Document:

Unassociated Document

    Ex.
10.1 

     

    AMENDMENT
NO. 1 TO THE

    AMENDED
AND RESTATED CREDIT AGREEMENT

     

    Dated as
of July 27, 2010

     

    AMENDMENT NO. 1 TO THE AMENDED AND
RESTATED CREDIT AGREEMENT (this “Amendment”) among
Chemtura Corporation, a Delaware corporation (the “Borrower”), the
guarantors party thereto (the “Guarantors”), the
banks, financial institutions and other institutional lenders party to the
Credit Agreement referred to below (collectively, the “Lenders”) and
Citibank, N.A., as administrative agent (the “Administrative
Agent”) for the Lenders.

     

    PRELIMINARY
STATEMENTS:

     

    (1)           The
Borrower, the Guarantors, the Lenders and the Administrative Agent have entered
into the Amended and Restated Senior Secured Superpriority Debtor-in-Possession
Credit Agreement dated as of February 3, 2010 (as heretofore amended or
otherwise modified, the “Credit
Agreement”).  Capitalized terms not otherwise defined in this
Amendment have the same meanings as specified in the Credit
Agreement.

     

    (2)           The
Borrower has requested that the Lenders amend certain provisions of the Credit
Agreement.  The Lenders party hereto are, on the terms and conditions
stated below, willing to grant the request of the Borrower.

     

    SECTION
1. Amendments to the Credit
Agreement.  The
Credit Agreement is, effective as of the date hereof and subject to the
satisfaction of the applicable conditions precedent set forth in Section 2
of this Amendment, hereby amended as follows:

     

    (a) Section
1.01 of the Credit Agreement is hereby further amended by inserting the
following new definitions in the appropriate alphabetical position:

     

    “Canadian Debtor”
means Chemtura Canada Co./Cie, a company organized under the laws of Ontario,
Canada.

     

    “CFH” means Crompton
Financial Holdings.

     

    “Conyers Fire
Settlement” means the settlement of certain claims against Bio-Lab, Inc.
(“BioLab”) and
GLCC relating to a fire that occurred at BioLab’s Plant 14 finished goods
warehouse in Conyers, Georgia on May 25 and May 26, 2004, pursuant to which
settlement such claims against the Borrower and its Subsidiaries will be
dismissed and released in consideration of BioLab and GLCC establishing, in an
escrow account with Citibank or another escrow agent mutually agreed upon by the
parties, a $7,000,000 settlement fund for the payment of such claims in
accordance with a settlement agreement that is approved by the Bankruptcy
Court.

     

    “GLCC” has the meaning
specified in the definition of “PMC Settlement”.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    “PMC Settlement” means
the settlement of certain claims relating to the asset purchase agreement (the
“PMC APA”)
entered into by the Borrower and PMC Biogenix, Inc. (“PMC”) prior to the
Petition Date, pursuant to which the Borrower sold its oleochemicals business
and certain related assets to PMC, pursuant to which settlement (i) the
value of a subordinated unsecured promissory note in the original principal
amount of $10,000,000 owed by PMC to the Borrower shall be fixed (the “PMC Note Value”);
(ii) the amount of PMC’s claim for amounts due and owing by Great Lakes
Chemical Corporation (“GLCC”) to PMC in
connection with certain products sold and delivered on various dates prior to
the Petition Date by PMC to GLCC (the “GLCC Trade
Receivables”) shall be fixed at $7,782; (iii) the amount of PMC’s
claim for amounts due and owing by the Borrower to PMC in connection with
certain products sold and delivered on various dates prior to the Petition Date
by PMC to the Borrower (the “Chemtura Trade
Receivables”) shall be fixed; (iv) the amount of the Borrower’s
claims for amounts due and owing by PMC to the Borrower in connection with the
parties’ ongoing business relationship (the “Chemtura Trade
Payables”) shall be fixed; (v) PMC’s claims against the Borrower
specified in the proof of claim (No. 392) filed in the Cases on account of
alleged breaches of representations and warranties under the PMC APA, for
rejection of the PMC APA and for prepetition and postpetition interest allegedly
arising from the PMC APA shall be deemed an allowed unsecured claim in the
amount of $5,500,000 (the “Initial PMC Allowed Chemtura
Claim”); (vi) the PMC APA shall be deemed rejected under and
pursuant to section 365(a) of the Bankruptcy Code; (vii) the amount of the
Initial PMC Allowed Chemtura Claim shall be set off against the PMC Note Value,
resulting in a net obligation of PMC to the Borrower of $3,209,810 for which PMC
shall issue a new subordinated unsecured promissory note in like principal
amount; (viii) the amount of the GLCC Trade Receivables shall be allowed as
a general unsecured claim against GLCC; (ix) the amount of the Chemtura
Trade Receivables shall be set off against the amount of the Chemtura Trade
Payables, resulting in net obligation of the Borrower to PMC of $70,777.26, to
be allowed against the Borrower as an administrative expense priority claim;
(x) the subordinated secured promissory note in the original principal
amount of $5,000,000 owed by PMC to the Borrower as of the Petition Date shall
remain in full force and effect; and (xi) PMC and the Borrower shall
execute a mutual release.

     

    “Sonneborn Sale” means
the sale of all or substantially all of the assets of the businesses of the
Borrower and its Subsidiaries known as the “global natural sodium sulfonates
business” and the “oxidized petroleum jelly business” (collectively, the “Sulfonates
Business”), to Sonneborn Holding, LLC or one or more of its subsidiaries
or affiliates (“Sonneborn”) on
substantially the terms set forth in the Asset Purchase Agreement dated as of
June 29, 2010 by and between Sonneborn, the Borrower and Chemtura Netherlands
B.V. as attached to the motion (as may be amended, supplemented, and modified
from time to time) filed in the Bankruptcy Court on June 30, 2010, for
consideration of (i) approximately $5 million in cash, subject to
adjustment in accordance with the terms of the purchase agreement relating to
the Sonneborn Sale, (ii) assumption by Sonneborn of substantially all
obligations arising from or related to the Sulfonates Business (except that
Sonneborn shall not in any event assume or be liable for indebtedness for
borrowed money, actual or threatened claims by third parties (other than
warranty claims), or environmental liabilities (other than environmental
liabilities relating to the remediation of or violations of environmental law at
certain facilities specified in the purchase agreement relating to the Sonneborn
Sale)), and (iii) a mutual release by Sonneborn and the Borrower on the
terms set forth in the purchase agreement relating to the Sonneborn
Sale.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b) Section
1.01 of the Credit Agreement is hereby further amended by deleting the reference
to “or (xviii)” in the definition of “Net Cash Proceeds” and substituting
therefor “, (xviii), (xix) or (xx)”.

     

    (c) Section
2.06(b)(i) is hereby amended by deleting “and” immediately prior to clause (D)
therein and adding immediately prior to the “.” at the end of such clause (D)
the following:

     

    “ and (E)
in the case of Extraordinary Receipts Proceeds on account of the claims subject
to the Conyers Fire Settlement, no such Extraordinary Receipts Proceeds shall be
required to be applied to any prepayment hereunder to the extent that such
Extraordinary Receipts Proceeds shall be used to pay or reimburse the Loan
Parties and their Subsidiaries for funding the settlement fund described in the
definition of “Conyers Fire Settlement” and/or for legal fees and expenses
incurred in connection therewith”.

     

    (d) Section
5.01(m) of the Credit Agreement is hereby amended to add immediately prior to
the “.” at the end thereof the following proviso:

     

    “; and
provided further, that
notwithstanding anything in the Loan Documents to the contrary, Canadian Debtor
shall not be required to become a Guarantor or provide or maintain a Lien on any
of its assets as security for any of the Obligations”.

     

    (e) Section
5.02(g) of the Credit Agreement is hereby amended by deleting the “and”
immediately preceding clause (xvi) thereof, and adding immediately prior to the
“.” at the end of such Section the following new
clause (xvii):

     

    “; and
(xvii) Investments by any Loan Party to Canadian Debtor consisting of
intercompany advances not to exceed $30,000,000 in the aggregate at any time
outstanding, provided that a portion of such advances shall be applied to repay
in full the intercompany obligations owed by Canadian Debtor to
CFH”.

     

    (f) Section
5.02(h) of the Credit Agreement is hereby amended by deleting the “and”
immediately preceding clause (xviii) thereof, and adding immediately prior to
the “.” at the end of such Section the following new clauses (xix), (xx)
and (xxi):

     

    “; (xix)
sales or dispositions pursuant to the Sonneborn Sale, so long as the same is
approved by an order of the Bankruptcy Court that is not stayed, reversed or
vacated at the time of such sale or disposition; (xx) dispositions pursuant
to the PMC Settlement, so long as the same is approved by an order of the
Bankruptcy Court that is not stayed, reversed or vacated at the time of such
disposition; and (xxi) dispositions pursuant to the Conyers Fire Settlement, so
long as the same is approved by an order of the Bankruptcy Court that is not
stayed, reversed or vacated at the time of such disposition”.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (g) Clause (u)
of the proviso to Section 5.02(j) of the Credit Agreement is hereby amended in
full to read as follows:

     

    “(u) the
Borrower may make any payment or prepayment or redemption or acquisition for
value or any cancellation or other retirement of Pre-Petition Debt or other
pre-Petition Date obligations of the Borrower or any Guarantor not to exceed in
the aggregate $10,000,000, and the Canadian Debtor may pay intercompany
obligations owed by it to CFH, to the extent permitted under
Section 5.02(g)(xvii),”.

     

    (h) Clause (v)
of the proviso to Section 5.02(j) of the Credit Agreement is hereby amended in
full to read as follows:

     

    “(v)
nothing in this Section 5.02(j) shall be construed to prohibit (1) the
Borrower from paying antitrust fines and related obligations in an aggregate
amount not to exceed the amount of “Anti Trust Payments” set forth in the DIP
Budget (as defined in the Existing DIP Agreement) delivered prior to June 24,
2009, (2) the issuance of any Letter of Credit to support any Pre-Petition Debt
or other pre-Petition Date obligations of the Borrower or any Guarantor (and the
drawing or reimbursement of any such Letter of Credit), to the extent the
issuance of such Letter of Credit is otherwise permitted under this Agreement,
(3) the Lyondell Property Purchase, (4) the Sonneborn Sale, so long as the
same is approved by an order of the Bankruptcy Court that is not stayed,
reversed or vacated at such time, (5) the PMC Settlement, so long as the
same is approved by an order of the Bankruptcy Court that is not stayed,
reversed or vacated at such time, and (6) the Conyers Settlement, so long as the
same is approved by an order of the Bankruptcy Court that is not stayed,
reversed or vacated at such time,”.

     

    (i) Section
6.01(s) of the Credit Agreement is hereby amended by inserting immediately after
the reference to “Cases” the phrase “(other than Canadian Debtor’s
Case)”.

     

    (j) Section
6.01(v) of the Credit Agreement is hereby amended by inserting immediately prior
to the “;” at the end thereof, the following proviso:

     

    “; provided, however, that the
commencement by Canadian Debtor of a Case under chapter 11 of the
Bankruptcy Code and a recognition proceeding in Canada under the Companies’
Creditors Arrangement Act shall not be an Event of Default under this
Section 6.01”.

     

    SECTION
2. Conditions to
Effectiveness.

     

    (a) This
Amendment shall become effective as of the date first above written (the “Effective Date”)
when, and only when (i) the Administrative Agent shall have received
counterparts of this Amendment executed by the Borrower, each Guarantor and the
Lenders or, as to any such Lenders, advice satisfactory to the Administrative
Agent that such Lender has executed this Amendment, (ii) the Borrower shall have
paid to the Administrative Agent, for the account of each Lender that has duly
executed and delivered to the Administrative Agent a counterpart of this
Amendment by no later than 5:00 PM, New York time, July 21, 2010, an amendment
fee equal to 0.05% of the aggregate principal amount of Term Advances held by
each such Lender, (iii) the Borrower shall have paid to CGMI such other fees
related to this Amendment as shall have been previously agreed by the Borrower
and CGMI, (iv) the Bankruptcy Court shall have approved the terms of this
Amendment, including, without limitation, the payment of all fees and expenses
described herein and (v) on the Effective Date, the representations and
warranties set forth in Section 3 shall be true.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (b) This
Amendment is subject to the provisions of Section 10.01 of the Credit
Agreement.

     

    SECTION
3. Representations and
Warranties.  Each Loan Party represents and warrants as
follows:

     

    (a) the
representations and warranties contained in each Loan Document are true and
correct in all material respects (provided that each representation and warranty
that is qualified as to “materiality”, “Material Adverse Effect” or similar
language is true and correct in all respects) on and as of the Effective Date,
immediately before and immediately after giving effect to this Amendment, as
though made on and as of the Effective Date, other than any such representations
or warranties that, by their terms, refer to a specific date, in which case such
representations or warranties were true and correct in all material respects
(provided that each such representation and warranty that is qualified as to
“materiality”, “Material Adverse Effect” or similar language was true and
correct in all respects) as of such specific date; and

     

    (b)  on
the Effective Date, immediately before and immediately after giving effect to
this Amendment, no Default has occurred and is continuing.

     

    SECTION
4. Reference to and Effect on
the Credit Agreement and the Loan Documents.  (a)  On
and after the effectiveness of this Amendment, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import
referring to the Credit Agreement, and each reference in the Notes and each of
the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement, as further amended by this
Amendment.

     

    (b) The
Credit Agreement (including, without limitation, the Guaranty of each Guarantor
set forth therein), the Notes and each of the other Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and
confirmed.

     

    (c) The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
any Lender or the Administrative Agent under the Credit Agreement or any other
Loan Document, nor constitute a waiver of any provision of the Credit Agreement
or any other Loan Document.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    SECTION
5. Costs and
Expenses.  The
Borrower agrees to pay within 10 Business Days of demand all reasonable costs
and expenses of the Administrative Agent in connection with the preparation,
execution, delivery and administration, modification and amendment of this
Amendment and the other instruments and documents to be delivered hereunder in
accordance with the terms of Section 10.04 of the Credit Agreement.

     

    SECTION
6. Execution in
Counterparts.  This
Amendment may be executed in any number of counterparts and by different parties
hereto in separate 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.  Delivery of an executed counterpart of a
signature page to this Amendment by telecopier shall be effective as delivery of
a manually executed counterpart of this Amendment.

     

    SECTION
7. Governing
Law.  This
Amendment shall be governed by, and construed in accordance with, the laws of
the State of New York.

     

     

     

    [Remainder of Page Intentionally Left
Blank]

     

    
      
         

      

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

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	 	CHEMTURA
      CORPORATION	 
	 	 	 
	 	 	 	 
	
                                     

                                  	
                                    By:
      

                                  	  
      	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	 	 	 	 
	 	      
                                    
                                      A
      & M CLEANING PRODUCTS, LLC

                                    

                                    
                                      AQUA
      CLEAR INDUSTRIES, LLC

                                    

                                    
                                      ASCK,
      INC.

                                    

                                    
                                      ASEPSIS,
      INC.

                                    

                                    
                                      BIOLAB
      TEXTILE ADDITIVES, LLC

                                    

                                    
                                      BIO-LAB,
      INC.

                                    

                                    
                                      CNK
      CHEMICAL REALTY CORPORATION

                                    

                                    
                                      CROMPTON
      COLORS INCORPORATED

                                    

                                    
                                      CROMPTON
      HOLDING CORPORATION

                                    

                                    
                                      CROMPTON
      MONOCHEM, INC.

                                    

                                    
                                      GREAT
      LAKES CHEMICAL CORPORATION

                                    

                                    
                                      GREAT
      LAKES CHEMICAL GLOBAL, INC.

                                    

                                    
                                      GT
      SEED TREATMENT, INC.

                                    

                                    
                                      HOMECARE
      LABS, INC.

                                    

                                    
                                      ISCI,
      INC.

                                    

                                    
                                      LAUREL
      INDUSTRIES HOLDINGS, INC.

                                    

                                    
                                      KEM
      MANUFACTURING CORPORATION

                                    

                                    
                                      MONOCHEM,
      INC.

                                    

                                    
                                      NAUGATUCK
      TREATMENT COMPANY

                                    

                                    
                                      RECREATIONAL
      WATER PRODUCTS, INC.

                                    

                                    
                                      UNIROYAL
      CHEMICAL COMPANY LIMITED (DELAWARE)

                                    

                                    
                                      WEBER
      CITY ROAD LLC

                                    

                                    
                                      WRL
      OF INDIANA, INC.

                                    

                                  	 
	 	 	 	 
	 	 	 	 
	 	By:	  
      	 
	 	 	Name:	 
	 	 	Title:	 

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      	
            	      
              
                SIGNATURE PAGE TO AMENDMENT NO. 1 TO THE AMENDED AND
      RESTATED CREDIT AGREEMENT, DATED AS OF THE DATE FIRST WRITTEN ABOVE, AMONG
      CHEMTURA CORPORATION, THE GUARANTORS PARTY THERETO, THE VARIOUS LENDERS
      PARTY THERETO AND CITIBANK. N.A., AS ADMINISTRATIVE
      AGENT

              

            
	 	 	 	 
	 	      
              BIOLAB
      COMPANY STORE, LLC

            
	 	 	 	 
	 	By:	  
      	 
	 	 	Name:	 
	 	 	Title:
	 	 	 
	 	 	 
	 	      
              BIOLAB
      FRANCHISE COMPANY, LLC

            
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	 	 
	 	GLCC
      LAUREL, LLC
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

       

    

    
      	
              SIGNATURE
      PAGE TO AMENDMENT NO. 1 

              TO
      THE AMENDED AND RESTATED CREDIT 

              AGREEMENT,
      DATED AS OF THE 

              DATE
      FIRST WRITTEN ABOVE, 

              AMONG
      CHEMTURA 

              CORPORATION,
      THE GUARANTORS 

              PARTY
      THERETO, THE VARIOUS 

              LENDERS
      PARTY THERETO AND 

              CITIBANK.
      N.A., AS 

              ADMINISTRATIVE
      AGENT

               

              Accepted
      and agreed:

               

              CITIBANK,
      N.A.,

              as
      Administrative Agent and as a Lender

               

              By:
      _______________________

              Name:

              Title:

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    SIGNATURE
PAGE TO AMENDMENT 

    NO. 1
TO THE AMENDED AND 

    RESTATED
CREDIT AGREEMENT, 

    DATED AS
OF THE DATE FIRST 

    WRITTEN
ABOVE, AMONG 

    CHEMTURA
CORPORATION, THE 

    GUARANTORS
PARTY THERETO, THE 

    VARIOUS
LENDERS PARTY THERETO 

    AND
CITIBANK. N.A., AS 

    ADMINISTRATIVE
AGENT

     

    Accepted
and agreed:

     

    

     

    _________________________,

    as a
Lender

     

    

    By:
______________________

    Name:

    Title:

    

    
      
         

      

      
        10May 24,
2010

    

    Michael
Schlehr

    

    Re:  Separation
Agreement

    

    Dear
Mike:

    

    This
letter will summarize the agreement between you and IEC Electronics Corp. (the
“IEC” or “Company”) with respect to all issues relating to your cessation of
employment with the Company.  This letter supersedes the severance
arrangements set forth in your original letter of employment.

    

    
      	
              1)

            	
              General.  The
      intent of this letter agreement is to mutually, amicably and finally
      resolve all issues and claims surrounding the employment relationship
      between you and IEC, and the termination of that relationship effective
      May 28, 2010.

            

    

    

    
      	
              2)

            	
              Separation
      Pay:

            

    

    

    
      	
               
      

            	
              a)

            	
              Salary Continuation Payments
      and Other Consideration.  IEC will provide to you the
      following amounts and benefits in consideration of the agreements
      contained herein.

            

    

    

    
      	
               
      

            	
              b)

            	
              Salary.  In
      accordance with your Offer letter dated January 11, 2008 the Company will
      provide you with severance payments for a period of six (6)
      months.  If at any time between the date severance payments
      begin and during the severance period you receive compensation for
      services rendered in any capacity all such guaranteed compensation shall
      be offset against the severance due from the Company You agree to promptly
      notify the Company of all such compensation.  Compensation
      received per the Consulting Agreement (Appendix A) will not IEC will be
      considered as compensation under this agreement.  The Company
      will continue to provide you with medical insurance during the severance
      period upon the same terms and conditions as immediately prior to
      termination of employment, subject to any changes to IEC’s coverage
      generally provided to IEC’s employees.  Such coverage shall
      continue until the earlier of (1) the expiration of the Severance Payment
      Period, or (2) you become eligible for medical coverage through another
      employer.

            

    

    

    
      	
               
      

            	
              c)

            	
              Consulting Agreement (Appendix
      A).  The Company agrees to pay you $100,000 for duties as
      an Independent Consultant, subject to the provisions contained in the
      Independent Consulting Agreement.  The Consulting Agreement will
      be for a period of six months following your last date of
      employment.

            

    

    

    
      	
               
      

            	
              i)

            	
              The
      Company will allow you to retain permanently your laptop, provided you
      agree that after the consulting period all company information is
      destroyed.  The Company requests confirmation that the
      information has been destroyed.

            

    

    
      	
               
      

            	
              ii)

            	
              The
      consulting agreement and payment is contingent upon receipt of a fully
      executed copy of the Separation Agreement and your full cooperation as
      determined solely by the Company.

            

    

    

    
      	
               
      

            	
              d)

            	
              Other
      Benefits.  Except as specifically provided in this
      Agreement, all other employee benefits shall be discontinued as of May 28,
      2010, and except as specifically provided in this Agreement, you shall not
      be entitled to any other compensation, bonuses or perquisites from
      IEC.  In
      addition, IEC will not contest any claim for unemployment
      benefits.

            

    

     

    
      

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

     

    
      	
              3)

            	
              Stock Options/Restricted
      Stock.  You have been granted incentive stock options
      that as of the date of this agreement are not vested, which by their terms
      will be forfeited upon your termination.  You have been granted
      Restricted Stock, which by their terms will forfeit upon your
      termination.

            

    

    

    
      	
              4)

            	
              Release.  You
      agree not to disparage IEC in any manner and not to disclose any
      confidential information or trade secrets, which you learned while
      employed by IEC.  You agree that the terms set forth in this
      letter agreement are in full satisfaction of all obligations IEC may have
      to you.  In return for the consideration set forth above, you
      agree irrevocably and unconditionally to release IEC and any related
      companies, and all their predecessors, successors, employees, officers,
      directors, stockholders, representatives, assigns, agents, insurers, and
      employee benefit programs and the trustees, administrators, fiduciaries
      and insurers of such programs from any and all claims, demands, and
      liabilities whatsoever you may have, or claim to have, arising out of any
      act or omission which occurred prior to the date you sign this agreement,
      including any attorneys’ fees.  This includes a release of any
      rights or claims you may have under the Age Discrimination in Employment
      Act, Older Workers’ Benefit Protection Act, Fair Labor Standards Act,
      Employee Retirement Income Security Act, Title VII of the Civil Rights Act
      of 1964, the Equal Pay Act, The Americans with Disabilities Act, New York
      State Human Rights Law, New York Labor Laws or any other federal, state,
      or local laws or regulations which prohibit employment discrimination,
      restrict any employer’s right to terminate employees or otherwise regulate
      employment.  This also includes a release by you of any claims
      for breach of contract, wrongful discharge, and all claims for alleged
      physical or personal injury, emotional distress relating to or arising out
      of your employment with IEC or the termination of that employment, and all
      claims under the Employee Retirement Income Security Act.  In
      return for this severance package being accorded to you under this
      agreement, it is your intent to provide IEC the broadest release of claims
      and liabilities that may be provided by law.  This agreement shall not be
      construed as an admission by IEC that it has acted wrongfully with respect
      to your employment or termination from employment.  This
      release shall not be affected by the full or partial invalidity of any
      other provision of this agreement.  In the event you bring a
      claim which is determined to be covered by the terms of this release, you
      will be required to reimburse the defending parties for their reasonable
      attorneys’ fees in connection with the defense of such
      claims.  The only exceptions to this paragraph are suits brought
      solely to test the validity of the release and waiver herein and/or suits
      brought to enforce the terms of this Agreement, and nothing in this
      Agreement shall be construed to prohibit you from participating in any
      Equal Employment Opportunity (“EEOC”)/State Division of Human Rights
      investigation or proceeding and/or from filing a charge with the EEOC, to
      the extent such a right is protected by law.  You acknowledge
      that you shall not be entitled to any legal or equitable relief
      (including, but not limited to, monetary relief) from any such suit or
      EEOC proceeding or charge.

            

    

    

    
      	
              5)

            	
              Indemnification:  The
      Company agrees to indemnify and hold you harmless from any and all
      liability, loss, suits, claims, damages, costs, judgments and expenses
      (including attorney’s fees and costs of litigation) which in whole or in
      part result from, or arise out of, or are claimed to result from or to
      arise out of any acts, errors or omissions in connection with the
      performance of your duties under this Agreement, provided that any such
      acts, errors or omissions are not willful or negligent.  If a
      claim by a third party is made or threatened against you, and if you
      intend to seek indemnity, you shall notify the company in writing of such
      claim within ten (10) days of notice of such claim.  The
      Company, at its sole option, shall have the authority to undertake,
      conduct and control, through counsel of its own choosing and at its
      expense, the settlement or defense of the claim, and Consultant shall
      cooperate with it in connection therewith.  You shall not,
      without the prior written consent of the Company, settle or compromise any
      claim or consent to the entry of any judgment.  In addition, the
      Company will immediately begin proceedings to remove your name from any
      licenses or contracts that may cause rise to any liability or claims as
      indicated in the foregoing
paragraph.

            

    

    

    
      	
              6)

            	
              You
      acknowledge that the Company advised you that you had twenty-one (21) days
      in which to consider whether you should sign this Release; and
      advised you that if you signed this Release, you would be given seven (7)
      days following the date in which you signed the Release to revoke it, and
      that the Release would not be effective until after this seven (7) day
      period had lapsed.

            

    

     

    
      

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

     

    
      	
              7)

            	
              Full
      Satisfaction.  You agree that the benefits provided in this
      separation agreement are in full satisfaction of any and all obligations
      of IEC. You also agree that the benefits received under this agreement are
      in excess of what you would otherwise be entitled to.  Any
      breach by you of the provisions of this agreement will permit IEC to
      discontinue any benefits under this agreement and seek recovery of any
      such benefits previously paid, without any effect on the full release of
      claims provided under this
agreement.

            

    

     

    
      
        	
                8)

              	
                Nondisclosure
      Statement.   You agree not to disclose any information
      regarding the substance of this agreement and the circumstances of the
      separation of service to anyone, except as required by law, or a spouse,
      medical professional, counselor, or to an attorney or accountant with whom
      you choose to consult regarding consideration of this
      agreement.  You also specifically agree not to initiate contact
      with any IEC customers or have discussions with any third parties
      regarding the details of your separation or this agreement. Any violation
      of this confidentiality provision will entitle IEC to recover any benefits
      paid to you, stop future payments and benefits under this agreement, plus
      reasonable attorney’s fees incurred in obtaining a court order enjoining
      such disclosures.  IEC agrees not to disclose any information
      regarding the substance of this agreement and the circumstances of the
      separation of service to anyone, except as required by law or in a legal
      proceeding, or to a professional retained by
it.

              

      

    

    

    
      	
              9)

            	
              Entire
      Agreement. This agreement constitutes and contains the entire agreement
      and understanding concerning your employment, separation from employment,
      and the other subject matters addressed herein between the parties and
      supersedes and replaces all prior negotiations and prior agreements
      proposed or otherwise, whether written or oral, concerning the subject
      matter hereof.

            

    

    

    
      	
              10)

            	
              Acknowledgment.  This
      letter agreement is the entire agreement between you and IEC with respect
      to your termination of employment with IEC.  You acknowledge and
      agree that you have been advised of your right to seek the advice of an
      attorney, that you fully understand the terms of this agreement, that you
      are not executing this agreement in reliance on any promises,
      representations, or inducements other than those contained herein; that
      you have entered into this agreement knowingly, voluntarily, and without
      threat, coercion, or duress.

            

    

    

    PLEASE
READ THIS AGREEMENT CAREFULLY, IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS.

     

    
      

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

     

    Very
truly yours,

    

    IEC
ELECTRONICS Corp.

    

    
      
        
          	
                  /s/
      Tina DeVey

                
	
                  Tina
      DeVey

                
	
                  Director
      of Human Resources

                

        

      

    

    

    I hereby
accept and agree to the foregoing terms and conditions for my termination of
employment with IEC Electronics Corp.

    

    Dated:
June 9, 2010

    

    
      
        
          	
                  /s/
      Michael Schlehr

                
	
                  Michael
      Schlehr

                

        

      

    

     

    
      

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

     

    APPENDIX
A

    

    INDEPENDENT
CONSULTING AGREEMENT

    

    This
agreement is entered into and shall become effective on the 24th day of
May, between IEC Electronics Corp. (“the Company”) and Michael Schlehr (“the
Consultant”).

    

    
      	
               
      

            	
              1.

            	
              Subject
      to the terms and conditions of this Agreement, the Company hereby engages
      the Consultant as an Independent Consultant to perform services in
      connection with the support of IEC
Electronics.

            

    

    

    
      	
               
      

            	
              2.

            	
              Term
      of Contract:  Unless terminated earlier as provided in this
      Agreement, this Agreement expires on November 26,
  2010.

            

    

    

    
      	
               
      

            	
              3.

            	
              Compensation:  Conditioned
      upon the full cooperation of consultant as determined solely in the
      discretion of the Company:

            

    

    

    
      	
               
      

            	
              a.

            	
              Consultant
      will be paid a fixed fee of $100,000 payable in two
      installments.

            

    

    
      	
               
      

            	
              i.

            	
              $25,
      000 to be paid upon the filing of the 10Q for fiscal
  Q3

            

    

    
      	
               
      

            	
              ii.

            	
              $75,000
      available to be paid after November 26, 2010, date to be determined by Mr.
      Schlehr.

            

    

    

    
      	
               
      

            	
              4.

            	
              Duties:  Consultant
      will act as an independent consultant to assist in management
      consultations and the transition of Ms. Susan Topel-Semak into the
      organization.    Consultations when required will be
      either in person or by phone.

            

    

    

    In
addition to the above, Consultant also agrees to with the
following:

    
      	
               
      

            	
              a.

            	
              Support
      the finance department with the completion of the 10Q for quarter ending
      June 25, 2010.

            

    

    
      	
               
      

            	
              b.

            	
              Support
      the Company with the completion and filing of the 10K for fiscal year end
      2010.

            

    

    
      	
               
      

            	
              c.

            	
              Support
      the Company with Crane working capital reconciliation issues and any
      resulting legal issues.

            

    

    
      	
               
      

            	
              d.

            	
              Not
      to solicit for employment, or advise or recommend to any other person that
      they solicit for employment any senior executive, key manager or member of
      IEC or its affiliates.

            

    

    

    
      	
               
      

            	
              5.

            	
              Confidentiality:  Consultant
      acknowledges and agrees that Consultant will be exposed to Confidential
      Information, knowledge or data and Consultant further acknowledges and
      agrees that such Confidential Information, knowledge or data is
      proprietary to and a valuable trade secret of the Company and that any
      disclosure or unauthorized use thereof will cause irreparable harm and
      loss to the Company.  Consultant agrees that Consultant will
      not, directly or indirectly, disclose or authorize anyone else to disclose
      or use or make known for Consultant’s or another’s benefit any
      Confidential Information, knowledge or data of the Company whether or not
      patentable or copyrightable, in any way acquired by
      Consultant.  For purposes of this provision, Confidential
      information shall include, without limitation, plans, procedures,
      products, processes, trade secrets, software programs, formulas,
      inventions, improvements, techniques, data, know-how, strategies,
      financial data, client names, customer lists, files, lists of suppliers,
      price lists, and other information with respect to the Company’s business
      or received from third parties, subject to a duty on the Company’s part to
      maintain the confidentiality of such information or with respect to its
      suppliers, clients or potential clients, whether prepared by me or
      others.

            

    

    

    
      	
               
      

            	
              6.

            	
              Termination:  The
      Company or the Consultant may terminate this Agreement at any
      time.

            

    

     

    
      

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

     

    
      	
               
      

            	
              7.

            	
              Independent
      Consultant:  This Agreement shall not render the Consultant an
      employee, partner, agent of or joint venture with the Company for any
      purpose.  The Consultant is and will remain an independent
      Consultant in his relationship to the Company.  The Company
      shall be not responsible for withholding taxes with respect to the
      Consultant’s compensation hereunder and shall be issued a Form
      1099.  The Consultant represents and warrants that the
      Consultant shall pay in a timely manner all federal and state income taxes
      and FICA in connection with the compensation the Consultant receives from
      the Company, and shall indemnify and hold the Company harmless from any
      liability, loss, or costs arising out of (1) a breach of this warranty, or
      (2) a determination by any government agency that the Consultant is an
      employee rather than an independent Consultant of the
      Company.  The Consultant shall have no claim against the Company
      hereunder or otherwise for vacation pay, sick leave, retirement benefits,
      worker’s compensation, health or disability benefits, or employee benefits
      of any kind.

            

    

    

    
      	
               
      

            	
              8.

            	
              Modification
      or Amendment:  No amendment, change or modification of the
      Agreement shall be valid unless in writing signed by the parties
      hereto.

            

    

    

    
      	
               
      

            	
              9.

            	
              Entire
      Understanding:  This Agreement constitutes the entire
      understanding and agreement of the parties, and any and all prior
      agreements, understandings, and representations are hereby terminated and
      canceled and are of no further force and
effect.

            

    

    

    
      	
            	
              10.

            	
              Indemnification:  The
      Company agrees to indemnify and hold harmless the Consultant from any and
      all liability, loss, suits, claims, damages, costs, judgments and expenses
      (including attorney’s fees and costs of litigation) which in whole or in
      part result from, or arise out of, or are claimed to result from or to
      arise out of any acts, errors or omissions of the Consultant in connection
      with the performance of Consultant’s duties under this Agreement, provided
      that any such acts, errors or omissions are not willful or
      negligent.  If a claim by a third party is made or threatened
      against Consultant, and if Consultant intends to seek indemnity,
      Consultant shall notify the company in writing of such claim within ten
      (10) days of notice of such claim.  The Company, at its sole
      option, shall have the authority to undertake; conduct and control,
      through counsel of its own choosing and at its expense, the settlement or
      defense of the claim, and Consultant shall cooperate with it in connection
      therewith.  The Consultant shall not, without the prior written
      consent of the Company, settle or compromise any claim or consent to the
      entry of any judgment.

            

    

    

    
      	
            	
              11.

            	
              Governing
      Law and Venue.  This Agreement shall be construed and enforced
      in accordance with the laws of New York State.  Any action or
      proceeding brought by either party against the other arising out of or
      related to the Agreement shall be brought only in a state court of
      competent jurisdiction located in the county of Wayne, New York, or the
      Federal District Court for the Western District of New York located in
      Monroe County, and the parties hereby consent to the personal jurisdiction
      of said courts.

            

    

    

    IN
WITNESS WHEREOF the undersigned have executed this Agreement as of the day and
year first written above.

    

    IEC
Electronics Corp.

    

    
      
        
          
            
              
                	
                        By:

                      	
                        /s/
      Tina DeVey

                      	 
      	
                        By:

                      	
                        /s/
      Michael Schlehr

                      	 
	 
      	
                        Tina
      DeVey, Director of Human Resources

                      	 
      	
                        Michael
      Schlehr

                      	 
	 
      	 
      	 
      	 
      	 

              

            

          

        

      

    

    

    
      
        
          
            
              	
                      June
      9, 2010

                    	 
      	 
      	
                      June
      9, 2010

                    	 
	
                      Date

                    	 
      	
                      Date

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