Document:

Exhibit
4.1

      

      [EXHIBIT
A

      

      Form
of Representative’s Option Agreement]

      

      THE
REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES THAT
IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN
PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE OPTION AGREES THAT IT WILL
NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE OPTION FOR A
PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW)
TO ANYONE OTHER THAN (I) RODMAN & RENSHAW, LLC OR AN UNDERWRITER OR A
SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER OR
PARTNER OF RODMAN & RENSHAW, LLC OR OF ANY SUCH UNDERWRITER OR SELECTED
DEALER.

      

      THIS
PURCHASE OPTION IS NOT EXERCISABLE PRIOR TO ________________ [DATE THAT IS SIX MONTHS FROM DATE OF
PROSPECTUS]. VOID AFTER
5:00 P.M. EASTERN TIME, ___________________ [DATE THAT IS FIVE YEARS THE
FROM DATE OF THE PROSPECTUS].

      

      COMMON
STOCK PURCHASE OPTION

      

      For the
Purchase of  Shares of Common Stock

      Of

      CHINA
SHANDONG INDUSTRIES, INC.

      

      1.           Purchase Option. THIS
CERTIFIES THAT, in consideration of funds duly paid by or on behalf of
[_______________]("Holder"), as registered owner of this Purchase Option, to
China Shandong Industries, Inc. (the "Company"), Holder is entitled, at any time
or from time to time from ________________ [DATE THAT IS SIX MONTHS FROM DATE OF
PROSPECTUS] (the "Commencement Date"), and at or before 5:00 p.m., Eastern
Time, ___________________ [DATE THAT IS FIVE YEARS THE FROM DATE OF THE
PROSPECTUS] (the "Expiration Date"), but not thereafter, to subscribe
for, purchase and receive, in whole or in part, up to [____] shares of common
stock of the Company, par value $0.0001 per share (the "Shares") subject to
adjustment as provided in Section 6 hereof. If the Expiration Date is a day on
which banking institutions are authorized by law to close, then this Purchase
Option may be exercised on the next succeeding day which is not such a day in
accordance with the terms herein. During the period ending on the Expiration
Date, the Company agrees not to take any action that would terminate the
Purchase Option. This Purchase Option is initially exercisable at $[________]
per Share (125% of the price of the Shares sold in the Offering); provided,
however, that upon the occurrence of any of the events specified in Section 6
hereof, the rights granted by this Purchase Option, including the exercise price
per Share and the number of Shares to be received upon such exercise, shall be
adjusted as therein specified. The term "Exercise Price" shall mean the initial
exercise price or the adjusted exercise price, depending on the
context.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      2.           Exercise.

      

      2.1           Exercise Form. In
order to exercise this Purchase Option, the exercise form attached hereto must
be duly executed and completed and delivered to the Company, together with this
Purchase Option and payment of the Exercise Price for the Shares being purchased
payable in cash by wire transfer of immediately available funds to an account
designated by the Company or by certified check or official bank check. If the
subscription rights represented hereby shall not be exercised at or before 5:00
p.m., Eastern time, on the Expiration Date, this Purchase Option shall become
and be void without further force or effect, and all rights represented hereby
shall cease and expire.

       

      2.2         Cashless
Exercise.  In
lieu of exercising this Purchase Option by payment of cash or certified check or
official bank check payable to the order of the Company pursuant to Section 2.1
above, Holder may elect to receive the number of Shares equal to the value of
this Purchase Option (or the portion thereof being exercised), by surrender of
this Purchase Option to the Company, together with the exercise form attached
hereto, in which event the issue to Holder, Shares in accordance with the
following formula:

      

      
        
          
            
              	
                      X

                    	
                      =

                    	
                      Y(A-B)

                    
	
                      A

                    

            

          

        

      

      Where,

      

      
        	 
      	
                X

              	
                =

              	
                The
      number of Shares to be issued to Holder;

              
	 
      	
                Y

              	
                =

              	
                The
      number of Shares for which the Purchase Option is being
      exercised;

              
	 
      	
                A

              	
                =

              	
                The
      fair market value of one Share; and

              
	 
      	
                B

              	
                =

              	
                The
      Exercise Price.

              

      

       

      For purposes of this Section 2.2, the
fair market value of a Share is defined as follows:

       

      (i)           if
the Company’s common stock is traded on a securities exchange, the value shall
be deemed to be the average of the closing prices on such exchange or market
over the thirty (30) day period ending three (3) days prior to the date of the
exercise form being submitted in connection with the exercise of the Purchase
Option; or

       

      (ii)          if
the Company’s common stock is actively traded over-the-counter, the value shall
be deemed to be the average of the closing bid prices over the thirty (30) day
period ending three (3) days prior to the date of the exercise form being
submitted in connection with the exercise of the Purchase Option; if there is no
active public market, the value shall be the fair market value thereof, as
determined in good faith by the Company’s Board of Directors.

      

      2.3           Legend. Each
certificate for the securities purchased under this Purchase Option shall
bear a legend as follows unless such securities have been registered under the
Securities Act of 1933, as amended (the "Act"):

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      "The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the "Act") or applicable state law. Neither
the securities nor any interest therein may be offered for sale, sold or
otherwise transferred except pursuant to an effective registration statement
under the Act, or pursuant to an exemption from registration under the Act and
applicable state law which, in the opinion of counsel to the Company, is
available."

      

      3.           Transfer.

      

      3.1           General Restrictions.
The registered Holder of this Purchase Option agrees by his, her or its
acceptance hereof, that such Holder will not: (a) sell, transfer, assign, pledge
or  hypothecate this Purchase Option for a period of one hundred
eighty (180) days following the  Effective Date to anyone other than:
(i) Rodman & Renshaw, LLC ("Rodman & Renshaw") or an underwriter or a
selected dealer participating in the Offering, or (ii) a bona fide officer or
partner of Rodman & Renshaw or of any such underwriter or selected dealer,
in each case in accordance with FINRA Conduct Rule 5110(g)(1), or (b) cause this
Purchase Option or the securities issuable hereunder to be the subject of any
hedging, short sale, derivative, put or call transaction that would result in
the effective economic disposition of this Purchase Option or the securities
hereunder, except as provided for in FINRA Rule 5110(g)(2). On and after 180
days from the Effective Date, transfers to others may be made subject to
compliance with or exemptions from applicable securities laws. In order to make
any permitted assignment, the Holder must deliver to the Company the assignment
form attached hereto duly executed and completed, together with the Purchase
Option and payment of all transfer taxes, if any, payable in connection
therewith. The Company shall within five business days transfer this Purchase
Option on the books of the Company and shall execute and deliver a new Purchase
Option or Purchase Options of like tenor to the appropriate assignee(s)
expressly evidencing the right to purchase the aggregate number of Shares
purchasable hereunder or such portion of such number as shall be contemplated by
any such assignment.

      

      3.2           Restrictions Imposed by the
Act. The securities evidenced by this Purchase Option shall not be
transferred unless and until: (i) the Company has received the opinion of
counsel for the Holder that the securities may be transferred pursuant to an
exemption from registration under the Act and applicable state securities laws,
the availability of which is established to the reasonable satisfaction of the
Company (the Company hereby agreeing that the opinion of Loeb & Loeb LLP
shall be deemed satisfactory evidence of the availability of an exemption), or
(ii) a registration statement or a post-effective amendment to the Registration
Statement relating to the offer and sale of such securities has been filed by
the Company and declared effective by the Securities and Exchange Commission
(the "Commission") and compliance with applicable state securities law has
been established.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      4.           Registration
Rights.

      

      4.1           Demand
Registration.

      

      4.1.1        Grant of Right. The
Company, upon written demand (a "Demand Notice") of the Holder(s) of at least
51% of the Purchase Options and/or the underlying Shares ("Majority Holders"),
agrees to register, on one occasion, all or any portion of the Shares underlying
the Purchase Options (collectively the "Registrable Securities"). On such
occasion, the Company will file a registration statement with the SEC covering
the Registrable Securities within sixty (60) days after receipt of a Demand
Notice and use its reasonable best efforts to have the registration statement
declared effective promptly thereafter, subject to compliance with review by the
SEC; provided, however, that the Company shall not be required to comply with a
Demand Notice if the Company has filed a registration statement with respect to
which the Holder is entitled to piggyback registration rights pursuant to
Section 4.2 hereof and either: (i) the Holder has elected to participate in the
offering covered by such registration statement or (ii) if such registration
statement relates to an underwritten primary offering of securities of the
Company, until the offering covered by such registration statement has been
withdrawn or until thirty (30) days after such offering is consummated. The
demand for registration may be made at any time during a period of four (4)
years beginning one (1) year from the Closing Date. The Company covenants and
agrees to give written notice of its receipt of any Demand Notice by any
Holder(s) to all other registered Holders of the Purchase Options and/or the
Registrable Securities within ten (10) days from the date of the receipt of any
such Demand Notice.

      

      4.1.2        Terms. The Company
shall bear all fees and expenses attendant to the registration of the
Registrable Securities pursuant to Section 4.1.1, but the Holders shall pay any
and all underwriting commissions and the expenses of any legal counsel selected
by the Holders to represent them in connection with the sale of the Registrable
Securities. The Company agrees to use its reasonable best efforts to cause the
filing required herein to become effective promptly and to qualify or register
the Registrable Securities in such States as are reasonably requested by the
Holder(s); provided, however, that in no event shall the Company be required to
register the Registrable Securities in a State in which such registration would
cause: (i) the Company to be obligated to register or license to do business in
such State or submit to general service of process in such State, or (ii) the
principal shareholders of the Company to be obligated to escrow their shares of
capital stock of the Company. The Company shall cause any registration statement
filed pursuant to the demand right granted under Section 4.1.1 to remain
effective for a period of at least twelve consecutive months from the date that
the Holders of the Registrable Securities covered by such registration statement
are first given the opportunity to sell all of suchsecurities. The Holders shall
only use the prospectuses provided by the Company to sell the shares covered by
such registration statement, and will immediately cease to use any prospectus
furnished by the Company if the Company advises the Holder that such prospectus
may no longer be used due to a material misstatement or
omission.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      4.2           "Piggy-Back"
Registration.

      

      4.2.1        Grant of Right. In
addition to the demand right of registration, described in Section 4.1 hereof
the Holder shall have the right, for a period of four (4) years commencing
one(1) year from the Closing Date, to include the Registrable Securities as part
of any other registration of securities filed by the Company (other than in
connection with a transaction contemplated by Rule 145 (a) promulgated under the
Act or pursuant to Form S-8 or any equivalent form); provided, however, that if,
solely in connection with any primary underwritten public offering for the
account of the Company, the managing underwriter(s) thereof shall, in its
reasonable discretion, impose a limitation on the number of shares of Common
Stock which may be included in the Registration Statement because, in such
underwriter(s)' judgment, marketing or other factors dictate such limitation is
necessary to facilitate public distribution, then the Company shall be obligated
to include in such Registration Statement only such limited portion of the
Registrable Securities with respect to which the Holder requested inclusion
hereunder as the underwriter shall reasonably permit. Any exclusion of
Registrable Securities shall be made pro rata among the Holders seeking to
include Registrable Securities in proportion to the number of Registrable
Securities sought to be included by such Holders; provided, however, that the
Company shall not exclude any Registrable Securities unless the Company has
first excluded all outstanding securities, the holders of which are not entitled
to inclusion of such securities in such Registration Statement or are not
entitled to pro rata inclusion with the Registrable Securities.

      

      4.2.2        Terms. The Company
shall bear all fees and expenses attendant to registering the Registrable
Securities pursuant to Section 4.2.1 hereof, but the Holders shall pay any and
all underwriting commissions and the expenses of any legal counsel selected by
the Holders to represent them in connection with the sale of the Registrable
Securities. In the event of such a proposed registration, the Company shall
furnish the then Holders of outstanding Registrable Securities with not less
than thirty (30) days written notice prior to the proposed date of filing of
such registration statement. Such notice to the Holders shall continue to be
given for each registration statement filed by the Company until such time as
all of the Registrable Securities have been sold by the Holder. The holders of
the Registrable Securities shall exercise the "piggy-back" rights provided for
herein by giving written. notice, within ten (10) days of the receipt of the
Company's notice of its intention to file a registration statement.

      

      4.3           General
Terms.

      

      4.3.1        Indemnification. The
Company shall indemnify the Holder(s) of the Registrable Securities to be sold
pursuant to any registration statement hereunder and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or Section 20
(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), against
all loss, claim, damage, expense or liability (including all reasonable
attorneys' fees and other expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may
become subject under the Act, the Exchange Act or otherwise, arising from such
registration statement but only to the same extent and with the same effect as
the provisions pursuant to which the Company has agreed to indemnify the
Underwriters contained in Section 5.1 of the Underwriting Agreement between the
Underwriters and the Company, dated as of [_________________]. The Holder(s) of
the Registrable Securities to be sold pursuant to such registration statement,
and their successors and assigns, shall severally, and not jointly, indemnify
the Company, against all loss, claim, damage, expense or liability (including
all reasonable attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, or their successors
or assigns, in writing, for specific inclusion in such registration statement to
the same extent and with the same effect as the provisions contained in Section
5.2 of the Underwriting Agreement pursuant to which the Underwriters have agreed
to indemnify the Company.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      4.3.2        Exercise of Purchase
Options. Nothing contained in this Purchase Option shall be construed as
requiring the Holder(s) to exercise their Purchase Options prior to or after the
initial filing of any registration statement or the effectiveness
thereof.

      

      4.3.3        Documents Delivered to
Holders. The Company shall furnish to each Holder participating in any of
the foregoing offerings and to each underwriter of any such offering, if any, a
signed counterpart, addressed to such Holder or underwriter, of. (i) an opinion
of counsel to the Company, dated the effective date of such registration
statement (and, if such registration includes an underwritten public offering,
an opinion dated the date of the closing under any underwriting agreement
related thereto), and (ii) a "cold comfort" letter dated the effective date of
such registration statement (and, if such registration includes an underwritten
public offering, a letter dated the date of the closing under the underwriting
agreement) signed by the independent public accountants who have issued a report
on the Company's financial statements included in such registration statement,
in each case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case of
such accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities. The Company shall also deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriter, if any, copies of all
correspondence between the SEC and the Company, its counsel or auditors and all
memoranda relating to discussions with the SEC or its staff with respect to the
registration statement and permit each Holder and underwriter to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of FINRA. Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
as any such Holder shall reasonably request.

      

      4.3.4        Underwriting
Agreement. The Company shall enter into an underwriting agreement with
the managing underwriter(s), if any, selected by any Holders whose Registrable
Securities are being registered pursuant to this Section 4, which managing
underwriter shall be reasonably satisfactory to the Company. Such agreement
shall be reasonably satisfactory in form and substance to the Company, each
Holder and such managing underwriters, and shall contain such representations,
warranties and covenants by the Company and such other terms as are customarily
contained in agreements of that type used by the managing underwriter. The
Holders shall be parties to any underwriting agreement relating to an
underwritten sale of their Registrable Securities and may, at their option,
require that any or all the representations, warranties and covenants of the
Company to or for the benefit of such underwriters shall also be made to and for
the benefit of such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders, their Shares and their
intended methods of distribution.

      

      4.3.5        Documents to be Delivered by
Holder(s). Each of the Holder(s) participating in any of the foregoing
offerings shall furnish to the Company a completed and executed questionnaire
provided by the Company requesting information customarily sought of selling
security holders.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      4.3.6        Damages. Should the
registration or the effectiveness thereof required by Sections 4.1 and 4.2 hereof
be delayed by the Company or the Company otherwise fails to comply with such
provisions, the Holder(s) shall, in addition to any other legal or other relief
available to the Holder(s), be entitled to obtain specific performance or other
equitable (including injunctive) relief against the threatened breach of such
provisions or the continuation of any such breach, without the necessity of
proving actual damages and without the necessity of posting bond or other
security.

      

      5.           New Purchase Options to be
Issued.

      

      5.1           Partial Exercise or
Transfer. Subject to the restrictions in Section 3 hereof, this Purchase
Option may be exercised or assigned in whole or in part. In the event of the
exercise or assignment hereof in part only, upon surrender of this Purchase
Option for cancellation, together with the duly executed exercise or assignment
form and funds sufficient to pay any Exercise Price and/or transfer tax if
exercised pursuant to Section 2.1 hereto, the Company shall cause to be
delivered to the Holder without charge a new Purchase Option of like tenor to
this Purchase Option in the name of the Holder evidencing the right of the
Holder to purchase the number of Shares purchasable hereunder as to which this
Purchase Option has not been exercised or assigned.

      

      5.2           Lost Certificate.
Upon receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Purchase Option and of reasonably satisfactory
indemnification or the posting of a bond, the Company shall execute and deliver
a new Purchase Option of like tenor and date. Any such new Purchase Option
executed and delivered as a result of such loss, theft, mutilation or
destruction shall constitute a substitute contractual obligation on the part of
the Company.

      

      6.           Adjustments.

      

      6.1           Adjustments to Exercise
Price and Number of Securities. The Exercise Price and the number of
Shares underlying the Purchase Option shall be subject to adjustment from time
to time as hereinafter set forth:

       

      6.1.1        Share Dividends; Split
Ups. If after the date hereof, and subject to the provisions of Section
6.3 below, the number of outstanding Shares is increased by a stock dividend
payable in Shares or by a split up of Shares or other similar event, then, on
the effective day thereof, the number of Shares purchasable hereunder shall be
increased in proportion to such increase in outstanding shares, and the Exercise
Price shall be proportionately increased.

      

      6.1.2        Aggregation of
Shares. If after the date hereof, and subject to the provisions of
Section 6.3, the number of outstanding Shares is decreased by a consolidation,
combination or reclassification of Shares or other similar event, then, on the
effective date thereof, the number of Shares purchasable hereunder shall be
decreased in proportion to such decrease in outstanding shares.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      6.1.3        Replacement of Securities
upon Reorganization, etc. In case of any reclassification or
reorganization of the outstanding Shares other than a change covered by Section
6.1.1 or 6.1.2 hereof or that solely affects the par value of such Shares, or in
the case of any share reconstruction or amalgamation or consolidation of the
Company with or into another corporation (other than a consolidation or share
reconstruction or amalgamation in which the Company is the continuing
corporation and that does not result in any reclassification or reorganization
of the outstanding Shares), or in the case of any sale or conveyance to another
corporation or entity of the property of the Company as an entirety or
substantially as an entirety in connection with which the Company is dissolved,
the Holder of this Purchase Option shall have the right thereafter (until the
expiration of the right of exercise of this Purchase Option) to receive upon the
exercise hereof, for the same aggregate Exercise Price payable hereunder
immediately prior to such event, the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such reclassification,
reorganization, share reconstruction or amalgamation, or consolidation, or upon
a dissolution following any such sale or transfer, by a Holder of the number of
Shares of the Company obtainable upon exercise of this Purchase Option
immediately prior to such event; and if any reclassification also results in a
change in Shares covered by Section 6.1.1 or 6.1.2, then such adjustment shall
be made pursuant to Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions
of this Section 6.1.3 shall similarly apply to successive reclassifications,
reorganizations, share reconstructions or amalgamations, or consolidations,
sales or other transfers.

      

      6.1.4        Changes in Form of Purchase
Option. This form of Purchase Option need not be changed because of any
change pursuant to this Section 6.1, and Purchase Options issued after such
change may state the same Exercise Price and the same number of Shares as are
stated in the Purchase Options initially issued pursuant to this Agreement. The
acceptance by any Holder of the issuance of new Purchase Options reflecting a
required or permissive change shall not be deemed to waive any rights to an
adjustment occurring after the Commencement Date or the computation
thereof.

      

      6.2           Substitute Purchase
Option. In case of any consolidation of the Company with, or share
reconstruction or amalgamation of the Company with or into, another corporation
(other than a consolidation or share reconstruction or amalgamation which does
not result in any reclassification or change of the outstanding Shares), the
corporation formed by such consolidation or share reconstruction or amalgamation
shall execute and deliver to the Holder a supplemental Purchase Option providing
that the holder of each Purchase Option then outstanding or to be outstanding
shall have the right thereafter (until the stated expiration of such Purchase
Option) to receive, upon exercise of such Purchase Option, the kind and amount
of shares of stock and other securities and property receivable upon such
consolidation or share reconstruction or amalgamation, by a holder of the number
of Shares of the Company for which such Purchase Option might have been
exercised immediately prior to such consolidation, share reconstruction or
amalgamation, sale or transfer. Such supplemental Purchase Option shall provide
for adjustments which shall be identical to the adjustments provided for in this
Section 6. The above provision of this Section shall similarly apply to
successive consolidations or share reconstructions or
amalgamations.

      

      6.3           Elimination of Fractional
Interests. The Company shall not be required to issue certificates
representing fractions of Shares upon the exercise of the Purchase Option, nor
shall it be required to issue scrip or pay cash in lieu of any fractional
interests, it being the intent of the parties that all fractional interests
shall be eliminated by rounding any fraction up or down, as the case may be, to
the nearest whole number of Shares or other securities, properties or
rights.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      7.           Reservation and
Listing. The Company shall at all times reserve and keep available out of
its authorized Shares, solely for the purpose of issuance upon exercise of the
Purchase Options, such number of Shares or other securities, properties or
rights as shall be issuable upon the exercise thereof. The Company covenants and
agrees that, upon exercise of the Purchase Options and payment of the Exercise
Price therefore, in accordance with the terms hereby, all Shares and other
securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any shareholder.
The Company further covenants and agrees that upon exercise of the Purchase
Options and payment of the exercise price therefore, all Shares and other
securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any shareholder.
As long as the Purchase Options shall be outstanding, the Company shall use its
commercially reasonable efforts to cause all Shares issuable upon exercise of
the Purchase Options to be listed (subject to official notice of issuance) on
all securities exchanges (or, if applicable on the Nasdaq Global Market, Capital
Market, OTC Bulletin Board or any successor trading market) on which the Shares
issued to the public in the Offering may then be listed and/or
quoted.

      

      8.           Certain Notice
Requirements.

      

      8.1           Holder's Right to Receive
Notice. Nothing herein shall be construed as conferring upon the Holders
the right to vote or consent or to receive notice as a shareholder for the
election of directors or any other matter, or as having any rights whatsoever as
a shareholder of the Company. If, however, at any time prior to the expiration
of the Purchase Options and their exercise, any of the events described in
Section 8.2 shall occur, then, in one or more of said events, the Company shall
give written notice of such event at least fifteen days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the shareholders entitled to such dividend, distribution, conversion or
exchange of securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of the closing of the transfer books, as the case
may be. Notwithstanding the foregoing, the Company shall deliver to each Holder
a copy of each notice given to the other shareholders of the Company at the same
time and in the same manner that such notice is given to the
shareholders.

      

      8.2           Events Requiring
Notice. The Company shall be required to give the notice described in
this Section 8 upon one or more of the following events: (i) if the Company
shall take a record of the holders of its Shares for the purpose of entitling
them to receive a dividend or distribution payable otherwise than in cash, or a
cash dividend or distribution payable otherwise than out of retained earnings,
as indicated by the accounting treatment of such dividend or distribution on the
books of the Company, (ii) the Company shall offer to all the holders of its
Shares any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefore, or (iii) a dissolution,
liquidation or winding up of the Company(other than in connection with a
consolidation or share reconstruction or amalgamation) or a sale of all or
substantially all of its property, assets and business shall be
proposed.

      

      8.3           Notice of Change in Exercise
Price. The Company shall, promptly after an event requiring a change in
the Exercise Price pursuant to Section 6 hereof, send notice to the Holders of
such event and change ("Price Notice"). The Price Notice shall describe the
event causing the change and the method of calculating same and shall be
certified as being true and accurate by the Company's Chief Financial
Officer.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      8.4           Transmittal of
Notices. All notices, requests, consents and other communications under
this Purchase Option shall be in writing and shall be deemed to have been duly
made when hand delivered, or mailed by express mail or private courier service:
(i) if to the registered Holder of the Purchase Option, to the address of such
Holder as shown on the books of the Company, or (ii) if to the Company, to
following address or to such other address as the Company may designate by
notice to the Holders:

      

      Jinliang
Li

      China
Shandong Industries, Inc.

      No. 2888
Qinghe Road

      Development
Zone Cao County

      Shandong
Province, 274400 China

      

      With a
copy to:

      

      Lawrence
G. Nusbaum

      Gusrae,
Kaplan, Bruno & Nusbaum PLLC

      120 Wall
Street, 11th Floor

      New York,
New York 10005

      

      9.           Miscellaneous.

      

      9.1           Amendments. The
Company and Rodman & Renshaw may from time to time supplement or amend this
Purchase Option without the approval of any of the Holders in order to cure any
ambiguity, to correct or supplement any provision contained herein that may be
defective or inconsistent with any other provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder that the Company
and Rodman & Renshaw may deem necessary or desirable and that the Company
and Rodman & Renshaw deem shall not adversely affect the interest of the
Holders. All other modifications or amendments shall require the written consent
of and be signed by the party against whom enforcement of the modification or
amendment is sought.

      

      9.2           Headings. The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any of
the terms or provisions of this Purchase Option.

      

      9.3.          Entire Agreement.
This Purchase Option (together with the other agreements and documents being
delivered pursuant to or in connection with this Purchase Option) constitutes
the entire agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.

      

      9.4           Binding Effect. This
Purchase Option shall inure solely to the benefit of and shall be binding upon,
the Holder and the Company and their permitted assignees, respective successors,
legal representative and assigns, and no other person shall have or be construed
to have any legal or equitable right, remedy or claim under or in respect of or
by virtue of this Purchase Option or any provisions herein
contained.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      9.5           Governing Law; Submission to
Jurisdiction. This Purchase Option shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without giving
effect to conflict of laws principles thereof. The Company hereby agrees that
any action, proceeding or claim against it arising out of, or relating in any
way to this Purchase Option shall be brought and enforced in the New York
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company hereby waives any objection
to such exclusive jurisdiction and that such courts represent an inconvenient
forum. Any process or summons to be served upon the Company may be served by
transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
8 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the Company in any action, proceeding or claim. The Company and the
Holder agree that the prevailing party(ies) in any such action shall be entitled
to recover from the other party(ies) all of its reasonable attorneys' fees and
expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefore.

      

      9.6           Waiver, etc. The
failure of the Company or the Holder to at any time enforce any of the
provisions of this Purchase Option shall not be deemed or construed to be a
waiver of any such provision, nor to in any way affect the validity of this
Purchase Option or any provision hereof or the right of the Company or any
Holder to thereafter enforce each and every provision of this Purchase Option.
No waiver of any breach, non-compliance or non-fulfillment of any of the
provisions of this Purchase Option shall be effective unless set forth in a
written instrument executed by the party or parties against whom or which
enforcement of such waiver is sought; and no waiver of any such breach,
non-compliance or non-fulfillment shall be construed or deemed to be a waiver of
any other or subsequent breach, non-compliance or non-fulfillment.

      

      9.7           Execution in
Counterparts. This Purchase Option may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto. Such counterparts may be delivered by
facsimile transmission or other electronic transmission.

      

      9.8           Exchange Agreement.
As a condition of the Holder's receipt and acceptance of this Purchase Option,
Holder agrees that, at any time prior to the complete exercise of this Purchase
Option by Holder, if the Company and Rodman & Renshaw enter into an
agreement ("Exchange Agreement") pursuant to which they agree that all
outstanding Purchase Options will be exchanged for securities or cash or a
combination of both, then Holder shall agree to such exchange and become a party
to the Exchange Agreement.

      

      [Remainder
of page deliberately left blank.]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the Company has caused this Purchase Option to be signed by its
duly authorized officer as of the ____ day of _______, 20___.

      

      
        
          
            
              	
                      CHINA
      SHANDONG INDUSTRIES, INC.

                    
	 
      	 
      	 
      
	
                      By:

                    	 
      	 
      
	
                      Name: 

                    	 
      	 
      
	
                      Title:

                    	 
      	 
      

            

          

        

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      [Form to be used to exercise
Purchase Option:

      

      Date:                  ,                      20___

      

      The
undersigned hereby elects irrevocably to exercise the Purchase Option for [___]
Shares of China Shandong
Industries, Inc. and hereby makes payment of $[_________] (at the rate of
$[___________] per Share) in payment of the Exercise Price pursuant thereto.
Please issue the Shares as to which this Purchase Option is exercised in
accordance with the instructions given below and, if applicable, a new Purchase
Option representing the number of Shares for which this Purchase Option has not
been exercised.

      

      or

      

      The
undersigned hereby elects irrevocably to convert its right to purchase [___]
Shares under the Purchase Option for [___] Shares, as determined in accordance
with the following formula:

      

      
        
          
            	
                    X

                  	
                    =

                  	
                    Y(A-B)

                  
	
                    A

                  

          

        

      

      Where,

      

      
        	 
      	
                X

              	
                =

              	
                The
      number of Shares to be issued to Holder;

              
	 
      	
                Y

              	
                =

              	
                The
      number of Shares for which the Purchase Option is being
      exercised;

              
	 
      	
                A

              	
                =

              	
                The
      fair market value of one Share which is equal to $[____];
    and

              
	 
      	
                B

              	
                =

              	
                The
      Exercise Price which is equal to $[_____] per
  share

              

      

      

      The
undersigned agrees and acknowledges that the calculation set forth above is
subject to confirmation by the Company and any disagreement with respect to the
calculation shall be resolved by the Company in its sole
discretion.

      

      Please
issue the Shares as to which this Purchase Option is exercised in accordance
with the instructions given below and, if applicable, a new Purchase Option
representing the number of Shares for which this Purchase Option has not been
converted.

      

      Signature

      

      Signature
Guaranteed

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      INSTRUCTIONS
FOR REGISTRATION OF SECURITIES

      

      Name:

       

      (Print in
Block Letters)

       

      Address:

      

      NOTICE:
The signature to this form must correspond with the name as written upon the
face of the Purchase Option without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a
trust company or by a firm having membership on a registered national securities
exchange.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Form to
be used to assign Purchase Option:

       

      ASSIGNMENT

      

      (To be
executed by the registered Holder to effect a transfer of the within Purchase
Option):

      

      FOR VALUE
RECEIVED,       does hereby sell, assign and
transferunto the right to purchaseShares of China Shandong Industries,
Inc. ("Company") evidenced by
the Purchase Option and does hereby authorize the Company to transfer such right
on the books of the Company.

      

      Dated:         ,
20__

      

      Signature

      

      Signature
Guaranteed

      

      NOTICE:
The signature to this form must correspond with the name as written upon the
face of the within Purchase Option without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank, other than a savings bank,
or by a trust company or by a firm having membership on a registered national
securities exchange.Exhibit
10.1

     

    THIRD AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT

     

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

     

    ARTICLE 1
- DEFINITIONS

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      Level

                                    	 	
                                      Debt to EBITDARS

                                    	 	
                                      Revolving Line 

                                      Facility*

                                    	 	
                                      Other Facilities

                                    
	
                                      I

                                    	 	
                                      ≥
      3.25 to 1

                                    	 	
                                      3.50%

                                    	 	
                                      3.75%

                                    
	
                                      II

                                    	 	
                                      ≥
      2.75 to 1 and < 3.25 to 1

                                    	 	
                                      3.25%

                                    	 	
                                      3.50%

                                    
	
                                      III

                                    	 	
                                      ≥ 2.25 to 1 and < 2.75 to 1

                                    	 	
                                      3.00%

                                    	 	
                                      3.25%

                                    
	
                                      IV

                                    	 	
                                      ≥
      1.75 to 1 and < 2.25 to 1

                                    	 	
                                      2.75%

                                    	 	
                                      3.00%

                                    
	
                                      V

                                    	 	
                                      <
      1.75 to 1

                                    	 	
                                      2.25%

                                    	 	
                                      2.50%

                                    

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      	
               
      

            	
              *

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

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    The
Applicable Margin shall be fixed at Level II for a six month period from the
date of this Agreement.  Effective on the tenth (10th) day following
the date on which the Borrower’s QCC Sheet is required to be delivered to the
Lender pursuant to Section 15.4 for the quarterly accounting period ending
on July 1, 2011, the Applicable Margin will be adjusted based upon the Debt to
EBITDARS ratio shown therein.  Thereafter, changes, if any, in the
Level applicable to Loans will be effective on the tenth (10th) day following
each date on which the Borrower’s QCC Sheet is required to be delivered to the
Lender pursuant to Section 15.4, based upon the Debt to EBITDARS ratio
shown therein.  In the event that any QCC Sheet is not delivered by
the date required, pricing will revert to Level I until the tenth (10th) day
following the date of delivery of the delayed QCC Sheet, on which tenth day
pricing will be adjusted to the applicable level shown by the QCC
Sheet.  Upon the occurrence of a Default or Event of Default, the
Applicable Margin shall immediately be adjusted to Level I and no reduction
shall occur thereafter unless the Default is cured, or if the Default is also an
Event of Default, the Event of Default is waived in writing by the
Lender.

     

    “Applicable Unused Fee” means
the per annum rate (calculated based upon days elapsed over a 360 day year)
shown in the table below based on the applicable Debt to EBITDARS Ratio,
calculated for Borrower on a consolidated basis and without duplication in
accordance with GAAP:

     

    
      
        
          
            
              
                
                  	
                          Level

                        	 	
                          Debt to EBITDARS

                        	 	
                          Unused Fee

                        
	
                          I

                        	 	
                          ≥
      3.25 to 1

                        	 	
                          0.500%

                        
	
                          II

                        	 	
                          ≥
      2.75 to 1 and < 3.25 to 1

                        	 	
                          0.375%

                        
	
                          III

                        	 	
                          ≥ 2.25 to 1 and < 2.75 to 1

                        	 	
                          0.250%

                        
	
                          IV

                        	 	
                          ≥
      1.75 to 1 and < 2.25 to 1

                        	 	
                          0.250%

                        
	
                          V

                        	 	
                          <
      1.75 to 1

                        	 	
                          0.125%

                        

                

              

            

          

        

      

    

    The
Applicable Unused Fee shall be fixed at Level II for a six month period from the
date of this Agreement.  Effective on the tenth (10th) day following
the date on which the Borrower’s QCC Sheet is required to be delivered to the
Lender pursuant to Section 15.4 for the quarterly accounting period ending
on July 1, 2011, the Unused Fee will be adjusted based upon the Debt to EBITDARS
ratio shown therein.  Thereafter, changes, if any, in the Level
applicable will be effective on the tenth (10th) day following each date on
which the Borrower’s QCC Sheet is required to be delivered to the Lender
pursuant to Section 15.4, based upon the Debt to EBITDARS ratio shown
therein.  In the event that any QCC Sheet is not delivered by the date
required, the unused fee will revert to Level I until the tenth (10th) day
following the date of delivery of the delayed QCC Sheet, on which tenth day the
unused fee will be adjusted to the applicable level shown by the QCC
Sheet.  Upon the occurrence of a Default or Event of Default, the
unused fee shall immediately be adjusted to Level I and no reduction shall occur
thereafter unless the Default is cured, or if the Default is also an Event of
Default, the Event of Default is waived in writing by the
Lender.

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

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

     

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

     

    “Borrowing Base” means the sum
of the following:

     

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

     

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

     

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

     

    “Breakage Costs” means amounts
covered by Section 10.6.

     

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

     

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

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

     

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

     

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

     

    “Celmet” means Celmet Co.,
Inc.

     

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

     

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

     

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

     

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

     

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

     

    “Closing Date” means the date
of this Agreement.

     

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

     

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

     

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

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (d)           obligations
as lessee under capital leases;

     

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

     

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

     

    (g)           obligations
under acceptance facilities;

     

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

    
      
         

      

      
        - 5
-

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “EBITDA” for the applicable
period, Net Income plus interest expense, Tax expense, depreciation and
amortization of intangible assets, all on a consolidated basis and determined in
accordance with GAAP on a consistent basis.

     

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

    
      
         

      

      
        - 6
-

        
          

        

      

      
         

      

    

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

    
      
         

      

      
        - 7
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    “Eligible Inventories” means
inventory owned by a Credit Party (“Inventory”) which has been
identified and described to the Lender’s reasonable satisfaction, and is
represented by the Borrower as meeting all of the following criteria on the date
any Revolving Credit Loan based thereon is outstanding:  (a) a
Credit Party is the sole owner of the Inventory, none of the Inventory is being
held or shipped by such Credit Party on a consignment or approval basis, such
Credit Party has not sold, assigned or otherwise transferred all or any portion
thereof, and none of the Inventory is subject to any claim, lien, or security
interest other than in favor of Lender; (b) if any of the Inventory is
represented or covered by any document of title, instrument or chattel paper, a
Credit Party is the sole owner of all such documents, instruments, and chattel
paper, all of which are in the possession of such Credit Party, none thereof has
been sold, assigned, or otherwise transferred, and none thereof is subject to
any claim, lien or security interest other than in favor of Lender; and
(c) the Inventory consists of saleable non-obsolete, commodity type raw
materials that are earmarked for specific orders or long-term customer forecasts
and is not excess as shown on the Borrower’s Excess Stock Report or determined
by the Lender’s collateral audits, and finished goods manufactured or acquired
by a Credit Party in the ordinary course of such Credit Party’s business, as
conducted on the date hereof, subject to its contract or sole possession and
located in places where Credit Parties maintain, or will maintain, Inventory,
and at locations for which landlord or bailee waivers in form and substance
acceptable to Lender have been executed and delivered by such landlord or bailee
to Lender; and any Inventory which the Lender in the good faith exercise of its
sole discretion from time to time has deemed to be ineligible because the Lender
otherwise considers the collateral value to the Lender to be impaired or its
ability to realize such value to be insecure.

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        - 8
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    “Environmental Permits” means
all licenses, permits, approvals, authorizations, consents or registrations
required by any applicable Environmental Laws and all applicable judicial and
administrative orders in connection with ownership, lease, purchase, transfer,
closure, use and/or operation of the Improvements and/or as may be required for
the storage, treatment, generation, transportation, processing, handling,
production or disposal of Hazardous Substances.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (a)           EBITDA,
minus

     

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

     

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

    
      
         

      

      
        - 9
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    (d)           all
principal payments (whether scheduled, voluntary prepayments, or mandatory
prepayments) of Debt other than Revolving Credit Loans, minus

     

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

     

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

     

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

     

    (h)           non-cash stock
compensation expense.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        - 10
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    “Fixed Rate Loan” means any
Loan when and to the extent that the interest rate for such Loan is determined
by reference to a Fixed Rate.

     

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

     

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

     

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

     

    “GTC” means General Technology
Corporation.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        - 11
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    “IECW&C” means IEC
Electronics Wire and Cable, Inc., formerly known as Val-U-Tech,
Inc.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        - 12
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    “Lender” means Manufacturers
and Traders Trust Company, and its successors, legal representatives, and
assigns.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        - 13
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    “Loan Documents” means the
Agreement, the Notes, the Security Documents, all documents and agreements
related to the M&T Sale-Leaseback, and all other agreements, documents and
certificates executed with or in favor of the Lender in connection with the
Agreement (including any predecessor agreement) or any amendment to the
Agreement or to any other Loan Document.

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        - 14
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    “Mortgage Secured Term Loan”
means the $4,000,000 aggregate original outstanding principal balance term loan
described in Article 7 hereof.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (c)           net
earnings or losses of any Subsidiary of Borrower accrued prior to the date it
became a Subsidiary;

    
      
         

      

      
        - 15
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    (d)           net
earnings or losses of any Person, substantially all the assets of which have
been acquired in any manner by Borrower, realized by such Person prior to the
date of such acquisition;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Permitted Debt” means Debt
described in Section 14.1.

    
      
         

      

      
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    “Permitted Liens” means the
following Liens:

     

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

     

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

     

    (c)           pledges
or deposits under workers’ compensation, unemployment insurance and other social
security legislation;

     

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

     

    (e)           Liens
in favor of Lender; and

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

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

     

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

     

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

     

    “Prior Closing Date” means
July 30, 2010.

     

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

     

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

     

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

    
      
         

      

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

     

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

     

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

     

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

     

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

     

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

     

    “SCB” means CSCB,
Inc.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        - 19
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    “Trademark Security
Agreements” means the Trademark Collateral Security and Pledge Agreement
listed on Schedule 1.1(A),
and any similar document delivered by any Credit Party, as amended, modified or
restated from time to time.

     

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

     

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

     

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

     

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

     

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

     

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

     

    (e)           words
importing gender include the other gender,

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
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    ARTICLE 2
- REVOLVING CREDIT FACILITY

     

    2.1           Revolving Credit
Commitment.  The
Lender agrees, subject to Section 2.2 and the other terms and conditions
hereinafter set forth, to make Revolving Credit Loans to the Borrower from time
to time during the period from the Closing Date up to but not including the
Revolving Credit Termination Date in an aggregate principal amount not to exceed
at any time outstanding the amount of $20,000,000 (the “Revolving Credit
Commitment”).  During the period from the Closing Date to the
Revolving Credit Termination Date, within the limits of the Revolving Credit
Commitment and subject to Section 2.2, the Borrower may borrow, prepay
pursuant to Section 2.5, and reborrow under this
Section 2.1.  Except as otherwise provided in this Agreement, the
Revolving Credit Loans will be outstanding as LIBOR Loans.

     

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

     

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

     

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

     

    2.3           Interest.

     

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

     

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

     

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

    
      
         

      

      
        - 21
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    (b)           After
any conversion to a Base Rate Loan, interest shall accrue on the Base Rate Loan
from and including the first date a Loan becomes a Base Rate Loan to, but not
including, the day such Base Rate Loan is paid in full or converted back to a
LIBOR Loan, at the rate per annum equal to the Base Rate.  Any change
in the Base Rate shall be effective on the date of such change.

     

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

     

    2.5           Payments.

     

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

     

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

     

    (c)           All
Revolving Credit Loans shall be repaid in full on the Revolving Credit
Termination Date.

     

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

     

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

     

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

    
      
         

      

      
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    ARTICLE 3
- 2008 TERM LOAN FACILITY

     

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

     

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

     

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

     

    3.4          Interest.

     

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

     

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

     

    ARTICLE 4
- ENERGY LOAN

     

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

     

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

     

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

     

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

     

    
      
         

      

      
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    ARTICLE 5
- EQUIPMENT LINE OF CREDIT FACILITY

     

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

     

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

     

    5.3          Interest.

     

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

     

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

     

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

    
      
         

      

      
        - 24
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    (i)           for
LIBOR Loans other than Daily LIBOR Loans, (A) for new LIBOR Loans, two (2)
LIBOR Business Days before the Draw Date; (B) for continuations of and
conversions to LIBOR Loans, the LIBOR Business Day the Lender receives (or is
deemed to receive) the required Notice in accordance with the terms of this
Agreement; (C) for LIBOR Loans where the Automatic Continuation Option is
in effect, the applicable Automatic Adjustment Rate Determination Date for such
LIBOR Loan, and

     

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

     

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

     

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

     

    5.5          Payments.

     

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

     

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

     

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

     

    ARTICLE 6
- GTC TERM LOAN FACILITY

     

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

     

    
      
         

      

      
        - 25
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    6.2          Interest.

     

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

     

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

     

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

     

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

     

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

     

    6.3          Payments on GTC Term
Loan.

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
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    ARTICLE 7
- MORTGAGE SECURED TERM LOAN FACILITY

     

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

     

    7.2          Interest.

     

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

     

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

     

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

     

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

     

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

     

    7.3          Payments on Mortgage Secured
Term Loan.

     

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

     

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

     

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

    
      
         

      

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

     

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

     

    ARTICLE 8
- CELMET TERM LOAN

     

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

     

    8.2          Interest.

     

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

     

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

     

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

     

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

     

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

    8.3          Payments on Celmet Term
Loan.

     

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

    
      
         

      

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

     

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

     

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

     

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

     

    ARTICLE 9
- SCB TERM LOAN

     

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

     

    9.2          Interest.

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
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    9.3          Payments on SCB Term
Loan.

     

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

     

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

     

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

     

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

     

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

     

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

     

    ARTICLE
10 - CERTAIN GENERAL PROVISIONS

     

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

     

    (a)          General
Requirements.

     

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

     

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

    
      
         

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (e)          Notice of
Continuation.

     

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

     

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

    
      
         

      

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

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

     

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

     

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

     

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

    
      
         

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

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

     

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

     

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

     

    10.12      Prepayments.

     

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

     

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

     

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

     

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

    
      
         

      

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

     

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

     

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

     

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

     

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

     

    ARTICLE
11 - REPRESENTATIONS OF BORROWER

     

    The
Borrower represents and warrants to the Lender as follows:

     

    11.1        Organization and
Power.

     

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

     

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

    
      
         

      

      
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    11.2        Proceedings of
Borrower.

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
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    11.6        Financial Statements and
Condition.

     

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

     

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

     

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

     

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

    
      
         

      

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

     

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

     

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

     

    11.12      Compliance With
Law.

     

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

     

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

     

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

    
      
         

      

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

     

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

     

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

     

    11.16      Governmental
Contracts.

     

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

     

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

     

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

    
      
         

      

      
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    (d)          (i) Neither
any of the Credit Parties or any of their respective directors or officers is
(or during the last five (5) years has been) under civil investigation by the
United States Department of Justice or a state attorney general or under
criminal investigation by any Governmental Authority, or is under indictment by
any Governmental Authority with respect to any irregularity, misstatement or
omission arising under or relating to any activities of the Credit Parties under
a government contract and (ii) during the last five (5) years, none of the
Credit Parties has made a voluntary disclosure to the United States Government
with respect to any irregularity, misstatement or omission arising under or
relating to a government contract, except, in each case, for any such
investigation, indictment, voluntary disclosure, irregularity, misstatement or
omission which, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

     

    (e)          There
exist (i) no outstanding material claims against the Credit Parties, either
by the United States Government or by any prime contractor, subcontractor,
vendor or other third party, arising under or relating to any government
contract and (ii) no disputes between any of the Credit Parties and the
United States Government under the Contract Disputes Act or any other Federal
statute or between any of the Credit Parties and any prime contractor,
subcontractor or vendor arising under or relating to any government contract,
which, either individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.

     

    (f)          None
of the Credit Parties or any of their respective directors, officers, owners,
partners, or to the knowledge of the foregoing, employees, is (or during the
last five (5) years has been) suspended or debarred from doing business with the
United States Government or is (or during such period was) the subject of a
finding of non-responsibility or ineligibility for United States Government
contracting.

     

    (g)          No
notice of suspension, debarment, cure notice, show cause notice or notice of
termination for default is in effect which, either individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
has been issued by the United States Government to any of the Credit Parties and
none of the Credit Parties is a party to any pending, or to the Borrower’s
knowledge threatened, suspension, debarment, termination for default issued by
the United States Government or other adverse United States Government action or
proceeding in connection with any contract with the United States Government
which, either individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.

     

    (h)          No
cost incurred pertaining to any government contract of any of the Credit Parties
has been disallowed by the United States Government or any of its agencies or,
to the knowledge of any of the Credit Parties, is the subject of any
investigation or which, either individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.

     

    (i)           On
the date hereof the cost accounting systems and government property management
systems with respect to the material government contracts of the Credit Parties
comply in all material respects with the applicable cost accounting standards
set forth in FAR Sections 30 and 45 respectively.

    
      
         

      

      
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    11.17      ERISA.  Except
as set forth on Schedule 11.17:

     

    (a)          Identification of
Plans.  (i) Neither any Credit Party, nor any ERISA
Affiliate, maintains or contributes to, or has maintained or contributed to, any
Plan that is an ERISA Plan, and (ii) none of the Credit Parties and their
ERISA Affiliates maintains or contributes to, or have maintained or contributed
to, any Plan that is an Executive Arrangement, except, in both cases, Plans that
are adopted after the Closing Date and either have been disclosed in writing to
the Lender or have been disclosed in Borrower’s SEC filings.

     

    (b)          Compliance.  Each
Plan has at all times been maintained, by its terms and in operation, in
accordance with all applicable laws, except such noncompliance (when taken as a
whole) that will not have a Material Adverse Effect.

     

    (c)          Liabilities.  Neither
any of the Credit Parties, nor any ERISA Affiliate, is currently, or has in the
last six (6) years been, obligated to make contributions (directly or
indirectly) to a Multiemployer Plan, and none of the Credit Parties or ERISA
Affiliates is currently subject to any liability (including withdrawal
liability), tax or penalty whatsoever to any person whomsoever with respect to
any Plan including, but not limited to, any tax, penalty or liability arising
under Title I or Title IV or ERISA or Chapter 43 of the Internal Revenue Code,
except such liabilities (when taken as a whole) as will not have a Material
Adverse Effect.

     

    (d)          Funding.  Each
Credit Party and each ERISA Affiliate has made full and timely payment of all
amounts (i) required to be contributed under the terms of each Plan and
applicable law and (ii) required to be paid as expenses of each
Plan.  No Plan has an “amount of unfunded benefit liabilities” (as
defined in Section 4001(a)(18) of ERISA).

     

    11.18      Employment and Labor
Relations.  None
of the Credit Parties is engaged in any unfair labor practice that could
reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect.  There is (i) no unfair labor practice
complaint pending against any of the Credit Parties or, to the knowledge of the
Borrower, threatened against any of them, before the National Labor Relations
Board, and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against any of the Credit Parties
or, to the knowledge of the Borrower, threatened against any of them,
(ii) no strike, labor dispute, slowdown or stoppage pending against any of
the Credit Parties or, to the knowledge of the Borrower, threatened against any
of the Credit Parties, (iii) no union representation question existing with
respect to the employees of any of the Credit Parties, (iv) no equal
employment opportunity charges or other claims of employment discrimination
pending or, to the Borrower’s knowledge, threatened against any of the Credit
Parties, (v) no wage and hour department investigation which has been made
of any of the Credit Parties, except (with respect to any matter specified in
clauses (i) through (v) above, either individually or in the aggregate) such as
could not reasonably be expected to have a Material Adverse Effect, and
(vi) the Credit Parties have in place all current affirmative action plans
applicable to their respective business operations and are in material
compliance with all laws and regulations governing such affirmative action
plans, including, without limitation, compliance with the terms set forth in
such plans.

    
      
         

      

      
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    11.19      Security
Documents.  The
Security Documents are effective to create in favor of the Lender legal, valid
and enforceable (subject to bankruptcy and creditors’ rights generally) security
interests in all non-real estate property and assets of the Credit Parties, all
of which are part of the Collateral.  When (i) financing
statements in appropriate form are filed in the applicable offices required by
the Uniform Commercial Code and (ii) upon the taking of possession or
control by the Lender of any Collateral in which a security interest may be
perfected only by possession or control (which possession or control shall be
given to the Lender to the extent possession or control by the Lender is
required by the Security Documents), the Lender shall have a fully perfected
first priority Lien on, and security interest in, all right, title and interest
of the Credit Parties in the Collateral to the extent such Lien and security
interest can be perfected by the filing of a financing statement pursuant to the
UCC or by possession or control by the Lender, in each case prior and superior
in right to any other Person, other than any holder of Permitted
Liens.  Without limitation to the foregoing, no consent of any Person
including any other general or limited partner, any other member of a limited
liability company, any other shareholder or any other trust beneficiary is
necessary in connection with the creation, perfection or first priority status
of the security interest of the Lender in any equity interests pledged to the
Lender under the Security Documents or the exercise by the Lender of the voting
or other rights provided for in the Security Documents or the exercise of
remedies in respect thereof.

     

    11.20      Disclosure.  Neither
this Agreement, any Loan Document nor any other document, certificate or
statement furnished to the Lender by or on behalf of any Credit Party in
connection herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading, if, in either case, such fact is material to an
understanding of the financial condition, performance or prospects of the Credit
Parties, taken as a whole or their business or operations, taken as a whole, or
the ability of the Credit Parties to fulfill their obligations under this
Agreement or under any Loan Documents to which they are parties.

     

    ARTICLE
12 - CONDITIONS OF LENDING

     

    12.1        Loans.  The
following conditions must be satisfied before the Lender shall have any
obligation to make Loans on the Closing Date under this Agreement:

     

    (a)          Performance.  Borrower
shall have performed and complied with all agreements and conditions required to
be performed or complied with by it prior to or at the time each Loan is
made.

     

    (b)          Opinion of Counsel.
As of the Closing Date, the Credit Parties shall have delivered to the Lender a
favorable opinion of their counsel, in form and substance satisfactory to the
Lender.

     

    (c)          Documents to be
Delivered.  Borrower shall have executed and delivered or have
caused to be executed and delivered to the Lender all Loan Documents in form and
substance satisfactory to Lender, and all Loan Documents shall be in full force
and effect.

    
      
         

      

      
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    (d)          Certified
Resolutions.  As of the Closing Date the Borrower and each
Guarantor shall have delivered a certificate of its corporate secretary
certifying (i) resolutions duly adopted by its Board of Directors
authorizing the SCB Transaction, in the case of Borrower and SCB only, and the
execution, delivery and performance of the Loan Documents to which each is a
party and the consummation of the transactions contemplated hereby and thereby,
as applicable, which resolutions shall remain in full force and effect so long
as any of the Obligations are outstanding or the Commitment has not been
terminated, (ii) as to all except SCB, that the true and complete copies of
the respective Certificates of Incorporation and By-Laws of the Credit Parties
delivered to the Lender on the Prior Closing Date or earlier have not been
modified or replaced, and remain in full force and effect, (iii) as to SCB, true
and complete copies of its Certificate of Incorporation and By-Laws and (iv) the
incumbency of the Credit Parties’ respective officers authorized to execute,
deliver and perform this Agreement or the Loan Documents, as
applicable.

     

    (e)          Fees and
Taxes.  Borrower shall have paid all filing fees, taxes, and
assessments related to the borrowings and the perfection of any interests in
collateral security required hereunder.

     

    (f)          Insurance.  Borrower
shall have delivered evidence satisfactory to the Lender of the existence of
insurance required hereby, including evidence of property and liability
insurance required for the SCB Assets.

     

    (g)          Other Documents and
Agreements.  On or before the date of this Agreement, the
Borrower shall have executed and/or delivered such other documents, instruments,
and agreements as the Lender and its legal counsel may reasonably require in
connection with the transactions contemplated hereby.   The
foregoing shall include, without limitation (i) a copy, certified by Borrower as
true and correct, of the final purchase and sale agreement and any other
relevant documents evidencing SCB’s contemplated purchase of substantially all
of the assets of Southern California Braiding Co., Inc., all of which shall be
satisfactory to the Bank in all material respects, and evidence satisfactory to
the Bank of the consummation thereof on the terms and conditions of the final
purchase and sale agreement and (ii)  a copy, certified by Borrower as
true and correct, of an executed employment agreement between Borrower or SCB
and Craig A. Pfefferman, the current President of Southern California Braiding
Co., Inc., which shall be satisfactory to the Bank in all material
respects. 

     

    (h)          Searches.  As
of the Closing Date, Borrower shall have delivered to the Lender (a) a
certificate of good standing from appropriate state officials to the effect
that  each of SCB and Southern California Braiding Co., Inc. was in
good standing in its state of incorporation as well as in all other states in
which qualification was necessary to carry on its businesses as presently
conducted, all as in effect immediately prior to the SCB Transaction and
(b) UCC, judgment, bankruptcy and tax searches covering each of SCB and
Southern California Braiding Co., Inc. in all jurisdictions deemed necessary by
the Lender, the results of all of which shall be satisfactory to the Lender in
all respects.

     

    (i)           Representations.  The
representations and warranties of the Credit Parties contained herein shall be
true and correct in all material respects.

    
      
         

      

      
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    (j)           Consents and
Approvals.  The Lender shall have received evidence of receipt
of all governmental, shareholder and other, if any, consents and approvals
necessary in connection with the related financings and other transactions
contemplated under this Agreement, except where the failure to obtain such
consents or approvals would not, individually or in the aggregate, have a
Material Adverse Effect.

     

    (k)          Litigation.  The
Lender shall have been informed of any suit, investigation or proceeding pending
in any court or before any arbitrator or governmental authority that would
reasonably be expected either to have a Material Adverse Effect or to materially
adversely affect the ability of any of the Credit Parties to perform its
respective obligations under this Agreement, and no such suits, investigations,
or proceedings shall be pending.

     

    (l)           Patriot
Act.  To the extent applicable, each Credit Party is in
compliance, in all material respects, with the (i) Trading with the Enemy
Act, as amended, and each of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
and any other enabling legislation or executive order relating thereto, and
(ii) Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA Patriot Act of
2001).  To the knowledge of the Borrower, no part of the proceeds of
the Loans will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

     

    (m)         Landlord
Waivers.  The Lender shall have received a waiver in form and
substance satisfactory to Lender from each landlord of premises on which the SCB
Assets are located.

     

    (n)          SCB
Transaction.  On or before the Closing Date, the Lender shall
have reviewed and approved the final form, substance, terms, and conditions of
the SCB Transaction.

     

    (o)          Continued
Subordination.  The IECW&C Subordinated Debt shall remain
subordinated to the Obligations on terms satisfactory to the
Lender.

     

    (p)          Financial
Statements.  (i) The Lender shall have received a report from
the independent accounting firm of Kushner, Smith, Joanou & Gregson LLP
based on their review of inventory accounts of Southern California Braiding Co.,
Inc., which shall be satisfactory to Lender and (ii) the add-backs necessary to
obtain “Normalized EBITDA” for the year to date period ending November 30, 2010
shall be delivered to and satisfactory to the Lender.

     

    (q)          No Material Adverse
Effect.  There shall have been no Material Adverse Effect with
respect to the Credit Parties since the date of the Financial Statements except
as was disclosed in the Financial Statements.

     

    12.2        Subsequent Loans and Letters
of Credit.  The
obligation of the Lender to make any Revolving Credit Loans or Equipment Line
Loans shall at all times be subject to the following continuing
conditions:

    
      
         

      

      
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    (a)          Representations and
Warranties.  The representations and warranties of the Credit
Parties contained herein shall be true and correct in all material respects as
of the date of making of each such advance (except those which are specific as
to a date certain), with the same effect as if made on and as of such
date.

     

    (b)          No Material Adverse
Effect.  Since the date of the Financial Statements, there
shall have been no Material Adverse Effect.

     

    (c)          No
Defaults.  There shall exist no Default or Event of Default at
the time each Loan is to be made.

     

    12.3        Notice of Borrowing
Representation.  Each
Notice of Borrowing given by a Borrower in accordance with Section 10.1
hereof and the acceptance by Borrower of the proceeds of a Revolving Credit Loan
and/or Equipment Line Loan shall constitute a representation and warranty by the
Borrower, made as of the time of the making of such Loan, that the conditions
specified in Sections 12.1 and 12.2 have been fulfilled as of such
time.

     

    ARTICLE
13 - AFFIRMATIVE COVENANTS OF BORROWER

     

    So long
as any Obligations shall be outstanding, the Commitment shall be in effect, or
this Agreement remains in effect, unless the Lender otherwise consents in
writing, the Credit Parties shall:

     

    13.1        Financial Statements; Other
Information.

     

    (a)          Furnish
to the Lender as soon as available, but in no event later than ninety (90) days
after the close of each Fiscal Year in which this Agreement remains in effect,
copies of annual consolidated financial statements of the Borrower in reasonable
detail satisfactory to the Lender prepared in accordance with GAAP on a
consistent basis audited by and with an unqualified opinion from an independent
certified public accountant satisfactory to the Lender, in Lender’s reasonable
discretion.  Said financial statements shall include at least a
consolidated and consolidating balance sheet and consolidated and consolidating
statements of operations, stockholders’ equity and cash flow, and shall be
accompanied by a copy of any management letter prepared by such
accountants.  Such financial statements shall be accompanied by a
certificate of the Chief Financial Officer of Borrower to the effect that no
Event of Default or Default has occurred.

     

    (b)          Furnish
to the Lender unaudited financial statements not more than forty-five (45) days
after the close of each Fiscal Quarter.  Said statements shall be in
reasonable detail satisfactory to the Lender, shall be prepared in accordance
with GAAP, shall include at least a consolidated and consolidating balance sheet
and a consolidated and consolidating statements of operations, stockholders’
equity and cash flow.  Said financial statements shall be certified to
be true and correct to the best knowledge of the Chief Financial Officer of
Borrower.  Such financial statements shall be accompanied by a
certificate of the Chief Financial Officer of Borrower to the effect that no
Event of Default or Default has occurred.

     

    (c)          Provide
to the Lender monthly borrowing base reports (“Borrowing Base Reports”), in
substantially the form of Exhibit I
attached hereto, each accompanied by an accounts receivable aging, accounts
payable aging, and inventory report.  At any time Overline Advances
are outstanding, weekly Borrowing Base Reports must be
provided.

    
      
         

      

      
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    (d)          Provide
to the Lender an annual operating budget for the Credit Parties, including a
balance sheet, statement of operations, and cash flow statement, with supporting
assumptions, in detail reasonably satisfactory to Lender, within thirty (30)
days after the end of each Fiscal Year of Borrower.

     

    (e)          Permit
the Lender at reasonable times and, prior to an Event of Default, upon
reasonable notice, to perform full field audits of the Credit Parties’ accounts
receivable and inventories with the reasonable cost thereof to be paid by the
Borrower.

     

    (f)         
Furnish to the Lender such additional information, reports, or financial
statements as the Lender may, from time to time, reasonably request, including,
without limitation, lists of vendors and suppliers and information necessary to
monitor Revolving Loans.

     

    (g)         Permit
any Person designated by the Lender to inspect the property, assets and books of
the Credit Parties at reasonable times and, prior to an Event of Default, upon
reasonable notice, provided that such Person is bound by a confidentiality
agreement reasonably acceptable to Borrower.  The Credit Parties shall
discuss their affairs, finances and accounts with the Lender, and Persons
designated by Lender that are bound by a confidentiality agreement reasonably
acceptable to Borrower, at reasonable times and from time to time as often as
may be reasonably requested.

     

    (h)         Notify
the Lender promptly upon addition of any new location at which it conducts
business or maintains assets, and of any new warehousing or distributorship
agreement.

     

    (i)        
 Report immediately to the Lender in writing upon becoming aware of any
noncompliance with any covenant in this Agreement or any Default, including
without limitation becoming aware of any noncompliance with Article 15 in
advance of the date on which the corresponding quarterly financial statements
are due to be delivered to the Lender.

     

    13.2        SEC
Reports.  Furnish
to the Lender, as applicable, copies of all proxy statements, financial
statements and reports which Borrower sends to its stockholders, and copies of
all regular, periodic and current reports, and all comment letters and responses
thereto, which Borrower files with the Securities and Exchange Commission
(“SEC”) or any
governmental authority which may be substituted therefore, or with any national
securities exchange; provided, however, in lieu of such copies Borrower may
advise Lender in writing (including by fax of email) that any such proxy
statement, financial statement and report, as the case may be, is available on
the SEC’s Edgar database.

     

    13.3        Taxes.  Pay
and discharge all taxes, assessments, levies and governmental charges upon the
Credit Parties, their income and property, prior to the date on which penalties
are attached thereto; provided, however, that the Credit Parties may in good
faith contest any such taxes, assessments, levies or charges so long as such
contest is diligently pursued and no lien or execution exists or is levied
against any of the Credit Parties’ assets related to the contested
items.

    
      
         

      

      
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    13.4        Insurance.  Maintain
or cause to be maintained insurance, of kinds and in amounts reasonably
satisfactory to the Lender, with responsible insurance companies on all of the
Credit Parties’ real and personal properties in such amounts and against such
risks as are prudent, including, but not limited to, all-risk property insurance
coverage (co-insurance not being permitted without the prior written consent of
the Lender), business interruption or loss of rents coverage, worker’s
compensation insurance, and general liability and products liability
insurance.  The Credit Parties also shall maintain flood insurance
covering any real properties located in flood zones as may be required by
governmental requirements to which Lender is subject.  The Credit
Parties shall provide to the Lender upon its request (and will endeavor to
deliver annually, but shall not be in Default for failure to make such annual
delivery unless a request has been made by the Lender), a detailed list and
evidence reasonably satisfactory to the Lender of their insurance carriers and
coverage and shall obtain such additional insurance as the Lender may reasonably
request.  Insurance policies shall name the Lender as additional
insured, as its interests may appear, with respect to liability insurance, and
mortgagee/lender loss payee with respect to property insurance, and all policies
shall provide for at least thirty (30) days prior notice of cancellation to the
Lender.

     

    13.5        Maintenance of Business
Assets.  At
all times maintain, preserve, protect, and keep the Credit Parties’ assets in
good repair, working order, and condition and, from time to time, make all
needed and proper repairs, renewals, replacements, betterments and improvements
thereto, so that the business of the Credit Parties may be properly and
advantageously conducted at all times and the value of the Lender’s collateral
shall be preserved.

     

    13.6        Notification of Material
Changes, Judgments etc.  Notify
the Lender promptly of:

     

    (a)          any
material adverse change in the financial condition of any of the Credit Parties,
and of any event, circumstance, or condition that has had or could reasonably be
expected to have a Material Adverse Effect, including the filing of any suits,
judgments or liens which, if adversely determined, could reasonably be expected
to have a Material Adverse Effect,

     

    (b)          the
existence of any Default of which a Credit Party has actual knowledge,
and

     

    (c)          the
filing of any patent, trademark, or copyright registrations by any Credit
Party.

     

    13.7        ERISA
Compliance.  Comply
in all material respects with the provisions of ERISA and regulations and
interpretations related thereto with respect to all of the Credit Parties’
Plans.

     

    13.8        Franchises; Permits;
Laws.  Preserve
and keep in full force and effect the existence of the Credit Parties and all
franchises, permits, licenses and other authority as are necessary to enable
them to conduct their businesses as being conducted on the date of this
Agreement, after giving effect to the SCB Transaction, and comply in all
material respects with all laws, regulations and requirements now in effect or
hereafter promulgated by any properly constituted governmental authority having
jurisdiction over them.

    
      
         

      

      
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    13.9        Performance of
Obligations.  The
Borrower will, and will cause each of the Credit Parties to, perform all of its
obligations under the terms of each mortgage, indenture, security agreement,
loan agreement or credit agreement and each other agreement, contract or
instrument by which it is bound (taking into account any grace, notice, or cure
periods applicable thereto), except in each case such non-performances as could
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

     

    13.10      Deposits; Bank
Services.  Maintain
at the Lender all of the Credit Parties’ primary depository accounts, with
exceptions permitted for accounts maintained for convenience in other
geographical locations for the temporary deposit of receipts or accounts
justified by Credit Parties’ need for services that Lender cannot reasonably
provide.

     

    13.11      Amendments.  Give
the Lender prompt written notice of an amendment or modification to any of the
Credit Parties’ Organizational Documents.

     

    13.12      Additional
Guarantors.  Notify
the Lender of the acquisition or creation of any new Subsidiary and cause each
domestic Subsidiary created or acquired after the Prior Closing Date to execute
and deliver to the Lender a continuing guaranty, general security agreement, and
other agreements in form and substance satisfactory to Lender subjecting all of
the assets of the Subsidiary to the Lien held by the Lender, together with
approvals and legal opinions in form and substance satisfactory to the Lender
opining to the authorization, validity and enforceability of such Guaranty, and
to such other matters at the Lender may reasonably request.

     

    13.13      Further
Assurances.  Cooperate
with the Lender and execute such further instruments and documents as the Lender
shall reasonably request to carry out the transactions contemplated by this
Agreement and the other Loan Documents.

     

    13.14      Mortgage Related
Matters.  GTC
shall not cause or permit a reconveyance to GTC of fee title to the premises
commonly known as 1450 Mission Avenue NE, Albuquerque, New Mexico held pursuant
to a Lease Agreement between the City of Albuquerque, New Mexico and GTC dated
as of March 1, 1999 unless (i) GTC gives the Lender at least 15
Business Days prior notice of its intention to cause the reconveyance,
(ii) at the time of such reconveyance GTC delivers to the Lender an
executed mortgage (the “Fee
Mortgage”) in favor of Lender, in form substantially the same as the
Mortgage (modified to create a mortgage covering the fee title interest of GTC),
and (iii) at the time of such reconveyance GTC delivers to the Lender a
mortgagee title insurance policy covering the Fee Mortgage free of exceptions,
encumbrances and Liens other than Permitted Exceptions and other exceptions
approved in writing in advance by Lender.

     

    ARTICLE
14 - NEGATIVE COVENANTS OF BORROWER

     

    So long
as any Obligations shall be outstanding, the Commitment shall be in effect, or
this Agreement shall remain in effect, unless the Lender otherwise consents in
writing, none of the Credit Parties shall, directly or indirectly, jointly or
severally:

    
      
         

      

      
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    14.1        Debt, Mortgages and
Liens.  Create,
incur, assume or allow to exist, voluntarily or involuntarily, any Debt or
Liens, excluding only (a) Debt to and interests held by the Lender under
this Agreement, (b) Debt described in Schedule 14.1(a)
attached hereto and made a part hereof, which Debt may not be renewed, extended,
amended or modified, (c) Permitted Liens, (d) Debt and interests to
which the Lender consents in writing, (e) Debt of Borrower to any Guarantor
or of any Guarantor to Borrower, and (f) debt to the sellers of IECW&C
to Borrower, covered by subordination agreements satisfactory to
Lender.

     

    14.2        Loans and
Investments.  Make
any Investment in any Person, or purchase or own a futures contract or otherwise
become liable for the purchase or sale of currency or other commodities at a
future date in the nature of a futures contract, except for (i) Investments
in (including for the avoidance of doubt transfers of machinery and equipment
to) any Person that is already a Credit Party, (ii) Money Market
Investments, and (iii) Investments received in connection with the
bankruptcy or reorganization of suppliers and customers and in good faith
settlement of delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business.

     

    14.3        Mergers, Dissolutions; Sales
and Acquisitions; Change in Ownership Interests.  Except
for the GTC Transaction, the Celmet Transaction, and the SCB Transaction, enter
into any partnership, joint venture, merger or consolidation, or wind up,
liquidate, or dissolve its affairs, or enter into a sale-leaseback except with
Lender or its affiliates, or acquire all or substantially all the Capital
Securities or assets of any Person, or sell, lease, transfer, or otherwise
dispose of any its assets, except, for (a) (i) dispositions of
inventory in the ordinary course of business or (ii) the disposition of any
asset not material to the respective Credit Party or its business and not
exceeding $100,000 in value, and (b) the merger of Borrower into any
Guarantor or of any Guarantor into Borrower after giving written notice to the
Lender of the intended merger, so long as any security interests granted to the
Lender in the assets so transferred shall remain in full force and effect and
perfected (to at least the same extent as in effect immediately prior to such
transfer) and all actions required to maintain said perfected status have been
taken.

     

    14.4        Amendments.  Allow
the amendment or modification of its Organizational Documents in any material
respect without the prior written consent of the Lender.

     

    14.5        Distributions.  Make
any Distributions, except Distributions from a Guarantor to Borrower, without
the prior consent of Lender.

     

    14.6        Material
Changes.  Permit
any material change to be made in the character of the business of any of the
Credit Parties, or in the nature of their operations as carried on at the date
hereof.

     

    14.7        Compensation.  Compensate
any Person, including, without limitation, salaries, bonuses, consulting fees,
or otherwise, in excess of amounts reasonably related to services rendered to
the Credit Parties.

     

    14.8        Judgments.  Allow
to exist any judgments against any of the Credit Parties in excess of $250,000
in the aggregate which are not fully covered by insurance or for which an appeal
or other proceeding for the review thereof shall not have been taken and for
which a stay of execution pending such appeal shall not have been obtained, or
allow to exist any judgment in any amount against GTC that creates a Lien
against any GTC real property or GTC real property interest.

    
      
         

      

      
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    14.9       Margin
Securities.  Directly
or indirectly, use any part of the proceeds of the Obligations for the purpose
of purchasing or carrying any margin stock within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or to extend credit to any
person for the purpose of purchasing or carrying any such margin stock, or for
any purpose which violates, or is inconsistent with, Regulation X of such Board
of Governors.

     

    14.10     Subsidiaries.

     

    (a)           Form,
or permit to be formed, any Subsidiary unless such Subsidiary guarantees all
Obligations to the Lender, which guarantee must be secured by all of its assets
pursuant to a guaranty and a security agreement in form and substance acceptable
to the Lender in its sole discretion.

     

    (b)           Directly
or indirectly, and will not permit any of its Subsidiaries to directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary to
(i) make Distributions on its Capital Securities owned by the Borrower or
any of its Subsidiaries, or pay any Indebtedness owed to the Borrower or any of
its Subsidiaries, (ii) make loans or advances to the Borrower or any of its
Subsidiaries or (iii) transfer any of its properties or assets to the
Borrower or any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (A) applicable law,
(B) this Agreement and the other Loan Documents, (C) customary
provisions restricting subletting or assignment of any lease governing any
leasehold interest of the Borrower or any of its Subsidiaries,
(D) customary provisions restricting assignment of any licensing agreement
(in which the Borrower or any of its Subsidiaries is the licensee) or other
contract entered into by the Borrower or any of its Subsidiaries in the ordinary
course of business, and (E) restrictions on the transfer of any asset
pending the close of the sale of such asset.

     

    14.11     Transactions with Credit
Parties.  Enter
into any transaction or series of related transactions with any Affiliate of any
of the Credit Parties, other than in the ordinary course of business and on
terms and conditions substantially as favorable to the Credit Party as would
reasonably be obtained by the Credit Party at that time in a comparable
arm’s-length transaction with a Person other than an Affiliate.

     

    ARTICLE
15 - FINANCIAL COVENANTS

     

    So long
as any Obligations shall be outstanding or this Agreement remains in effect,
unless the Lender otherwise consents in writing, the Borrower
shall:

     

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

     

    
      
        
          	
                  Closing
      Date through and including 9/29/2011

                	
                  <
      3.50 to 1.00

                
	
                  9/30/2011
      through and including 9/29/2012

                	
                  <
      3.25 to 1.00

                
	
                  9/30/2012
      through and including 9/29/2013

                	
                  <
      3.00 to 1.00

                
	
                  9/30/2013
      and thereafter

                	
                  <2.75
      to 1.00

                

        

      

    

    
      
         

      

      
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    For
purposes of calculating the Borrower’s consolidated Debt to EBITDARS ratio from
and after the date of this Agreement for periods ending on or before October 1,
2011, EBITDARS related to SCB for the period December 26, 2009 through
December 31, 2010 shall be added to Borrower’s EBITDARS at a rate of
$1,592,000 per Fiscal Quarter for each of the four Fiscal Quarters in the
period.

     

    15.2       Minimum Quarterly
EBITDARS.  Maintain
at all times minimum EBITDARS for the trailing three months, on a consolidated
basis, equal to or greater than $1,500,000, reported at each Fiscal Quarter
end.

     

    15.3       Fixed Charge Coverage
Ratio.  Maintain
at all times a Fixed Charge Coverage Ratio, on a consolidated basis, equal to or
greater than 1.25 to 1.00, reported at each Fiscal Quarter end.  For
purposes of calculating the Borrower’s Fixed Charge Coverage Ratio from and
after the date of this Agreement for periods ending on or before September 30,
2011, EBITDARS related to SCB for the period December 26, 2009 through
December 31, 2010 shall be added to Borrower’s EBITDARS at a rate of
$1,592,000 per Fiscal Quarter for each of the four Fiscal Quarters in the
period.

     

    15.4       Quarterly Covenant
Compliance Sheet.  Provide
the Quarterly Covenant Compliance Sheet to Lender within thirty (30) days after
the close of each of its Fiscal Quarters (which shall include a certificate of
the Chief Financial Officer of the Borrower certifying that no Event of Default
or Default has occurred (or if one has occurred, identifying the same) and
certifying the accuracy of an attached schedule showing computation of financial
covenants contained in this Article 15.

     

    ARTICLE
16 - ENVIRONMENTAL MATTERS; INDEMNIFICATION

     

    16.1       Environmental
Representations.  Borrower
represents and warrants that to the best of Borrower’s knowledge and except as
disclosed in (i) the Environmental Report delivered to Lender related to
the Mortgaged Property, (ii) the Phase II Environmental Site Assessment
prepared for Celmet by LCS Inc. dated December 7, 2009, (iii) the
Landfill Methane Gas Evaluation Report prepared for Celmet by Bergmann
Associates dated March 10, 2010, and (iv) the IEC Electronics Corp. Final
Phase I Environmental Site Assessment and Limited Compliance Review Southern
California Braiding Company, Inc. prepared by ERM and dated December 13,
2010:

     

    (a)           Neither
the Improvements nor any property adjacent to the Improvements is being or has
been used for, and none of the Credit Parties are engaged in, the storage,
treatment, generation, transportation, processing, handling, production or
disposal of any Hazardous Substance or as a landfill or other waste disposal
site or for the storage of petroleum or petroleum based products except in
compliance with all Environmental Laws.

     

    (b)           Underground
storage tanks are not and have not been located on the Improvements except in
compliance with all Environmental Laws

    
      
         

      

      
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    (c)           The
soil, subsoil, bedrock, surface water and groundwater of the Improvements are
free of any Hazardous Substances, except as permitted by Environmental
Laws.

     

    (d)           There
has been no Release, nor is there the threat of a Release of any Hazardous
Substance on, at or from the Improvements or any property adjacent to or within
the immediate vicinity of the Improvements which through soil, subsoil, bedrock,
surface water or groundwater migration could come to be located on the
Improvements, and the Credit Parties have not received any form of notice or
inquiry from any federal, state or local governmental agency or authority, any
operator, tenant, subtenant, licensee or occupant of the Improvements or any
property adjacent to or within the immediate vicinity of the Improvements or any
other person with regard to a Release or the threat of a Release of any
Hazardous Substance on, at or from the Improvements or any property adjacent to
the Improvements.

     

    (e)           All
Environmental Permits relating to the Credit Parties and the Improvements have
been obtained and are in full force and effect.

     

    (f)           No
event has occurred with respect to the Improvements which, with the passage of
time or the giving of notice, or both, would constitute a violation of any
applicable Environmental Law or non-compliance with any Environmental
Permit.

     

    (g)           There
are no agreements, consent orders, decrees, judgments, license or permit
conditions or other orders or directives of any federal, state or local court,
governmental agency or authority relating to the past, present or future
ownership, use, operation, sale, transfer or conveyance of the Improvements
which require any change in the present condition of the Improvements or any
work, repairs, construction, containment, clean up, investigations, studies,
removal or other remedial action or capital expenditures with respect to the
Improvements.

     

    (h)           There
are no actions, suits, claims or proceedings, pending or threatened, which could
cause the incurrence of expenses or costs of any name or description or which
seek money damages, injunctive relief, remedial action or any other remedy that
arise out of, relate to or result from (i) a violation or alleged violation
of any applicable Environmental Law or noncompliance or alleged non-compliance
with any Environmental Permit, (ii) the presence of any Hazardous Substance
or a Release or the threat of a Release of any Hazardous Substance on, at or
from the Improvements or any property adjacent to or within the immediate
vicinity of the Improvements or (iii) human exposure to any Hazardous
Substance, noises, vibrations or nuisances of whatever kind to the extent the
same arise from the condition of the Improvements or the ownership, use,
operation, sale, transfer or conveyance thereof.

     

    16.2       Environmental
Covenants.  Borrower
covenants and agrees with the Lender that, until the Obligations have been fully
satisfied and paid and the Commitment has been terminated, the Borrower
shall:

     

    (a)           Comply
with, and shall cause all operators, tenants, subtenants, licensees and
occupants of the Improvements to comply with all applicable Environmental Laws
and shall obtain and comply with, and shall cause all operators, tenants,
subtenants, licensees and occupants of the Improvements to obtain and comply
with, all Environmental Permits.

    
      
         

      

      
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    (b)           Not
cause or permit any change to be made in the present or intended use of the
Improvements which would (i) violate any applicable Environmental Law,
(ii) constitute non-compliance with any Environmental Permit or
(iii) materially increase the risk of a Release of any Hazardous
Substance.

     

    (c)           Promptly
provide the Lender with a copy of all notifications which it gives or receives
with respect to any past or present Release or the threat of a Release of any
Hazardous Substance on, at or from the improvements or any property adjacent to
the Improvements.

     

    (d)           Undertake
and complete all investigations, studies, sampling and testing and all removal
and other remedial actions required by law to contain, remove and clean up all
Hazardous Substances that are determined to be present at the Improvements in
accordance with all applicable Environmental Laws and all Environmental
Permits.

     

    (e)           At
all reasonable times and, prior to an Event of Default upon reasonable prior
notice, allow the Lender and its officers, employees, agents, representatives,
contractors and subcontractors access to the Improvements for the purposes of
ascertaining site conditions, including, but not limited to, subsurface
conditions.

     

    (f)           Deliver
promptly to the Lender: (i) copies of any documents received from the
United States Environmental Protection Agency, or any state, county or municipal
environmental or health agency concerning a Credit Party’s operations or the
Improvements; and (ii) copies of any documents submitted by any of the
Credit Parties to the United States Environmental Protection Agency or any
state, county or municipal environmental or health agency concerning its
operations or the Improvements.

     

    (g)           If
at any time the Lender obtains any reasonable evidence or information which
suggests that a material potential environmental problem may exist at the
improvements, the Lender may require that a full or supplemental environmental
inspection and audit report with respect to the Improvements of a scope and
level of detail satisfactory to the Lender, in Lender’s reasonable discretion,
be prepared by an environmental engineer or other qualified person acceptable to
the Lender at the Borrower’s expense.  Such audit may include a
physical inspection of the Improvements, a visual inspection of any property
adjacent to or within the immediate vicinity of the Improvements, personnel
interviews and a review of all Environmental Permits.  If the Lender
requires, such inspection shall also include a records search and/or subsurface
testing for the presence of Hazardous Substances in the soil, subsoil, bedrock,
surface water and/or groundwater.  If such audit report indicates the
presence of any Hazardous Substance or a Release or the threat of a Release of
any Hazardous Substance on, at or from the Improvements, the Credit Parties
shall promptly undertake and diligently pursue to completion all legally
required investigative, containment, removal, clean up and other remedial
actions, using methods recommended by the engineer or other person who prepared
said audit report and acceptable to the appropriate federal, state and local
agencies or authorities.

    
      
         

      

      
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    16.3       Indemnity.  Borrower
agrees to indemnify, defend and hold harmless the Lender from and against any
and all liabilities, claims, damages, penalties, expenditures, losses or
charges, including, but not limited to, all costs of investigation, monitoring,
legal representation, remedial response, removal, restoration or permit
acquisition of any kind whatsoever, which may now or in the future be
undertaken, suffered, paid, awarded, assessed, or otherwise incurred by the
Lender (or any other Person affiliated with the Lender or representing or acting
for the Lender or at the Lender’s behest, or with a claim on the Lender or to
whom the Lender has liability or responsibility of any sort related to this
Section 16.3) relating to, resulting from or arising out of (a) the
use of the Improvements for the storage, treatment, generation, transportation,
processing, handling, production or disposal of any Hazardous Substance or as a
landfill or other waste disposal site, (b) the presence of any Hazardous
Substance or a Release or the threat of a Release of any Hazardous Substance on,
at or from the Improvements, (c) the failure to promptly undertake and
diligently pursue to completion all necessary, appropriate and legally
authorized investigative, containment, removal, clean up and other remedial
actions with respect to a Release or the threat of a Release of any Hazardous
Substance on, at or from the Improvements, (d) human exposure to any
Hazardous Substance, noises, vibrations or nuisances of whatever kind to the
extent the same arise from the condition of the Improvements or the ownership,
use, operation, sale, transfer or conveyance thereof, (e) a violation of
any applicable Environmental Law, (f) non-compliance with any Environmental
Permit or (g) a material misrepresentation or inaccuracy in any
representation or warranty or a material breach of or failure to perform any
covenant made by Borrower in this Agreement.  Such costs or other
liabilities incurred by the Lender, or other Person described in this
Section 16.3 shall be deemed to include, without limitation, any sums which
the Lender deems it necessary or desirable to expend to protect the Lender’s
security interests and liens.

     

    16.4       No
Limitation.  The
liability of the Borrower to Lender (or any other Person affiliated with the
Lender or representing or acting for the Lender or at the Lender’s behest, or
with a claim on the Lender or to whom the Lender has liability or responsibility
of any sort related to Section 16.3) under this Article 16 shall in no
way be limited, abridged, impaired or otherwise affected by (a) any
amendment or modification of this Agreement or any other document relating to
the Obligations by or for the benefit of the Credit Parties or any subsequent
owner of the Improvements except for an amendment or modification which
expressly refers to this Article 16, (b) any extensions of time for
payment or performance required by this Agreement or any other document relating
to the Obligations, (c) the release of any of the Credit Parties or any
other person from the performance or observance of any of the agreements,
covenants, terms or conditions contained in this Agreement or any other document
relating to the Obligations by operation of law, or the Lender’s voluntary act
or otherwise, (d) the invalidity or unenforceability of any of the terms or
provisions of this Agreement or any other document relating to the Obligations,
(e) any exculpatory provision contained in this Agreement or any other
document relating to the Obligations limiting the Lender’s recourse, to property
encumbered by any mortgage or to any other security or limiting the Lender’s
rights to a deficiency judgment against the Borrower, (f) any applicable
statute of limitations, (g) any investigation or inquiry conducted by or on
behalf of the Lender or any information which the Lender may have or obtain with
respect to the environmental or ecological condition of the Improvements,
(h) the sale, assignment or foreclosure of any interest in collateral for
the Obligations, (i) the sale, transfer or conveyance of all or part of the
Improvements, (j) the dissolution and liquidation of Borrower, (k) the
death or legal incapacity of any individual, (l) the release or discharge,
in whole or in part, of Borrower in any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar proceeding, or
(m) any other circumstances which might otherwise constitute a legal or
equitable release or discharge of Borrower, in whole or in
part.

    
      
         

      

      
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    16.5       Survival.  Notwithstanding
anything to the contrary contained herein, the liability and obligations of the
Borrower under Section 16.3 shall survive the discharge, satisfaction or
assignment of this Agreement and the payment in full of all of the Obligations,
unless such liability and obligations are terminated with express reference to
this Section 16.5.

     

    16.6       Investigations.  If
an Event of Default occurs, or Borrower defaults on any of its Obligations
pursuant to this Article 16, the Lender or its designee shall have the
right at reasonable times, and prior to an Event of Default upon reasonable
notice to the Borrower, to enter upon the Improvements and conduct such tests,
investigation and sampling, including, but not limited to, installation of
monitoring wells, as shall be reasonably necessary for the Lender to determine
whether any Release of Hazardous Substances has occurred on, at or near the
Improvements.  The costs of all such tests, investigations and
samplings shall be considered as additional Debt secured by all collateral for
the Obligations and shall become immediately due and payable upon being invoiced
to Borrower and with interest thereon at the highest rate then borne by any of
the Obligations.

     

    16.7       No Warranty Regarding
Information.  Borrower
agrees that the Lender shall not be liable in any way for the completeness or
accuracy of any Environmental Report or the information contained
therein.  The Borrower further agrees that the Lender has no duty to
warn any of the Credit Parties or any other Person about any actual or potential
environmental contamination or other problem that may have become apparent or
will become apparent to the Lender.

     

    ARTICLE
17 - DEFAULTS

     

    17.1       Defaults. The
following events (hereinafter called “Events of Default”) shall
constitute defaults under this Agreement:

     

    (a)          Nonpayment.  (i) failure
of Borrower to make any payment of principal or interest under the terms of this
Agreement, any of the Notes, or of any of the Loan Documents, within ten (10)
days after the same becomes due and payable, except that there shall be no ten
(10) day grace period for the Borrower’s obligation to reduce the principal
balance of the Revolving Credit Facility if the outstanding principal balance of
the Revolving Credit Facility exceeds the Revolving Credit Commitment or the
Borrowing Base under Sections 2.1 and 2.2 of this Agreement, and
(ii) failure of Borrower to make any payment of any type other than
principal or interest under the terms of this Agreement, any of the Notes, or of
any of the Loan Documents which is not cured within five (5) Business Days after
notice of such failure is given by the Lender.

     

    (b)      
   Performance.  Failure
of any of the Credit Parties to observe or perform, as applicable,

     

    (i)           any
of the financial covenants in Article 15 of this Agreement,

     

    (ii)          Sections 13.1(a),
13.1(b), 13.1(c), 13.4, and 13.14,

    
      
         

      

      
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    (iii)          Sections 13.1(e),
13.1(i), 13.6, and 13.12 within ten days after the date on which performance was
required, or

     

    (iv)          any
condition, covenant or term of this Agreement or any Loan Document not covered
by Section 17.1(a), Section 17.1(b)(i), Section 17.1(b)(ii), or
Section 17.1(b)(iii) which is not cured within thirty (30) days after
notice of such failure is given by the Lender, and provided that during such
thirty (30) day period the Credit Parties are diligently and in good faith
curing such failure.

     

    (c)          Other Obligations to
Lender.  Failure of any Credit Party to observe or perform any
condition or covenant of any other agreement or instrument with the Lender, or
any of its affiliates not covered by Section 17.1(a) or
Section 17.1(b) after any applicable cure or grace period related
thereto.

     

    (d)         Obligations to Third
Parties.  Default by any Credit Party under:

     

    (i)           any
agreement or instrument involving Debt in excess of $100,000 (except as covered
by Section 17.1(a), Section 17.1(b), or Section 17.1(c)) unless
and so long as such default is being contested reasonably diligently and in good
faith and no judgment has been taken against the respective Credit Party or
restraint, levy, or similar action with respect to any assets of the Credit
Party has occurred, or

     

    (ii)          any
other agreement with any third Person, which is not terminable on thirty (30)
days or less notice, or provides for payment of consideration of more than
$100,000 by any party thereafter unless and so long as such default is being
contested reasonably diligently and in good faith.

     

    (e)         Representations.  Failure
of any representation or warranty made by any Credit Party in connection with
the execution and performance of any Loan Document or any certificate of
officers pursuant thereto, to be truthful, accurate or correct in all material
respects; provided such failure in the case of representations and warranties
specific as to a date certain must be as of such date certain.

     

    (f)          Financial
Difficulties.  Financial difficulties of any Credit Party as
evidenced by:

     

    (i)           any
admission in writing of inability to pay debts as they become due;
or

     

    (ii)          the
filing of a voluntary, or sixty (60) days after a filing of an involuntary,
petition in bankruptcy, or under any chapters of the Bankruptcy Code, or under
any federal or state statute providing for the relief of debtors unless, in the
case of the filing of an involuntary petition, it is dismissed within such sixty
(60) day period; or

     

    (iii)         making
an assignment for the benefit of creditors; or

     

    (iv)        consenting
to the appointment of a trustee or receiver for all or a major part of any of
its property; or

    
      
         

      

      
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    (v)          the
entry of a court order appointing a receiver or a trustee for all or a major
part of its property which is not bonded, discharged or stayed within sixty (60)
days;

     

    (vi)         the
occurrence of any event, action, or transaction that could give rise to a lien
or encumbrance on the assets of any Credit Party as a result of application of
relevant provisions of ERISA; or

     

    (vii)         the
occurrence of any Forfeiture Action.

     

    (g)          Change in
Control.  The occurrence of a Change in Control.

     

    (h)           Security
Documents.  Any Credit Party, as signatory under any of the
Security Documents, shall cause the Security Documents at any time to, or if for
any reason the Security Documents: (i) cease to create a valid and
perfected Lien in and to the property purported to be subject to the same for
any reason other than the failure of the secured parties thereunder to continue
any UCC financing statement, or (ii) cease to be in full force and effect
or shall be declared null and void, or (iii) the validity or enforceability
of any Security Document shall be contested by any party thereto or any party
thereto shall deny it has any further liability or obligations to the secured
parties thereunder.

     

    (i)           ERISA.  Any
event occurs or condition exists which, with notice or lapse of time or both,
would make any Plan of any Credit Party subject to termination under
subsections (1), (2) and (3) of Section 4042(a) of ERISA, or any
Credit Party or any of their respective plan administrators shall have received
notice from the PBGC indicating that it has made a determination that any Plan
of any Credit Party is subject to termination under Section 4042(a)(4) of
ERISA, or any Credit Party is subject to employer’s liability under
Section 4062, 4063, or 4064 of ERISA, in each case under ERISA as now or
hereafter amended.

     

    (j)           Government
Contracts.  (i) any notice of debarment, notice of
suspension or termination for default shall have been issued under any United
States government contract, or (ii) any of the Credit Parties is debarred
or suspended from contracting with any part of the United States Government or
any state, local or foreign government, or (iii) a United States Government
or any state, local or foreign government investigation shall have resulted in
criminal or civil liability, suspension, debarment or any other adverse
administrative action arising by reason of alleged fraud, willful misconduct,
neglect, default or other wrongdoing, or (iv) the actual termination of any
government contract due to alleged fraud, willful misconduct, neglect, default
or any other wrongdoing and the effect of any of the events described in
subclauses (i), (ii), (iii) and (iv), either individually or in the aggregate,
has had, or could reasonably be expected to have, a Material Adverse
Effect.

     

    (k)           Any
failure of GTC to be able to, or to, cause reconveyance of fee title to the
premises covered by the Mortgage in strict accordance with Section 13.14 of
this Agreement at such time as the tax benefits available through the City of
Albuquerque expire, it being the intention of the parties that this Event of
Default shall be an event of default under the Mortgage entitling the Lender to
its remedies, including foreclosure, thereunder.

    
      
         

      

      
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    17.2       Remedies.

     

    (a)           If
any one or more Events of Default listed in Section 17.1(f)(i)-(vi) occur,
(a) the Commitment and any further commitments or obligations of the Lender
shall be deemed to be automatically and without need for further action
terminated, and (b) all Obligations of the Borrower to the Lender,
automatically and without need for further action, shall become forthwith due
and payable without presentment, demand, protest, or other notice of any kind,
all of which are hereby expressly waived.  If any one or more Events
of Default other than those listed in Section 17.1(f)(i)-(vi) occur, the
Lender may, at its option, take either or both of the following actions at the
same or different times: (i) terminate the Commitment and any further
commitments or obligations of the Lender, and (ii) declare all Obligations
of the Borrower to the Lender, automatically and without need for further
action, to be forthwith due and payable without presentment, demand, protest, or
other notice of any kind, all of which are hereby expressly waived.

     

    (b)           In
case any such Events of Default shall occur, the Lender shall be entitled to
recover judgment against the Borrower for all Obligations of the Borrower to the
Lender either before, or after, or during the pendency of any proceedings for
the enforcement, of any Security Document and, in the event of realization of
any funds from any security or guarantee and application thereof to the payment
of the Obligations due, the Lender shall be entitled to enforce payment of and
recover judgment for all amounts remaining due and unpaid on such
Obligations.

     

    (c)           The
Lender shall be entitled to exercise any other legal or equitable right which it
may have, and may proceed to protect and enforce its rights by any other
appropriate proceedings, including action for the specific performance of any
covenant or agreement contained in this Agreement and the Loan
Documents.

     

    (d)           In
the case of an Event of Default caused by a failure of compliance with
Section 13.14, without limitation of any other right and remedy of the
Lender, the Borrower shall deliver to Lender a mortgage in form satisfactory to
Lender covering the premises located at 105 Norton Street, Newark, Wayne
County, New York, together with a mortgagee title insurance policy in form
satisfactory to the Lender insuring the same and a survey, environmental report,
and appraisal covering such property, all in form satisfactory to the
Lender.

     

    ARTICLE
18 - MISCELLANEOUS

     

    18.1       Waiver.  No
delay or failure of the Lender to exercise any right, remedy, power or privilege
hereunder shall impair the same or be construed to be a waiver of the same or of
any Event of Default or an acquiescence therein.  No single or partial
exercise of any right, remedy, power or privilege shall preclude other or
further exercise thereof by the Lender.  All rights, remedies, powers,
and privileges herein conferred upon the Lender shall be deemed cumulative and
not exclusive of any others available.

     

    18.2       Survival of
Representations.  All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the execution and delivery of other agreements
hereunder.

    
      
         

      

      
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    18.3     
  Additional
Security; Setoff.  The
Lender shall have a security interest in and right of setoff with respect to all
deposits or other sums credited by or due from the Lender to Borrower and a
security interest in all securities or other property of Borrower in any of the
Lender’s possession for safekeeping or otherwise.  The Lender’s
security interest shall secure payment of the Obligations.  In the
event of any Event of Default under this Agreement, regardless of the adequacy
of collateral, without any demand or notice, except as required by applicable
law, any Lender may apply or setoff such deposits or other sums and may sell or
dispose of any or all of such securities or other property and may exercise any
and all rights it may have under the New York Uniform Commercial Code, as in
effect from time to time.  The rights of the Lender under this
Agreement are in addition to, and not exclusive of, any other rights it may have
with respect to such deposits, sums, securities, or other property under other
agreements or applicable principles of law.  The Lender shall have no
duty to take steps to preserve rights against prior parties as to such
securities or other property.

     

    18.4   
    Notices.  Any
notice or demand upon any party hereto shall be deemed to have been sufficiently
given or served for all purposes hereof when delivered in person, the Business
Day after delivery to a nationally recognized overnight courier marked for next
Business Day delivery, or three (3) Business Days after it is mailed certified
mail postage prepaid, return receipt requested, addressed as
follows:

     

    If to
Lender:

     

    Manufacturers
and Traders Trust Company

    255 East
Avenue

    Rochester,
New York 14604

    Attention:  J.
Theodore Smith/Brett Rawlings

    Facsimile:  (585)
325-5105

    Email:  jtsmith@mtb.com
and brawlings@mtb.com

     

    with a
copy to:

     

    Nixon
Peabody LLP

    40
Fountain Plaza, Suite 500

    Buffalo,
New York 14202

    Attention:  Martha
M. Anderson, Esq.

    Facsimile:  (716)
853-8105

    Email:
manderson@nixonpeabody.com

     

    If to
Borrower:

     

    IEC
Electronics Corp.

    105
Norton Street

    Newark,
New York 14513

    Attention:     W.Barry
Gilbert, CEO and

    Susan E.
Topel-Samek, CFO

    Facsimile:  (315)
331-3547

    Email:
wbgilbert@iec-electronics.com and stopel@iec-electronics.com

    
      
         

      

      
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    with a
copy to:

     

    Harris
Beach PLLC

    99
Garnsey Road

    Pittsford,
NY 14534

    Attention:  Beth
Ela Wilkens, Esq.

    Facsimile:  585-419-8817

    Email:  BWilkens@HarrisBeach.com

     

    Any party
may change, by notice in writing to the other parties, the address to which
notices to it shall be sent.  Email addresses are provided for
convenience only and notice is not effective if given only by email unless also
given by another means provided by this Section.

     

    18.5       Entire
Agreement.  This
Agreement and the Loan Documents embody the entire agreement and understanding
among the parties and supersede all prior agreements and understandings relating
to the subject matter hereof.  This Agreement shall not be changed or
amended without the written agreement of all parties hereto.  This
Agreement embodies all commitments to lend between the Lender and the Borrower
and supersedes any prior commitments.

     

    18.6       Parties in
Interest.

     

    (a)           All
the terms and provisions of this Agreement shall inure to the benefit of and be
binding upon and be enforceable by the parties and their respective successors
and assigns and shall inure to the benefit of and be enforceable by any holder
of any of the Notes.  Upon any transfer of any Obligation or any
interest therein any Lender may deliver or otherwise transfer or assign to the
holder any collateral or guarantees for the Obligation, which holder shall
thereupon have all the rights of the Lender.

     

    (b)           The
rights, remedies, and benefits of and in favor of the Lender under this
Agreement shall inure to the benefit of, and be enforceable by, any or all of
the Lender and each of its affiliates.

     

    18.7       Indemnity.

     

    (a)           Nothing
in this Section 18.7 shall be deemed or shall be construed to relieve or
release the Lender from any liability for breach of contract arising from any
failure by the Lender to perform its contractual obligations
hereunder.  The Borrower shall indemnify and hold harmless the Lender
and its affiliates, directors, officers, employees, agents, and representatives
from and against any and all claims, damages, liabilities, and expenses
(including, without limitation, attorneys’ fees, whether incurred in a third
party action or in an action to enforce this Agreement) that may be incurred by
or asserted against such indemnified party in connection with the Loan Documents
and the transactions contemplated thereby including in connection with the
investigation of, preparation for, or defense of any pending or threatened
claim, action, or proceeding; provided, however, that the Borrower shall not be
liable to any indemnified party for such claims, damages, liabilities, and
expenses resulting from such indemnified party’s own gross negligence or willful
misconduct.  The indemnification obligations of the Credit Parties
hereunder include obligations to indemnify and hold harmless the Lender for any
cost, expense, or liability (including among others reasonable attorneys fees)
incurred in connection with actions taken (including if applicable foreclosure
of the Mortgage), and payments made, by the Lender reasonably necessary to
assure that the Lender’s Mortgage, and at such time as the tax benefits
available through the City of Albuquerque expire the Lender’s interest in the
premises covered by the Fee Mortgage, are subject to no Liens other than
Permitted Liens.

    
      
         

      

      
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    (b)           To
the extent, if at all, New Mexico NMSA 1978, Section 56-7-1, as amended, is
applicable to any Loan Document, any agreement to indemnify, hold harmless,
insure or defend another party contained therein shall not extend to liability,
claims, damages, losses or expenses, including attorneys’ fees, arising out of
bodily injury to persons or damage to property caused by or resulting from, in
whole or in part, the negligent act or omission of the indemnitee, its officers,
employees or agents.

     

    18.8       Usury.  The
Loan Documents are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration or maturity of the indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid to
Lender for the use or the forbearance of the indebtedness evidenced hereby
exceed the maximum permissible under applicable law.  As used in this
Section 18.8, the term “applicable law” shall mean
the law in effect as of the date hereof, provided, however that in the event
there is a change in the law which results in a higher permissible rate of
interest, then the Loan Documents shall be governed by such new law as of its
effective date.  If, under or from any circumstances whatsoever,
fulfillment of any provision hereof or of any of the Loan Documents at the time
performance of such provision shall be due, shall involve transcending the limit
of such validity prescribed by applicable law, then the obligation to be
fulfilled shall automatically be reduced to the limits of such validity, and if
under or from any circumstances whatsoever the Lender should ever receive as
interest an amount which would exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the principal
balance evidenced hereby and not to the payment of interest.  This
provision shall control every other provision of all Loan
Documents.

     

    18.9       Severability.  In
the event that any one or more of the provisions contained in this Agreement or
any other Loan Document shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or such other Loan
Document.

     

    18.10     Governing
Law.  This
Agreement and the Loan Documents (except as otherwise expressly provided
therein), together with all of the rights and obligations of the parties hereto,
shall be construed, governed and enforced in accordance with the laws of the
State of New York, without giving effect to the principles of conflict of laws
thereof.

     

    18.11     Electronic
Communications.  Borrowing
base and compliance certificates submitted to the Lender electronically by a
representative of the Borrower shall be deemed to have been submitted and signed
by the representative sending the electronic communication.

    
      
         

      

      
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    18.12     Patriot
Act.  The
Lender hereby notifies the Credit Parties that pursuant to the requirements of
the USA Patriot Act (Title III of Pub. L. 107-56 signed into law
October 26, 2001 and for purposes of this Section 18.12 called the
“Act”), it is required
to obtain, verify, and record information that identifies the Credit Parties,
which information includes the name and address of the Credit Parties and other
information that will allow the Lender to identify the Credit Parties in
accordance with the Act.

     

    18.13     Counterparts.  This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same agreement, and any party hereto may
execute this Agreement by signing any such counterpart.

     

    18.14     Survival.  All
indemnities set forth herein shall survive the execution, delivery, and
termination of this Agreement and the Loan Documents and the making and
repayment of the Obligations.

     

    18.15     Jurisdiction.  Borrower
hereby irrevocably and unconditionally consents to jurisdiction and service of
process, which may be effected by certified mail in accordance with the
certified mail provisions contained in Section 18.4, in the Supreme Court
of the State of New York sitting in Monroe County, or of the United States
District Court for the Western District of New York.  Borrower hereby
irrevocably and unconditionally waives any objection it may have to the laying
of venue of any such action, suit or proceeding in any such court referred to in
this Section 18.15.  Borrower hereby irrevocably waives the
defense of an inconvenient forum to the maintenance of any such action, suit or
proceeding in any such court.

     

    18.16     Waiver of Trial by
Jury.  BORROWER
WAIVES TRIAL BY JURY OF ANY CLAIMS OR PROCEEDINGS WITH RESPECT TO THIS
AGREEMENT, THE LOAN DOCUMENTS, THE OBLIGATIONS AND ALL MATTERS RELATED HERETO TO
THE FULLEST EXTENT ALLOWED BY LAW.

     

    [Signature
Pages Follow]

    
      
         

      

      
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    [Signature
Page to Credit Agreement]

     

    IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
duly authorized representatives by their signatures below.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	

                                          MANUFACTURERS
      AND TRADERS TRUST COMPANY,

                                        	 
	 	 	 
	
                                          By:  

                                        	
                                             

                                        	 
	 	

                                          Brett
      W. Rawlings

                                        	 
	 	

                                          Assistant
      Vice President

                                        	 

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      	
                              IEC
      ELECTRONICS CORP.

                            	 
	 
      	 
	
                              By: 

                            	
                                 

                            	 
	 	

                              Susan
      E. Topel-Samek

                            	 
	 	

                              Vice
      President and Chief Financial Officer

                            	 

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
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    EXHIBIT
A

    FORM OF QUARTERLY COVENANT
COMPLIANCE SHEET

     

    See
attached.

    
      
         

      

      
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    EXHIBIT
B

    FORM OF REVOLVING CREDIT
NOTE

     

    AMENDED
AND RESTATED REVOLVING CREDIT NOTE

     

    
      	
              $20,000,000.00

            	
              December
      17, 2010

            

    

    IEC
ELECTRONICS CORP. (“Borrower”), a corporation
organized under the laws of Delaware, for value received, hereby promises to pay
to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“Lender”) the principal sum of
Twenty Million Dollars ($20,000,000.00) or, if less, the amount of the Revolving
Credit Loans loaned by the Lender to Borrower pursuant to the Agreement referred
to below, in lawful money of the United States of America and in immediately
available funds on the date(s) and in the manner provided in said Agreement and
with a final payment on the Revolving Credit Termination
Date.  Borrower also promises to pay interest on the unpaid principal
balance hereof, for the period such balance is outstanding, in like money, at
the rates of interest as provided in the Agreement described below, on the
date(s) and in the manner provided in said Agreement.

     

    The date
and amount of each Revolving Credit Loan made by the Lender to the Borrower
under the Agreement referred to below, maturity date and each payment of
principal thereof, shall be recorded by the Lender on its books.  The
Lender’s records shall be presumed to be accurate absent manifest
error.

     

    This is
the Revolving Credit Note referred to in that certain Third Amended and Restated
Credit Facility Agreement (as amended, supplemented, or restated from time to
time, the “Agreement”)
dated as of December 17, 2010, made among Borrower and Lender, and
evidences the Revolving Credit Loans made thereunder.  All capitalized
terms not defined herein shall have the meanings given to them in the
Agreement.

     

    Borrower
waives presentment, notice of dishonor, protest and any other notice or
formality with respect to this Revolving Credit Note.

     

    This
Revolving Credit Note shall be governed by the laws of the State of New
York.

     

    This
Revolving Credit Note evidences in part the obligations evidenced by, and
amends, restates, and replaces in its entirety the Amended and Restated
Revolving Credit Note made by the Borrower in favor of the Lender dated December
16, 2009.

     

    
      
        	 	
                IEC
      ELECTRONICS CORP.

              
	 	 
      
	 	
                By:

              	
                   

              
	 	 
      	 
      
	 	
                Title:

              	
                   

              

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
C

    FORM OF 2008 TERM LOAN
NOTE

     

    AMENDED
AND RESTATED 2008 TERM LOAN NOTE

     

    
      	
              Original
      Principal Amount  - $1,700,000

              Principal
      Amount As of Date of this Note - $689,988

            	
              December
      16, 2009

            

    

    

    IEC
ELECTRONICS CORP. (“Borrower”), a corporation
organized under the laws of Delaware, for value received, hereby promises to pay
to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“Lender”) the principal sum of
Six Hundred Eighty-Nine Thousand Nine Hundred Eighty-Eight Dollars ($689,988),
in lawful money of the United States of America and in immediately available
funds in consecutive installments of principal on the first day of each month in
the amount of $28,334 each.  The entire unpaid principal amount of
this Amended and Restated 2008 Term Loan Note (“2008 Term Loan Note”) shall
be due and payable on the 2008 Term Loan Maturity Date.  Borrower also
promises to pay interest on the unpaid principal balance hereof, for the period
such balance is outstanding, in like money, at the rates of interest as provided
in the Agreement described below, on the date(s) and in the manner provided in
said Agreement.

     

    This is
the 2008 Term Loan Note referred to in that certain Amended and Restated Credit
Facility Agreement (as amended, supplemented, and restated from time to time,
the “Agreement”) dated
as of December 16, 2009, made among Borrower and Lender, and evidences the
2008 Term Loan described therein.  All capitalized terms not defined
herein shall have the meanings given to them in the Agreement.

     

    Borrower
waives presentment, notice of dishonor, protest and any other notice or
formality with respect to this 2008 Term Loan Note.

     

    This 2008
Term Loan Note shall be governed by the laws of the State of New
York.

     

    This 2008
Term Loan Note evidences in part the obligations evidenced by, and amends,
restates, and replaces in its entirety the Term Loan Note made by the Borrower
in favor of the Lender dated May 30, 2008.

     

    
      
        
          	 	
                  IEC
      ELECTRONICS CORP.

                
	 	 
      
	 	
                  By:

                	
                     

                
	 	 
      	 
      
	 	
                  Title:

                	
                     

                

        

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
D

    FORM OF ENERGY LOAN NOTE
WITH RIDER

     

    See
attached

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
E

    FORM OF EQUIPMENT LINE
NOTE

     

    EQUIPMENT
LINE NOTE

     

    
      	
              $________________

            	
              _________________,
      20__

            

    

    

    IEC
ELECTRONICS CORP. (“Borrower”), a corporation
organized under the laws of Delaware, for value received, hereby promises to pay
to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“Lender”) the principal sum of
__________________ Dollars ($_____________), in lawful money of the United
States of America and in immediately available funds in consecutive installments
of principal on the first day of each month in the amount of $__________
each.  The entire unpaid principal amount of the Equipment Line Loan
evidenced hereby shall be due and payable on the Revolving Credit Line
Termination Date.  Borrower also promises to pay interest on the
unpaid principal balance hereof, for the period such balance is outstanding, in
like money, at the rates of interest as provided in the Agreement described
below, on the date(s) and in the manner provided in said
Agreement.  The initial interest rate hereunder shall be [the LIBOR
Rate for a LIBOR Interest Period of _______ months/the Fixed Rate of ________%
per annum.

     

    This is
an Equipment Line Note referred to in that certain Amended and Restated Credit
Facility Agreement (as amended from time to time, the “Agreement”) dated as of
December 16, 2009, made among Borrower and Lender, and evidences an
Equipment Line Loan made thereunder.  All capitalized terms not
defined herein shall have the meanings given to them in the
Agreement.

     

    Borrower
waives presentment, notice of dishonor, protest and any other notice or
formality with respect to this Equipment Line Note.

     

    This
Equipment Line Note shall be governed by the laws of the State of New
York.

     

    [The
Linked Deposit Program Rider attached to this Equipment Line Note is
incorporated herein by reference.]

     

    
      
        	 	
                IEC
      ELECTRONICS CORP.

              
	 	 
      
	 	
                By:

              	
                   

              
	 	 
      	 
      
	 	
                Title:

              	
                   

              

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
F

    FORM OF LINKED DEPOSIT
PROGRAM RIDER

     

    LINKED
DEPOSIT PROGRAM RIDER

     

    THIS
RIDER is made as _______________, 20___ by IEC ELECTRONICS CORP. (“Borrower”) in
favor of Manufacturers and Traders Trust Company (“Lender”) in connection with
and as an addendum to the Equipment Line Note dated on even date herewith in the
original principal amount of $_____________ (‘Note”).  Unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings as set forth in the Note and the Agreement referenced
therein.  To the extent that the terms of this Rider are inconsistent
with other terms in the Note, the terms of this Rider shall
control.

     

    1.      
     Definitions.

     

    “Adjusted Rate” shall mean on
any given day the rate selected by the Borrower pursuant to Section 5.1 of
the Agreement as in effect on the Closing Date, or any successor section
thereto.

     

    “Program Rate” shall mean the
rate equal to _____ percentage points below the initial Fixed Rate applicable to
the Note.

     

    “Reset Date” shall
mean:

     

    
      	
               
      

            	
               ̈

            	
              Not
      Applicable (the Note is to mature without a Reset
  Date.)

            

    

     

    
      	
               
      

            	
               ̈

            	
              the
      date _____ months from the date of the Note (which under no circumstances
      shall be more than forty-eight (48) months from the date of this
      Note).

            

    

     

    2.           Interest.  The
unpaid principal of this Note shall earn interest from and including the date
the proceeds of this Note are disbursed, to, but not including, the earlier of
the Reset Date (if applicable) or the final maturity date of the Note, at a rate
per year (“Interest
Rate”) which shall on each day be the Program Rate; provided, however,
the applicable Interest Rate prior to the earlier of the Reset Date (if
applicable) or the final maturity date of the Note shall automatically and
immediately (without further notice to Borrower) be adjusted to the Adjusted
Rate if (i) the Lender terminates its participation in the Linked Deposit
Program, (ii) the Linked Deposit Program is canceled or otherwise
terminated, (iii) Borrower’s right to participate in the Linked Deposit
Program is canceled, revoked or is otherwise not authorized, or (iv) all
requirements of the Linked Deposit Program have not been satisfied (as
determined by the Lender in its discretion) with respect to the Loan evidenced
by the Note.  Under any of the above scenarios, the Lender reserves
the right to charge Borrower for the amount of any interest that would have
accrued, or other amounts that would otherwise have been due to the Lender, if
the Adjusted Rate had been in effect from the date the proceeds of the Note were
disbursed, and the Lender will waive any applicable Prepayment
Premium.

     

    [From and
including the Reset Date (if applicable), to, but not including the date all
amounts hereunder are paid in full, the applicable Interest Rate shall be the
Adjusted Rate.]

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    3.           Recalculation of Principal
and Interest Installments.  To the extent (if at all) that the
Note contemplates repayment by Borrower in consecutive level installments of
principal and interest over the term of the Note until the Maturity Date, the
amount of each installment of principal and interest due and payable under the
Note may be adjusted by the Lender at any time to account for any change in the
applicable Interest Rate as described herein.  Absent manifest error,
the Lender’s calculation of the adjustment and determination of the ongoing
installment amounts shall be conclusive of the amounts due and payable by
Borrower.  Any such adjustment may affect the amount of the final
installment of principal due at the final maturity date of the
Note.

     

    
      
        
          	 	
                  IEC
      ELECTRONICS CORP.

                
	 	 
      
	 	
                  By:

                	
                     

                
	 	 
      	 
      
	 	
                  Title:

                	
                     

                

        

      

    

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

    EXHIBIT
G

    FORM OF GTC TERM LOAN
NOTE

     

    GTC TERM
LOAN NOTE

     

    
      	
              $5,000,000

            	
              December
      16, 2009

            

    

    

    IEC
ELECTRONICS CORP. (“Borrower”), a corporation
organized under the laws of Delaware, for value received, hereby promises to pay
to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“Lender”) the principal sum of
Five Million Dollars ($5,000,000), in lawful money of the United States of
America and in immediately available funds in consecutive installments of
principal on the first day of each month in the amount of $83,333
each.  The entire unpaid principal amount of this GTC Term Loan Note
(“GTC Term Loan Note”)
shall be due and payable on the GTC Term Loan Maturity Date.  Borrower
also promises to pay interest on the unpaid principal balance hereof, for the
period such balance is outstanding, in like money, at the rates of interest as
provided in the Agreement described below, on the date(s) and in the manner
provided in said Agreement.

     

    This is
the GTC Term Loan Note referred to in that certain Amended and Restated Credit
Facility Agreement (as amended, supplemented, and restated from time to time,
the “Agreement”) dated as of December 16, 2009, made among Borrower and
Lender, and evidences the GTC Term Loan described therein.  All
capitalized terms not defined herein shall have the meanings given to them in
the Agreement.

     

    Borrower
waives presentment, notice of dishonor, protest and any other notice or
formality with respect to this GTC Term Loan Note.

     

    This GTC
Term Loan Note shall be governed by the laws of the State of New
York.

     

    
      
        
          	 	
                  IEC
      ELECTRONICS CORP.

                
	 	 
      
	 	
                  By:

                	
                     

                
	 	 
      	 
      
	 	
                  Title:

                	
                     

                

        

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
H

    FORM OF MORTGAGE SECURED
TERM LOAN NOTE

     

    MORTGAGE
SECURED TERM LOAN NOTE

     

    
      	
              $4,000,000

            	
              December
      16, 2009

            

    

    

    IEC
ELECTRONICS CORP. (“Borrower”), a corporation
organized under the laws of Delaware, for value received, hereby promises to pay
to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“Lender”) the principal sum of
Four Million Dollars ($4,000,000), in lawful money of the United States of
America and in immediately available funds in consecutive installments of
principal on the first day of each month in the amount of $22,222
each.  The entire unpaid principal amount of this Mortgage Secured
Term Loan Note (“Mortgage
Secured Term Loan Note”) shall be due and payable on the Mortgage Secured
Term Loan Maturity Date.  Borrower also promises to pay interest on
the unpaid principal balance hereof, for the period such balance is outstanding,
in like money, at the rates of interest as provided in the Agreement described
below, on the date(s) and in the manner provided in said Agreement.

     

    This is
the Mortgage Secured Term Loan Note referred to in that certain Amended and
Restated Credit Facility Agreement (as amended, supplemented, and restated from
time to time, the “Agreement”) dated as of December 16, 2009, made among
Borrower and Lender, and evidences the Mortgage Secured Term Loan described
therein.  All capitalized terms not defined herein shall have the
meanings given to them in the Agreement.

     

    Borrower
waives presentment, notice of dishonor, protest and any other notice or
formality with respect to this Mortgage Secured Term Loan Note.

     

    This
Mortgage Secured Term Loan Note shall be governed by the laws of the State of
New York.

     

    
      
        
          	 	
                  IEC
      ELECTRONICS CORP.

                
	 	 
      
	 	
                  By:

                	
                     

                
	 	 
      	 
      
	 	
                  Title:

                	
                     

                

        

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
I

    FORM OF BORROWING BASE
REPORT

     

    See
attached

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
J

    CELMET TERM LOAN
NOTE

     

    
      	
              $2,000,000

            	
              July
      30, 2010

            

    

    

    IEC
ELECTRONICS CORP. (“Borrower”), a corporation
organized under the laws of Delaware, for value received, hereby promises to pay
to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“Lender”) the principal sum of
Two Million Dollars ($2,000,000), in lawful money of the United States of
America and in immediately available funds in consecutive installments of
principal on the first day of each month in the amount of $33,333.33
each.  The entire unpaid principal amount of this Celmet Term Loan
Note (“Celmet Term Loan
Note”) shall be due and payable on the Celmet Term Loan Maturity
Date.  Borrower also promises to pay interest on the unpaid principal
balance hereof, for the period such balance is outstanding, in like money, at
the rates of interest as provided in the Agreement described below, on the
date(s) and in the manner provided in said Agreement.

     

    This is
the Celmet Term Loan Note referred to in that certain Second Amended and
Restated Credit Facility Agreement (as amended, supplemented, and restated from
time to time, the “Agreement”) dated as of July 30, 2010, made among
Borrower and Lender, and evidences the Celmet Term Loan described
therein.  All capitalized terms not defined herein shall have the
meanings given to them in the Agreement.

     

    Borrower
waives presentment, notice of dishonor, protest and any other notice or
formality with respect to this Celmet Term Loan Note.

     

    This
Celmet Term Loan Note shall be governed by the laws of the State of New
York.

     

    
      
        	 	
                IEC
      ELECTRONICS CORP.

              
	 	 
      
	 	
                By:

              	
                   

              
	 	 
      	 
      
	 	
                Title:

              	
                   

              

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
K

    SCB TERM LOAN
NOTE

     

    
      	
              $20,000,000.00

            	
              December
      17, 2010

            

    

    

    IEC
ELECTRONICS CORP. (“Borrower”), a corporation
organized under the laws of Delaware, for value received, hereby promises to pay
to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (“Lender”) the principal sum of
Twenty Million Dollars ($20,000,000.00), in lawful money of the United States of
America and in immediately available funds in consecutive installments of
principal on the first day of each month in the amount of $333,333.33
each.  The entire unpaid principal amount of this SCB Term Loan Note
(“SCB Term Loan Note”)
shall be due and payable on the SCB Term Loan Maturity Date.  Borrower
also promises to pay interest on the unpaid principal balance hereof, for the
period such balance is outstanding, in like money, at the rates of interest as
provided in the Agreement described below, on the date(s) and in the manner
provided in said Agreement.

     

    This is
the SCB Term Loan Note referred to in that certain Third Amended and Restated
Credit Facility Agreement (as amended, supplemented, and restated from time to
time, the “Agreement”)
dated as of December 17, 2010, made among Borrower and Lender, and evidences the
SCB Term Loan described therein.  All capitalized terms not defined
herein shall have the meanings given to them in the Agreement.

     

    Borrower
waives presentment, notice of dishonor, protest and any other notice or
formality with respect to this SCB Term Loan Note.

     

    This SCB
Term Loan Note shall be governed by the laws of the State of New
York.

     

    
      
        
          
            	
                    IEC
      ELECTRONICS CORP.

                  
	 
      	 
      
	
                    By:

                  	  
      	  
      
	 
      	
                    Susan
      E. Topel-Samek

                  
	 
      	
                    Vice
      President and Chief Financial

                  
	 
      	
                    Officer

                  

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
1.1(A)

    SECURITY
DOCUMENTS

     

    Security
Agreement

     

    Amended
and Restated Negative Pledge Agreement dated December 16, 2009 between Borrower
and Lender.

     

    Second
Amended and Restated Pledge Agreement dated December 17, 2010.

     

    Trademark
Security Agreement dated as of May 30, 2008 by Borrower in favor of
Lender

     

    Trademark
Security Agreement dated as of December 17, 2010 by SCB in favor of
Lender

     

    Copyright
Security Agreement dated as of May 30, 2008 by Borrower in favor of
Lender

     

    Mortgage

     

    General
Assignment of Rents given by GTC to Lender and dated December 16,
2009

     

    Environmental
Compliance and Indemnification Agreement given by GTC and Borrower to Lender and
dated December 16, 2009

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    SCHEDULE
11.1

    CREDIT PARTIES;
JURISDICTIONS

     

    
      	
              Credit Party Name

            	 
      	
              Jurisdiction of Formation

            	 
      	
              Jurisdictions of Qualification

            
	
              IEC
      Electronics Corp.

            	 
      	
              Delaware

            	 
      	
              New
      York

            
	
              IEC
      Electronics Wire and Cable, Inc.

            	 
      	
              New
      York

            	 
      	
              None

            
	
              General
      Technology Corporation

            	 
      	
              New
      Mexico

            	 
      	
              California

            
	
              CSCB,
      Inc.*

            	
                

            	
              Delaware

            	
                

            	
              California*

            

    

    

    *CSCB,
Inc.’s name will be changed to Southern California Braiding, Inc. within ten
days after closing of the SCB Transaction, and it will then file for
qualification to do business in California

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
11.5

    LITIGATION

     

    None

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
11.13

    INTELLECTUAL
PROPERTY

     

    Registered
Trademarks:

     

    1.           “IEC”

    Registration
Number:  1646272

     

    2.        
   IEC Logo

    Registration
Number:  1650337

     

    3.           “SCB”
[with design]

    California
State Registration Number 00064779

     

    4.           SCB
[with design]

    California
State Registration Number 00064780

     

    Registered
Copyrights:

     

    1.           Type
of Work: Text

    Registration
Number:  TXu000800909

    Application
Title:  The IEC UCW Menu System.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
11.15

    SUBSIDIARIES AND
AFFILIATES

     

    
      	
              Subsidiary Name

            	 
      	
              Jurisdiction of Formation

            	 
      	
              Jurisdictions of Qualification

            
	
              IEC
      Electronics Wire and Cable, Inc.

            	 
      	
              New
      York

            	 
      	
              None

            
	
              General
      Technology Corporation

            	 
      	
              New
      Mexico

            	 
      	
              California

            
	
              CSCB,
      Inc.*

            	
                

            	
              Delaware

            	
                

            	
              California*

            

    

    

    *CSCB,
Inc.’s name will be changed to Southern California Braiding, Inc. within ten
days after closing of the SCB Transaction, and it will then file for
qualification to do business in California

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
11.17

    ERISA
MATTERS

     

    IEC Electronics
Corp.:

    

    IEC
Electronics Corp. Corporate 401k Plan

     

    Employee
Profit Sharing Plan

     

    2001
Stock Option and Incentive Plan, which covers employees of the Company and the
Subsidiaries [a proposal will be made for shareholder approval at the annual
meeting in 2011 of an updated incentive plan]

     

    Management
Incentive Plan

     

    Cafeteria
Plan (Medical/Dental/Flex Spending/Health Reimbursement)

     

    Long Term
Disability Plan/Short Term Disability Plan

     

    Life
Insurance Plan

    

    IEC Electronics Wire and
Cable, Inc.:

    

    IEC
Electronics Corp. Corporate 401k Plan

     

    Management
Incentive Plan

     

    Cafeteria
Plan (Medical/Dental/Flex Spending/Health Reimbursement)

     

    Long Term
Disability Plan/Short Term Disability Plan

     

    Life
Insurance Plan

    

    General Technology
Corporation:

    

    IEC
Electronics Corp. Corporate 401k Plan

     

    Management
Incentive Plan

     

    Cafeteria
Plan (Medical/Dental/Flex Spending/Health Reimbursement)

     

    Long Term
Disability Plan/Short Term Disability Plan

     

    Life
Insurance Plan

    

    CSCB,
Inc.:

    

    IEC
Electronics Corp. Corporate 401k Plan

     

    Management
Incentive Plan

     

    Cafeteria
Plan (Medical/Dental/Flex Spending/Health Reimbursement)

     

    Long Term
Disability Plan/Short Term Disability Plan

     

    Life
Insurance Plan

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE 14.1(a)

    DEBT

     

    $100,000
Bond held by Crane Fund for Widows and Children

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE 14.1(b)

    PERMITTED
LIENS

     

    Lien in
favor of USBancorp. on the following equipment:

     

    
      	
               
      

            	
              1

            	
              Xerox
      6204 1 Roll 36” Copier/Printer

            

    

     

    
      	
               
      

            	
              1

            	
              Xerox
      6204 5D Speed Key Upgrade

            

    

     

    1      Xerox
6204 2nd Drawer
Upgrade

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