Borrower is a party or by which it or any of
its Property may be affected,  or (b) the imposition of any lien on any Property
of Borrower.

     5.27.  Survival of Representations  and Warranties.  - Borrower  covenants,
warrants and  represents to Lender that all  representations  and  warranties of
Borrower  contained in this  Agreement or in any other Loan  Documents  shall be
true at the time of  Borrower's  execution of this  Agreement and the other Loan
Documents,  and  Lender's  right to  bring  an  action  for  breach  of any such
representation  or warranty or to exercise any remedy under this Agreement based
upon the breach of such  representation or warranty shall survive the execution,
delivery  and  acceptance  hereof by Lender and the closing of the  transactions
described  herein or  related  hereto  until the  Obligations  are  finally  and
irrevocably paid in full.


6. FINANCIAL  STATEMENTS AND  INFORMATION;  CERTAIN NOTICES TO LENDER. - So
long as Borrower  shall have any  Obligations  to Lender  under this  Agreement,
Borrower shall deliver to Lender, or shall cause to be delivered to Lender:

     6.1.  Borrowing  Base  Certificate.  - Weekly (on or before Tuesday of each
week as of the preceding week end),  and monthly  (within two (2) days after the
end of each month) and  contemporaneously  with each  request for an Advance,  a
satisfactorily  completed and executed  Borrowing  Base  Certificate in the form
attached as Exhibit E hereto.

                                  Page 12 of 21

                                  Page 54 of 79
<PAGE>

     6.2.  Monthly  Reports.  - Within  twenty  (20) days  after the end of each
month,  an accounts  receivable  aging,  accounts  payable  aging,  an inventory
listing,  a  collateral  update  certificate,  and a  Reconciliation  Report  of
Borrower  for such  month,  all in form  satisfactory  to  Lender,  prepared  by
Borrower and if Lender so requests,  customer statements,  sales journals,  cash
receipts journals and detailed sales credit reports.

     6.3. Annual Financial Statements. - Within ninety (90) days after the close
of  each  Fiscal  Year  of  Borrower,  a copy of a  unqualified  audited  annual
financial  statements of Borrower  prepared by an independent  certified  public
accountant consisting of a balance sheet,  statements of operations and retained
earnings  and  accompanying  footnotes,  statements  of  cash  flow,  reasonably
acceptable to Lender.

     6.4. Monthly Financial Statements.  - Within thirty (30) days after the end
of each month of Borrower,  financial statements  consisting of a balance sheet,
statements  of  operations  and retained  earnings and  statements of cash flow,
prepared by  management  of Borrower in  accordance  with GAAP,  together with a
compliance certificate in the form attached as Exhibit F hereto.


     6.5. Projections. - Within thirty (30) days prior to the end of each Fiscal
Year of Borrower, monthly financial projections for the next fiscal year in form
satisfactory to Lender.

     6.6. Customer Lists. - Semiannually,  a list of all of Borrower's customers
and vendors,  including the  addresses,  and telephone and facsimile  numbers of
such  customers  and vendors  which lists shall be delivered  within thirty (30)
days of the end of the second fiscal quarter of each Fiscal Year and each Fiscal
Year end.

     6.7. Insurance. - Annually,  within thirty (30) days of the renewal date of
such insurance policy, evidence of insurance in form and content satisfactory to
Lender and otherwise in compliance with Section 8.6 of this Agreement,  together
with the original insurance policy.

     6.8.  Notice of Event of  Default  and  Adverse  Business  Developments.  -
Immediately  after  becoming  aware of the existence of a Default or an Event of
Default or after becoming aware of any developments or other  information  which
is likely to  materially,  adversely  affect  Borrower's  properties,  business,
prospects,  profits or  condition  (financial  or  otherwise)  or its ability to
perform  its  obligation  under  this  Agreement  or any other  Loan  Documents,
including,  without limitation, the following: (a) any material dispute that may
arise between Borrower and any  governmental  regulatory body or law enforcement
authority,  including  any action  relating to any tax  liability of Borrower or
guarantor  if any; (b) any labor  controversy  resulting  in or  threatening  to
result in a strike or work stoppage  against  Borrower;  (c) any proposal by any
public authority to acquire the assets or business of Borrower; (d) the location
of any  Collateral  other than at  Borrower's  place of business or as permitted
under this  Agreement;  (e) any proposed or actual  change of  Borrower's  name,
identity,  state of organization or corporate structure; or (f) any other matter
which has resulted or may result in a Material Adverse Effect. (g) In each case,
Borrower  will provide  Lender with  telephonic  notice  followed by notice in a
Record specifying and describing the nature of such Default, Event of Default or
development or information, and such anticipated effect.

     6.9. Other Information.  - Such other information  respecting the financial
condition of Borrower or any  guarantor,  if any, or any Property of Borrower in
which Lender may have a lien as Lender may, from time to time, request. Borrower
authorizes Lender to communicate directly with Borrower's  independent certified
public  accountants and authorizes  those  accountants to disclose to Lender any
and all financial  statements  and other  information  of any kind that they may
have with respect to Borrower and its business and financial and other  affairs.
Lender shall treat  information  so obtained as  confidential.  On or before the
date of this Agreement,  Borrower shall deliver to Lender a letter  addressed to
such accountants  instructing them to comply with the provisions of this Section
6.9, which letter shall be acknowledged by such  accountants.

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7.  ACCOUNTING.  - Lender may account  monthly to Borrower.  Each and every
account  shall be deemed  final,  binding and  conclusive  upon  Borrower in all
respects,  as  to  all  matters  reflected  therein,  unless  Borrower,   within
forty-five (45) days after the date the account was rendered, delivers to Lender
notice in a Record of any objections which Borrower may have to any such account
and in that event only those items expressly objected to in such notice shall be
deemed to be disputed by Borrower.  If Borrower  disputes the correctness of any
statement,  Borrower's  notice shall  specify in detail the  particulars  of its
basis for contending that such statement is incorrect.

8. AFFIRMATIVE  COVENANTS. - Borrower represents and warrants that, so long as
it shall have any Obligations to Lender under this Agreement, Borrower will:

     8.1. Business and Existence.  - Preserve and maintain  Borrower's  separate
existence and rights, privileges and franchises.

     8.2.  Trade Names.  - Transact  business in Borrower's own name and invoice
all of Borrower's receivables in Borrower's own name.

     8.3.   Transactions  with  Affiliates.   -  Whenever  Borrower  engages  in
transactions  with  any  of  Borrower's  Affiliates,  conduct  the  same  on  an
arms-length basis or other basis more favorable to Borrower.

     8.4. Taxes. - Pay and discharge all taxes, assessments,  government charges
and levies imposed upon  Borrower,  Borrower's  income or Borrower's  profits or
upon any  Property  belonging to Borrower  prior to the date on which  penalties
attach  thereto,  except  where  the  same  may be  contested  in good  faith by
appropriate proceedings being diligently conducted.

     8.5.  Compliance with Laws. - Comply with all Governmental Rules applicable
to Borrower including,  without limitation,  all laws and regulations  regarding
the  collection,  payment and deposit of  employees'  income,  unemployment  and
Social Security taxes.

     8.6. Maintain Properties:  Insurance.  - Safeguard and protect all Property
used in the conduct of Borrower's  business and keep all of Borrower's  Property
insured with insurance companies licensed to do business in the states where the
Property is located  against loss or damage by fire or other risk under extended
coverage  endorsement and against theft,  burglary,  and pilferage together with
such  other  hazards  as  Lender  may  from  time to time  request,  in  amounts
reasonably satisfactory to Lender. Borrower shall deliver the policy or policies
of such insurance or certificates of insurance to Lender containing endorsements
in form satisfactory to Lender naming Lender as lender loss payee and additional
insured and  providing  that the  insurance  shall not be  canceled,  amended or
terminated  except upon thirty (30) days' prior  written  notice to Lender.  All
insurance   proceeds  received  by  Lender  shall  be  retained  by  Lender  for
application  to the payment of such the Revolving  Loan,  and then to such other
Obligations  then  due  and  payable,   as  Lender  may  determine  in  Lender's
discretion.  Borrower  shall  promptly  notify Lender of any event or occurrence
causing a loss or decline in the value of Property  insured or the  existence of
an event  justifying  a claim  under  any  insurance  and the  estimated  amount
thereof.

     8.7.  Business  Records.  - Keep adequate records and books of account with
respect to Borrower's  business  activities in which proper  entries are made in
accordance   with  sound   bookkeeping   practices   reflecting   all  financial
transactions  of Borrower;  and Borrower shall maintain all of its Bank Accounts
as set forth on Schedule 5.24 of this Agreement.

     8.8.  Litigation.  - Give  Lender  prompt  notice  of any suit at law or in
equity against Borrower involving a claim for damages,  money or property valued
in excess of $100,000,  except where the same is fully  covered by insurance and
the insurer has accepted liability therefor in writing.

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     8.9.  Damage  or  Destruction  of  Collateral.  -  Maintain  or cause to be
maintained the  Collateral  and all its Properties in reasonably  good condition
and repair at all times,  preserve the Collateral  and all its other  Properties
from loss,  damage,  or destruction of any nature  whatsoever and provide Lender
with prompt notice in a Record of any  destruction or substantial  damage to any
Collateral  subject to Lender's  security  interest and of the occurrence of any
condition or event which has caused,  or may cause,  loss or depreciation in the
value of any Collateral.

     8.10.  Name Change.  - Provide  Lender with not fewer than thirty (30) days
notice in an  Authenticated  Record prior to any proposed  change of name or the
creation of any subsidiary.

     8.11.  Access to Books and Records.  - Provide Lender with such reports and
with such access to  Borrower's  books and records and permit Lender to copy and
inspect  such  reports and books and records all as Lender  deems  necessary  or
desirable to enable  Lender to monitor the credit  facilities  extended  hereby.
Lender may examine and inspect the Inventory,  equipment or other Collateral and
may examine,  inspect and copy all books and records with respect thereto at any
time during  Borrower's  normal  business  hours.  Borrower shall maintain full,
accurate  and  complete  records  respecting  Inventory,  including  a perpetual
inventory, and all other Collateral at all times. Borrower will pay all costs to
be paid on taxes,  assessments,  governmental  charges or  private  encumbrances
levied,  assessed,  imposed or payable  upon or with  respect to the  Inventory,
equipment or other Collateral or any part thereof.

     8.12. Solvent. - Continue to be Solvent.

     8.13.  Compliance  With  Environmental  Laws. - Comply with all  applicable
Environmental Laws.

     8.14.  Compliance with ERISA and other  Employment  Laws. - Comply with all
applicable  provisions  of ERISA  and the  Internal  Revenue  Code of  1986,  as
amended,  and any other applicable  laws,  rules or regulations  relating to the
compensation of employees and funding of employee pension plans.

     8.15. Proceeds of Collateral.  - Forthwith upon receipt,  pay to Lender the
proceeds of all  Collateral,  whereupon  such  proceeds  shall be applied to the
Obligations in such order and manner as shall be determined in the discretion of
Lender.

     8.16. Delivery of Documents. - Notify Lender if any proceeds of Receivables
shall include,  or any of the  Receivables  shall be evidenced by, notes,  trade
acceptances  or  instruments  or  documents,  or if any  Inventory is covered by
documents of title or chattel paper, whether or not negotiable,  and if required
by Lender,  immediately deliver them to Lender appropriately endorsed.  Borrower
waives protest  regardless of the form of the endorsement.  If Borrower fails to
endorse  any  instrument  or  document,  Lender is  authorized  to endorse it on
Borrower's behalf.


9. NEGATIVE  COVENANTS.  - So long as Borrower shall have any Obligation to
Lender under this Agreement and unless Lender has first consented  thereto in an
Authenticated Record, Borrower shall not:

     9.1. Indebtedness.  - Create, incur, assume or suffer to exist, voluntarily
or involuntarily, any Indebtedness, except (i) Obligations to Lender, (ii) trade
debt incurred in the ordinary  course of  Borrower's  business;  (iii)  purchase
money financing and equipment  leases not to exceed $100,000 in any Fiscal Year;
and (iv) Indebtedness described on Schedule 5.18.

     9.2.  Mergers;  Consolidations;  Acquisitions.  - (Enter  into any  merger,
consolidation,  reorganization or  recapitalization  with any other Person; take
any steps in  contemplation  of dissolution or liquidation;  conduct any part of
its business  through any corporate  subsidiary,  unincorporated  association or
other  Person;  acquire  the stock or assets of any  Person,  whether by merger,
consolidation, purchase of stock or otherwise; or acquire all or any substantial
part of the properties of any Person) provided,  however,  that Lender shall not
unreasonably withhold its consent to any merger, consolidation or acquisition.

     9.3.  Sale or  Disposition.  - Sell or dispose of all or any  Properties or
grant any Person an option to acquire any such Property; provided, however, that
the foregoing  shall not prohibit  sales of Inventory in the ordinary  course of
Borrower's   business  and  provided,   further,   however,   Lender  shall  not
unreasonably withhold its consent to any such other sale or disposition.

9.4.  Defaults.  - Permit any  landlord,  mortgagee,  trustee under deed of
trust or  lienholder  to declare a default  under any lease,  mortgage,  deed of
trust or lien on real estate owned or leased by Borrower,  which default remains
uncured  after any stated  cure  period or for a period in excess of thirty (30)
days from its  occurrence,  whichever  is less,  unless  such  default  is being
contested by Borrower in good faith by appropriate  proceedings being diligently
conducted.
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     9.5.  Limitations  on Liens.  - Suffer any lien,  encumbrance,  mortgage or
security  interest  on any of its  property,  except  such  liens as  appear  on
Schedule 5.17 attached hereto, if any.

     9.6.  Dividends  and  Distributions.  - Pay any  cash  dividends,  make any
capital distribution in cash or other Property or return of capital, or purchase
or redeem any of its stock or other  securities,  or retire any of its stock, or
take any action which would have an effect equivalent to any of the foregoing.

     9.7.  Borrower's Name and Offices.  - Transfer  Borrower's  chief executive
office or  change  its  organizational  name or office  where it  maintains  its
records (including  computer printouts and programs) with respect to Receivables
or any other Collateral,  except with Lender's prior consent in an Authenticated
Record.

     9.8. Fiscal Year. - Change its Fiscal Year.

     9.9.  Change of  Control/Management.  - Allow,  without  the prior  written
consent of Lender,  not to be unreasonably  withheld,  a change in the ownership
structure  of  Borrower,  or have a Chairman  other  than W. Barry  Gilbert or a
Controller other than Kevin Monacelli.

     9.10. Guaranties;  Contingent Liabilities.  - Assume,  guarantee,  endorse,
contingently agree to purchase or otherwise become liable upon the obligation of
any Person,  except by the endorsement of negotiable  instruments for deposit or
collection  or  similar  transactions  in its  ordinary  course of  business  as
currently conducted.

     9.11.  Removal of Collateral.  - Remove,  or cause or permit to be removed,
any of the Collateral or other Property from the premises where such  Collateral
or Property is currently located and as set forth on Schedule 5.14, 5.15 or 5.16
of this  Agreement,  except for sales of  Inventory  in the  ordinary  course of
business.


     9.12. Transfer of Notes or Accounts. - Sell, assign, transfer,  discount or
otherwise  dispose of any Receivables or any promissory note or other instrument
payable to it with or without recourse.

     9.13. Settlements. Compromise, - settle or adjust any claim relating to any
of the Collateral,  except for claims against insurers following  casualty,  and
any compromise or settlement for $10,000 in any one case or $50,000 for all such
compromises and settlements in the aggregate.


     9.14. Change of Business. - Cause or permit a material change in the nature
of its business as conducted on the date of this Agreement.

     9.15.  Change of  Accounting  Practices.  - Change its  present  accounting
principles  or  practices  in any  respect,  except,  upon notice to Lender in a
Record, as may be required by changes in GAAP.

     9.16.  Inconsistent  Agreement.  - Enter into any agreement  containing any
provision which would be violated by the  performance of Borrower's  Obligations
or other obligations under this Agreement or any other Loan Document.

     9.17. Loan or Advances. - Make any loans or advances to any Person,  except
for loans and advances not exceeding  $25,000 in the aggregate,  and in no event
shall  Borrower  make any  advance or  transfer  any asset to any of  Borrower's
subsidiaries or Affiliates.

     9.18. Investments.  - Make any investment in any Person including,  without
limitation,  in any  Affiliates  or form  any  Affiliates  or  subsidiaries  not
existing on the date hereof.

     9.19.  Fixed  Charge  Coverage  Ratio.  - Permit  Borrower's  Fixed  Charge
Coverage  Ratio for the fiscal  quarter  ending  June 30,  2003 and each  fiscal
quarter thereafter to be less than 1.00 to 1.00.

     9.20. Capital Expenditures. - Make or agree to make Capital Expenditures in
an amount which  exceeds  $500,000 for each fiscal year,  beginning  with fiscal
year ending September 30, 2003.

     9.21.  EBITDA. - Permit Borrower's EBITDA to be less than $450,000 for each
fiscal  quarter,  calculated for each quarter on an  individual,  non-cumulative
basis, beginning with the fiscal quarter ending March 31, 2003.

     9.22.  Vendor  Settlements.  - Fail to provide Lender on or before February
28, 2003 with written,  final  documentation of all vendor  settlements shown as
"accepted"  on the Trade Summary and back-up  schedule  delivered by Borrower to
Lender, which documentation shall evidence settlements consistent with the terms
represented  by  Borrower to have been  accepted  by such  vendors in such Trade
Summary, back-up schedule or other supporting documentation provided by Borrower
to Lender on or before the date of this Agreement.

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10.  CONDITIONS TO ADVANCES.

     10.1. Lender's Right to Take Certain Actions. - Lender's obligation to make
any Advance is subject to the condition that, as of the date of the Advance,  no
Default or Event of Default shall have  occurred and be continuing  and that the
matters set forth in Section 5 of this  Agreement  and the  representations  and
covenants  set  forth  in the  other  Loan  Documents  continue  to be true  and
complete.  Borrower's  acceptance  of each Advance  under this  Agreement  shall
constitute a  confirmation,  as of the date of the  Advance,  of the matters set
forth in Section 5 of this Agreement,  of the  representations and covenants set
forth in the other Loan Documents,  and that no Default or Event of Default then
exists.  If requested by Lender,  Borrower shall further confirm such matters by
delivery of a Record  dated the day of the  Advance and signed by an  authorized
officer of Borrower.

11. TERM. - Unless  sooner  terminated  by Lender  pursuant to the terms of
this  Agreement,  the period during which the Revolving  Loan shall be available
shall initially be a period  commencing on the date hereof and concluding on the
Termination Date.

12. EVENTS OF DEFAULT.

     12.1.  Defaults.  - Upon  the  happening  of any  of the  following  events
(individually, an "Event of Default;" collectively, "Events of Default"): (a) if
Borrower  shall fail to make any payment when due on any  Obligation  under this
Agreement or any other Loan  Document;  or (b) if Borrower  shall fail to comply
with any term,  condition,  covenant,  warranty or  representation  contained in
Articles 6 or 9 of this Agreement;  or (c) if Borrower shall fail to comply with
any term, condition,  covenant or warranty of or in this Agreement other than in
Articles 6 or 9 of this  Agreement,  and such failure  continues for a period in
excess of ten (10) days after notice thereof is given by Lender to Borrower;  or
(d) if  Borrower  shall  fail to  comply  with any  term,  condition,  covenant,
warranty or  representation  contained in any of the other Loan Documents or any
other agreement between Lender and Borrower (not otherwise constituting an Event
of Default) and such failure  continues  for a period in excess of 10 days after
notice  given by  Lender  to  Borrower;  or (e) if  Borrower  shall  cease to be
Solvent, make an assignment for the benefit of its creditors,  call a meeting of
its creditors to obtain any general financial accommodation, suspend business or
if any case under any provision of the Bankruptcy Code including  provisions for
reorganizations,  shall be  commenced  by or against  Borrower or if a receiver,
trustee  or  equivalent  officer  shall  be  appointed  for  all  or  any of the
Properties of Borrower;  or (f) if any statement or representation  contained in
any financial statement or certificate  delivered by Borrower to Lender shall be
false,  in any  respect,  when made;  or (g) if any federal or state tax lien is
filed of record against Borrower or any guarantor(s),  if any, and is not bonded
or discharged within ten (10) days of filing;  or (h) if Borrower's  independent
public  accountants shall refuse to deliver any financial  statement required by
this  Agreement;  or (i) if a judgment  for more than  $50,000  shall be entered
against  Borrower in any action or proceeding and shall not be stayed,  vacated,
bonded,  paid or  discharged  within  ten (10) days of entry,  except a judgment
where the claim is fully  covered by  insurance  and the  insurance  company has
accepted liability therefore in writing; or (j) if any obligation of Borrower in
respect  of any  Indebtedness  (other  than  Indebtedness  to  Lender)  shall be
declared to be or shall become due and payable  prior to its stated  maturity or
such obligation  shall not be paid as and when the same becomes due and payable;
or there  shall  occur  any event or  condition  which  constitutes  an event of
default  under any  mortgage,  indenture,  instrument,  agreement or evidence of
Indebtedness  relating  to any  obligation  of  Borrower  in respect of any such
Indebtedness  the effect of which is to permit the holder or the holders of such
mortgage,  indenture,  instrument,  agreement or evidence of Indebtedness,  or a
trustee,  agent or other  representative on behalf of such holder or holders, to
cause the  Indebtedness  evidenced  thereby  to become  due prior to its  stated
maturity; or (k) Intentionally  omitted. (l) upon the occurrence and continuance
of any  Material  Adverse  Effect,  which in the sole and  absolute  opinion  of
Lender,  impairs  Lender's  security,   increases  Lender's  risks;  or  impairs
Borrower's  ability to  perform  under  this  Agreement  or under the other Loan
Documents;  or  (m)  upon  the  happening  of any of  the  events  described  in
Subsections  12.1 (d),  (e),  (f),  (g),  (h),  (i) or (j) with  respect  to any
guarantor,  if any, or if any such guarantor  purports to terminate its guaranty
or upon the death of a  guarantor,  if any,  that is a natural  person,  if any.
Then, and in any such event,  Lender may terminate this Agreement  without prior
notice or demand to  Borrower or may demand  payment in full of all  Obligations
(whether  otherwise  then  payable on demand or not)  without  terminating  this
Agreement and shall, in any event, be under no further  responsibility to extend
any credit or afford any financial accommodation to Borrower, whether under this
Agreement  or  otherwise.

     12.2.  Obligations  Immediately  Due. - Upon the  Termination  Date for any
reason, all of Borrower's  Obligations to Lender including,  but not limited to,
the Loans shall  immediately  become due and payable  without  further notice or
demand.


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     12.3.   Continuation  of  Security   Interests.   -   Notwithstanding   any
termination,  until all  Obligations  of Borrower shall have been fully paid and
satisfied,  Lender  shall  retain all  security in and title to all existing and
future  Receivables,   General  Intangibles,   Inventory,  Equipment,  Fixtures,
Investment  Property,  and other  Collateral  held by Lender  under the  General
Security  Agreement or under any other Loan Document and Borrower shall continue
to assign  Receivables and consign Inventory to Lender and continue to turn over
all proceeds of Collateral to Lender.

13.  REMEDIES OF LENDER.  - Upon the  occurrence of any Event of Default or
upon any termination of this  Agreement,  then Lender shall have, in addition to
all of its other  rights  under this  Agreement  all of the rights and  remedies
provided in the General Security Agreement.

14. GENERAL PROVISIONS.

     14.1.  Rights  Cumulative.  -  Lender's  rights  and  remedies  under  this
Agreement shall be cumulative and  non-exclusive of any other rights or remedies
which Lender may have under any other  agreement or instrument,  by operation of
law or otherwise.

     14.2.  Successors  and  Assigns.  - This  Agreement is entered into for the
benefit of the parties  hereto and their  successors  and  assigns.  It shall be
binding upon and shall inure to the benefit of the parties, their successors and
assigns.  Lender  shall have the right,  without  the  necessity  of any further
consent or  authorization  by Borrower,  to sell,  assign,  securitize  or grant
participation in all, or a portion of, Lender's  interest in the Loans, to other
financial  institutions  of  the  Lender's  choice  and  on  such  terms  as are
acceptable to Lender in its discretion.

     14.3.  Notice.  - Wherever this Agreement  provides for notice to any party
(except as expressly provided to the contrary),  it shall be given by messenger,
facsimile,  certified  U.S. mail with return  receipt  requested,  or nationally
recognized  overnight  courier with  receipt  requested,  effective  when either
received  or  receipt  rejected  by the  party to whom  addressed,  and shall be
addressed  as  follows,  or to such  other  address  as the party  affected  may
hereafter designate:  If to Lender:  Keltic Financial Partners, LP Attn: John P.
Reilly,  Managing  Partner 555 Theodore Fremd Avenue,  Suite C-207 Rye, New York
10580 Fax: (914) 921-1154

With a copy to:

        Hodgson Russ LLP
        Attn: Victoria J. Saxon
        One M&T Plaza, Suite 2000
        Buffalo, New York 14203
        Fax: (716) 849-0349

If to Borrower:

        IEC Electronics Corp.
        Attn: W. Barry Gilbert
        105 Norton Street
        Newark, New York, NY 14513
        Fax:  (315) 331-4430

With a copy to:

        Boylan, Brown, Code, Vigdor & Wilson, LLP
        Attn:  Justin L. Vigdor
        2400 Chase Square
        Rochester, New York 14604
        Fax:  (585) 232-3528

     14.4. Strict Performance. - The failure, at any time or times hereafter, to
require strict  performance by Borrower of any provision of this Agreement shall
not waive,  affect or diminish any right of Lender  thereafter  to demand strict
compliance and performance therewith.  Any suspension or waiver by Lender of any
Default or Event of Default by Borrower  under this  Agreement or any other Loan
Document  shall not  suspend,  waive or affect  any  other  Default  or Event of
Default by Borrower under this Agreement or any other Loan Document, whether the
same is prior or subsequent thereto and whether of the same or a different type.

     14.5. Waiver. - Borrower waives  presentment,  protest,  notice of dishonor
and notice of protest upon any instrument on which it may be liable to Lender as
maker, endorser, guarantor or otherwise.

     14.6.  Construction of Agreement. - The parties hereto agree that the terms
and  language  of this  Agreement  were the result of  negotiations  between the
parties,  and, as a result,  there shall be no prescription that any ambiguities
in this Agreement shall be resolved  against either party.  Any controversy over
the  construction of this Agreement shall be decided  mutually without regard to
events of authorship or negotiation.

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     14.7.  Expenses.  If, at any time or times prior or  subsequent to the date
hereof,  regardless  of whether  or not a Default  or an Event of  Default  then
exists  or  any  of the  transactions  contemplated  under  this  Agreement  are
concluded, Lender employs counsel for advice or other representation,  or incurs
legal expenses, or consulting fees and expenses, or other costs or out-of-pocket
expenses  in  connection  with:  (A) the  negotiation  and  preparation  of this
Agreement or any other Loan  Document,  or any amendment of or  modification  of
this  Agreement  or any other  Loan  Document;  (B) the  administration  of this
Agreement or any of the other Loan Documents and the  transactions  contemplated
hereby and thereby;  (C) periodic audits and appraisals performed by Lender; (D)
any litigation, contest, dispute, suit, proceeding or action (whether instituted
by Lender,  Borrower or any other Person) in any way relating to the Collateral,
this Agreement or any other Loan Document or Borrower's affairs; (E) the perfect
ion of any lien on the  Collateral;  (F) any  attempt to  enforce  any rights or
remedies of Lender  against  Borrower or any other Person which may be obligated
to Lender by virtue of this  Agreement  or any other  Loan  Document  including,
without limitation,  the Account Debtors; or (G) any attempt to inspect, verify,
protect, preserve,  restore, collect, sell, liquidate or otherwise dispose of or
realize upon the Collateral; then, in any such event, the actual attorneys' fees
and expenses  arising from such  services and all expenses,  costs,  charges and
other fees of such counsel of Lender or relating to any of the events or actions
described in this Section 14.7 shall be payable by Borrower to Lender, and shall
be  additional  Obligations  under this  Agreement  secured  by the  Collateral.
Additionally,  if any taxes (excluding taxes imposed upon or measured by the net
income of Lender, but including any intangibles tax, stamp tax or recording tax)
shall be payable on account of the execution or delivery of this  Agreement,  or
the execution,  delivery,  issuance or recording of any other Loan Document,  or
the creation of any of the Obligations  under this  Agreement,  by reason of any
existing or hereafter  enacted  federal or state statute,  Borrower will pay (or
will promptly reimburse Lender for the payment of) all such taxes including, but
not limited to, any interest and penalties thereon,  and will indemnify,  defend
and hold Lender harmless from and against any liability in connection therewith.
Borrower shall also reimburse  Lender for all other expenses  incurred by Lender
in connection  with the  transactions  contemplated  under this Agreement or the
other Loan Documents, including, without limitation, fees in connection with any
bank account, the Lockbox, wire charges, automatic clearing house fees and other
similar costs and expenses.

     14.8.  Reimbursements  Charged to  Revolving  Loan.  - With  respect to any
amount advanced by Lender and required to be reimbursed by Borrower  pursuant to
the  foregoing  provisions  of Section 14.7, it is hereby agreed that Lender may
charge  any  such  amount  to  Borrowers'  Revolving  Loan  on  the  dates  such
reimbursement is made.  Borrower's  obligations under Section 14.7 shall survive
termination of the other provisions of this Agreement.

     14.9.  Waiver of Right to Jury Trial. - Borrower and Lender  recognize that
in matters related to the Loan and this Agreement, and as it may be subsequently
modified  and/or  amended,  any such party may be  entitled  to a trial in which
matters of fact are  determined  by a jury (as  opposed to a trial in which such
matters  are  determined  by a federal or state  judge).  By  execution  of this
Agreement, Lender and Borrower will give up their respective right to a trial by
jury. Borrower and Lender each hereby expressly acknowledged that this waiver is
entered into to avoid delays,  minimize trial expenses, and streamline the legal
proceedings in order to accomplish a quick resolution of claims arising under or
in connection  with the Note and this  Agreement.  WAIVER OF JURY TRIAL.  TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, BORROWER AND LENDER EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY  WAIVES ANY RIGHT THAT BORROWER OR LENDER MAY HAVE
TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION,  DIRECTLY OR INDIRECTLY, AT ANY
TIME ARISING OUT OF, UNDER, OR IN CONNECTION  WITH THE LOAN, THIS AGREEMENT,  OR
ANY  TRANSACTION  CONTEMPLATED  THEREBY  OR  HEREBY,  BEFORE OR AFTER  MATURITY.
CERTIFICATIONS.  BORROWER HEREBY CERTIFIES THAT NEITHER ANY  REPRESENTATIVE  NOR
AGENT OF LENDER NOR LENDER'S COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR
IMPLIED THAT LENDER WOULD NOT, IN THE EVENT OF  LITIGATION,  SEEK TO ENFORCE THE
FOREGOING  WAIVER.  BORROWER  ACKNOWLEDGES THAT LENDER HAS BEEN INDUCED TO ENTER
INTO  THE   TRANSACTION   BY,  AMONG  OTHER  THINGS,   THE  MUTUAL  WAIVERS  AND
CERTIFICATION HEREIN.

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     14.10.  Indemnification  by Borrower/Waiver of Claims. - Except in the case
of Lender's willful  misconduct or gross  negligence,  Borrower hereby covenants
and agrees to  indemnify,  defend  (with  counsel  selected  by Lender) and hold
harmless Lender and its officers,  partners,  employees,  consultants and agents
from and against any and all claims,  damages,  liabilities,  costs and expenses
(including,  without limitation,  the actual fees and expenses of counsel) which
may be  incurred  by or  asserted  against  Lender or any such  other  Person in
connection with: (a) any  investigation,  action or proceeding arising out of or
in any way relating to this Agreement,  any of the Loans,  any of the other Loan
Documents,  any other agreement  relating to any of the Obligations,  any of the
Collateral,  or any act or omission relating to any of the foregoing; or (b) any
taxes,  liabilities,  claims or damages  relating to the  Collateral or Lender's
liens thereon; or (c) the correctness, validity or genuineness of any instrument
or document  that may be released or endorsed to Borrower by Lender (which shall
automatically be deemed to be without  recourse to Lender in any event),  or the
existence,  character,  quantity,  quality,  condition, value or delivery of any
goods  purporting to be represented by any such  documents;  or (d) any broker's
commission,  finder's fee or similar charge or fee in connection  with the Loans
and the transactions contemplated in this Agreement.

     14.11.  Savings  Clause  for  Indemnification.  - To the  extent  that  the
undertaking to indemnify, pay and hold harmless set forth in Section 14.10 above
may be  unenforceable  because  it is  violative  of any law or  public  policy,
Borrower shall  contribute the maximum  portion which it is permitted to pay and
satisfy  under  applicable  law to the payment and  satisfaction  of all matters
referred to under Section 14.10.

     14.12. Waiver. - To the extent permitted by applicable law, no claim may be
made by Borrower or any other Person  against  Lender or any of its  Affiliates,
partners, officers, employees, agents, attorneys or consultants for any special,
indirect,  consequential  or punitive damages in respect of any claim for breach
of contract,  tort or any other theory of liability arising out of or related to
the  transactions  contemplated by this Agreement or the other Loan Documents or
any act,  omission or event  occurring  in  connection  therewith;  and Borrower
hereby  waives,  releases  and  agrees  not to sue upon any  claim  for any such
damages,  whether or not accrued and whether or not known or  suspected to exist
in its favor.  Neither  Lender nor any of its  Affiliates,  partners,  officers,
employees, agents, attorneys or consultants shall be liable for any action taken
or omitted to be taken by it or them under or in connection  with this Agreement
or the  transactions  contemplated  hereby,  except  for its or their  own gross
negligence or willful misconduct.

     14.13.  Entire Agreement;  Amendments;  Lender's Consent.  - This Agreement
(including  the Exhibits  and  Schedules  thereto) and the other Loan  Documents
supersede,  with respect to their subject matter, all prior and  contemporaneous
agreements,  understandings,  inducements  or conditions  between the respective
parties,  whether express or implied, oral or written. No amendment or waiver of
any provision of this Agreement or any other Loan  Document,  nor consent to any
departure by Borrower therefrom, shall in any event be effective unless the same
shall be in a Record  Authenticated  by Lender,  and then such waiver or consent
shall be effective  only in the specific  instance and for the specific  purpose
for which given.

     14.14. Cross Default;  Cross Collateral.  - Borrower hereby agrees that (a)
all other  agreements  between  Borrower and Lender are hereby amended so that a
Default or an Event of Default under this  Agreement is a default under all such
other  agreements  and a  default  under any one of the  other  agreements  is a
Default or an Event of  Default  under this  Agreement,  and (b) the  Collateral
under this Agreement secures the Obligations now or hereafter  outstanding under
all other  agreements  between  Borrower and Lender and the  Collateral  pledged
under any other  agreement  with  Lender  secures  the  Obligations  under  this
Agreement.

     14.15.  Execution in Counterparts.  - This Agreement may be executed in any
number of counterparts,  each of which when so executed shall be deemed to be an
original and all of which taken together  shall  constitute but one and the same
agreement.

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     14.16. Severability of Provisions. - Any provision of this Agreement or any
of  the  other  Loan  Documents  that  is  prohibited  or  unenforceable  in any
jurisdiction  shall,  as to such  jurisdiction,  be ineffective to the extent of
such  prohibition  or  unenforceability   without   invalidating  the  remaining
provisions  of this  Agreement  or the other Loan  Documents  or  affecting  the
validity or enforceability of such provision in any other jurisdiction.


     14.17.  Table of Contents;  Headings.  - The table of contents and headings
preceding the text of this  Agreement  are inserted  solely for  convenience  of
reference  and shall  not  constitute  a part of this  Agreement  or affect  its
meaning, construction or effect.

     14.18. Exhibits and Schedules.  - All of the Exhibits and Schedules to this
Agreement are hereby  incorporated  by reference  herein and made a part hereof.
15. GOVERNING LAW; CONSENT TO JURISDICTION.  A. THIS AGREEMENT WAS NEGOTIATED IN
THE STATE OF NEW YORK,  AND MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE
OF NEW YORK, AND THE PROCEEDS OF THE SECURED  REVOLVING NOTE DELIVERED  PURSUANT
THERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE
HAS A SUBSTANTIAL  RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED  HEREIN,  AND IN  ALL  RESPECTS,  INCLUDING  MATTERS  OF  CONSTRUCTION,
VALIDITY AND PERFORMANCE,  THIS AGREEMENT AND THE OBLIGATIONS  ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK  APPLICABLE  TO  CONTRACTS  MADE AND  PERFORMED  IN SUCH  STATE AND ANY
APPLICABLE  LAW OF THE  UNITED  STATES OF AMERICA  EXCEPT  THAT AT ALL TIMES THE
PROVISIONS  FOR THE  CREATION,  PERFECTION,  AND  ENFORCEMENT  OF THE  LIENS AND
SECURITY  INTERESTS  CREATED  PURSUANT  HERETO  AND  PURSUANT  TO THE OTHER LOAN
DOCUMENTS  SHALL BE GOVERNED BY AND CONSTRUED  ACCORDING TO THE LAW OF THE STATE
IN WHICH THE APPLICABLE  INDIVIDUAL  PROPER TY IS LOCATED,  IT BEING  UNDERSTOOD
THAT, TO THE FULLEST EXTENT  PERMITTED BY THE LAW OF SUCH STATE,  THE LAW OF THE
STATE OF NEW YORK SHALL GOVERN THE VALIDITY AND THE  ENFORCEABILITY  OF ALL LOAN
DOCUMENTS  AND ALL OF THE  INDEBTEDNESS  OR  OBLIGATIONS  ARISING  HEREUNDER  OR
THEREUNDER.  TO THE FULLEST EXTENT  PERMITTED BY LAW, LENDER AND BORROWER HEREBY
UNCONDITIONALLY  AND  IRREVOCABLY  WAIVE ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER  JURISDICTION  GOVERNS THIS AGREEMENT AND THE SECURED  REVOLVING NOTE, AND
THIS AGREEMENT AND THE SECURED REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. B. ANY LEGAL SUIT,  ACTION
OR PROCEEDING  AGAINST LENDER OR BORROWER,  ANY GUARANTOR OR OTHER PARTY TO THIS
TRANSACTION  ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN
THE SOLE OPTION OF LENDER IN ANY FEDERAL OR STATE COURT  LOCATED IN  WESTCHESTER
COUNTY,  NEW YORK,  PURSUANT TO ss.  5-1402 OF THE NEW YORK GENERAL  OBLIGATIONS
LAW, AND LENDER AND BORROWER  WAIVE ANY OBJECTION  WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT,  ACTION OR PROCEEDING,  AND LENDER
AND BORROWER HEREBY  IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUIT,  ACTION OR PROCEEDING.  BORROWER WAIVES PERSONAL SERVICE OF PROCESS IN
ANY SUCH SUIT,  ACTION OR  PROCEEDING  AND  CONSENTS TO THE MAKING OF SERVICE OF
PROCESS IN EACH SUCH SUIT, ACTION AND OTHER PROCEEDING (1) BY REGISTERED MAIL TO
THE LAST  ADDRESS OF BORROWER  SHOWN IN THE  RECORDS OF LENDER  RELATING TO THIS
AGREEMENT  MAINTAINED  BY  LENDER  WITH SUCH  SERVICE  OF  PROCESS  TO BE DEEMED
COMPLETE FIVE DAYS AFTER THE MAILING THERE OF, OR (2) AS OTHERWISE  PERMITTED BY
LAW.  BORROWER  REPRESENTS  AND WARRANTS  THAT IT HAS  REVIEWED  THIS CONSENT TO
JURISDICTION  PROVISION  WITH  ITS  LEGAL  COUNSEL,  AND HAS  MADE  THIS  WAIVER
KNOWINGLY AND VOLUNTARILY. [Remainder of this Page Intentionally Left Blank]

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed by their officers  thereunto duly  authorized on the day and year first
above written.

        KELTIC FINANCIAL PARTNERS, LP
        By:   KELTIC FINANCIAL SERVICES LLC,
        its general partner

By:
        -------------------------
        Name:  John P. Reilly
        Title:    Managing Partner


        IEC ELECTRONICS CORP.

By:     ------------------------
        Name:  W. Barry Gilbert
        Title:    Chairman


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