Document:

Unassociated Document

    

      Exhibit
10.1

       

      EMPLOYMENT
AGREEMENT

       

      

       

      THIS AGREEMENT dated as of
24th
April, 2009 (the “Agreement”) by and between IEC ELECTRONICS CORP. (“IEC”)
and W. BARRY GILBERT
(“Executive”).

       

      

       

      WITNESSETH:

       

      

       

      WHEREAS, Executive is currently
employed as IEC’s Chief Executive Officer and has been so employed since 2002,
at which time IEC was in dire financial straits; and

       

      WHEREAS, during the period of
Executive’s employment, he has directed the growth of IEC and returned it to
profitability; and

       

      WHEREAS, IEC greatly values Executive’s
industry expertise and management skills and seeks to avail itself of his
continued services for an extended period of time.

       

      NOW, THEREFORE, in consideration of the
mutual covenants herein and other valid consideration, the sufficiency of which
is acknowledged, the parties agree as follows:

       

      
        	
                1.

              	
                Employment
      as CEO

              

      

       

      
        	
                 
      

              	
                1.1.

              	
                CEO
      Term.  IEC agrees to employ Executive as CEO, and
      Executive agrees to be so employed by IEC pursuant to this Agreement for a
      period commencing on the date hereof (the “Effective Date”) and ending on
      December 31, 2010, or such date as may be mutually agreed between the
      parties unless earlier terminated as provided herein (the “CEO
      Term”).

              

      

       

      
        	
                 
      

              	
                1.2.

              	
                Duties as
      CEO.  During the CEO Term, Executive shall serve as IEC’s
      Chief Executive Officer and shall have such other positions as an officer
      of IEC and its subsidiaries as Executive and the Board mutually agree from
      time to time.  In such positions, Executive shall perform such
      duties, functions and responsibilities commensurate with such positions as
      reasonably directed by the Board.

              

      

       

      
        	
                 
      

              	
                1.3.

              	
                Exclusivity.  During
      the CEO Term, and excluding any periods of vacation and sick leave to
      which Executive is entitled, Executive shall devote his full time and
      attention to the business and affairs of IEC, shall faithfully serve IEC,
      and shall in all material respects conform to and comply with the lawful
      and reasonable directions and instructions given to him by the Board,
      consistent with Section 1.2 hereof.  Executive shall use his
      best efforts to promote and serve IEC’s interests and shall not engage in
      any other business activity, whether or not such activity shall be engaged
      in for pecuniary profit; provided, however, that
      it shall not be a violation of this Agreement for Executive to serve on
      the boards of directors of other companies which do not compete with IEC
      and educational institutions, in both cases with the Chairman of the
      Board’s Compensation Committee’s prior written consent, which shall not be
      unreasonably withheld.

              

      

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      2.           Compensation as
CEO

       

      
        	
                 
      

              	
                2.1.

              	
                CEO
      Salary.  As compensation for the performance of
      Executive’s services hereunder during the CEO Term, IEC shall pay to
      Executive a salary at an annual rate of  two hundred
      seventy-five thousand dollars ($275,000) payable in accordance with IEC’s
      standard payroll policies (the “Base Salary”).  Increases to the
      Base Salary shall be based upon the Board of Directors’ annual evaluation
      of Executive’s performance and compensation
  analysis.

              

      

       

      
        	
                 
      

              	
                2.2.

              	
                Equity
      Awards.  Executive shall be eligible to receive equity
      awards at the sole discretion of the Board of Directors, which shall
      determine the amount and all terms and conditions applicable to any such
      awards.

              

      

       

      
        	
                3.

              	
                Employment
      as Advisor to Board

              

      

       

      
        	
                 
      

              	
                3.1.

              	
                Advisory
      Term.    Immediately upon the expiration of the
      CEO Term, IEC shall employ Executive as an Advisor to the Board of
      Directors, and Executive shall serve IEC for a period terminating on
      December 31, 2020 unless earlier terminated as provided herein (the
      “Advisory Term”).

              

      

       

      
        	
                 
      

              	
                3.2.

              	
                Services to be
      Rendered.    During the Advisory Term, the
      Executive agrees to consult with and advise IEC’s Board of Directors to
      the best of his abilities with respect to such matters involving the
      business and affairs of IEC as may be reasonably assigned to him by the
      Board of Directors of IEC and as are consistent with the his knowledge,
      abilities and experience; provided, however, that
      the total number of days of service required to be rendered by him shall
      be not less than seven (7) days per month.  IEC and the
      Executive shall mutually determine the dates on which advisory services
      are to be performed and the location at which he will perform such
      services.

              

      

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                3.3.

              	
                Duties as
      Advisor.    In performing his duties as
      Advisor, the Executive shall use his best efforts to promote the best
      interests of IEC and, subject to the non-competition provisions set forth
      in Section 9.2, may engage in any other business
    activities.

              

      

       

      4.           Compensation as an Advisor.
During the Advisory Term, Executive will receive compensation of Sixty
Two Thousand Five Hundred ($62,500) Dollars annually.  Increases to
the Advisory Compensation shall be based upon the Board of Directors’ periodic
evaluation of Executive’s performance.

       

      
        	
                5.

              	
                Incentive
      Payments

              

      

       

      
        	
                 
      

              	
                5.1.

              	
                At
      any time during both the CEO Term and the Advisory Term, Executive shall
      have the opportunity to earn up to three (3) additional cash incentive
      payments of One Hundred Twenty-Five Thousand ($125,000) Dollars
      (“Incentive Payments”), each one payable  upon the achievement
      of each of the following performance
conditions:

              

      

       

      
        	
                 
      

              	
                5.1.1.

              	
                IEC’s
      shares become listed on any of the following public exchanges: the AMEX,
      NYSE or the NASDAQ (“National Exchange”), payable in four equal
      installments of $31,250 each, with the first installment payable within
      thirty (30) days of such listing, and each subsequent installment payable
      within thirty days of the first, second and third anniversaries of such
      listing, provided that each payment shall be contingent upon Executive
      still serving as an employee and/or a director of IEC at the time such
      payment is due;

              

      

       

      
        	
                 
      

              	
                5.1.2.

              	
                IEC’s
      Daily Stock Price closes at $2.00 or more greater than the Listing Price
      for any 20 trading days during any 30 consecutive trading day period,
      payable in full within thirty (30) days of the last day of such 30
      consecutive trading day period;

              

      

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                5.1.3.

              	
                IEC’s
      Daily Stock Price closes at $4.00 or more greater than the Listing Price
      for any 20 trading days during any 30 consecutive trading-day period,
      payable in full within thirty (30) days of the last day of such 30
      consecutive trading day period.

              

      

       

      
        	
                 
      

              	
                5.1.4.

              	
                Definitions.  For
      purposes of this Section 5.1, the following definitions shall have the
      meanings ascribed to them:

              

      

       

      
        	
                 
      

              	
                5.1.4.1.

              	
                “Daily
      Stock Price” shall mean the average of the closing bid and ask prices with
      respect to IEC’s stock on the National Exchange upon which it is listed;
      and

              

      

       

      
        	
                 
      

              	
                5.1.4.2.

              	
                “Listing
      Price” means the closing price of IEC’s stock at the end of the first day
      of trading on a National Exchange.

              

      

       

      
        	
                 
      

              	
                5.1.4.3.

              	
                In
      the event of a recapitalization, stock split, reverse stock split,
      reorganization, merger, consolidation, split-up, spin-off, combination,
      repurchase or exchange of stock of the IEC or other similar corporate
      transaction or event affecting the stock would be reasonably likely to
      result in a change in the value of the IEC stock, the Board, in its sole
      discretion, shall  make an appropriate and equitable adjustment
      to sections 5.1.2 and 5.1.3 for purposes of determining Executive’s
      entitlement to Incentive Payments.

              

      

       

      
        	
                 
      

              	
                5.2.

              	
                During
      the CEO Term, Executive shall be eligible to participate in company
      incentive plans and programs as established by the board in its sole
      discretion on the same basis as other senior
  executives.

              

      

       

      6.           Benefits

       

      
        	
                 
      

              	
                6.1.

              	
                Generally.  During
      both the CEO Term and the Advisory Term, Executive shall be eligible to
      participate in such health and other group insurance and other employee
      benefit plans and programs of IEC as in effect from time to time on the
      same basis as other senior executives of
  IEC.  

              

      

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                6.2.

              	
                Medical
      Insurance.  During both the CEO Term and the Advisory
      Term, IEC will continue to pay the full cost of medical insurance for
      Executive and his spouse.

              

      

       

      
        	
                 
      

              	
                6.3.

              	
                Life
      Insurance.    Provided that Executive is and
      remains insurable, and Executive shall do, execute, acknowledge and
      deliver all documents, applications, instruments, assurances or acts
      (including but not limited to physical examinations), as may be necessary
      to obtain such insurance coverage, IEC agrees to maintain the following
      insurance policies:

              

      

       

      
        	
                 
      

              	
                6.3.1.

              	
                During
      both the CEO Term and the Advisory Term, a life insurance policy on
      Executive payable to the Executive’s designated beneficiary, with face
      value equal to $500,000; and

              

      

       

      
        	
                 
      

              	
                6.3.2.

              	
                Until
      December 31, 2014, IEC shall also maintain an existing key man life
      insurance policy for $1 million in face value, 25% of which shall be
      payable to Executive’s estate if he dies prior to December 31,
      2014.

              

      

       

      
        	
                 
      

              	
                6.3.3.

              	
                During
      both the CEO Term and the Advisory Term, IEC shall maintain an additional
      life insurance policy payable to Executive’s estate if he dies, with a
      minimum face value as indicated
below:

              

      

       

      
        
          
            
              	
                      Date

                    	
                      Minimum Face Amount

                    
	 	 
	
                      January
      1, 2009

                    	
                      $1,000,000

                    
	
                      January
      1, 2010

                    	
                      $1,000,000

                    
	
                      January
      1, 2011

                    	
                      $1,315,000

                    
	
                      January
      1, 2012

                    	
                      $1,252,000

                    
	
                      January
      1, 2013

                    	
                      $1,190,000

                    
	
                      January
      1, 2014

                    	
                      $1,127,500

                    
	
                      January
      1, 2015

                    	
                      $1,065,000

                    
	
                      January
      1, 2016

                    	
                      $1,002,500

                    
	
                      January
      1, 2017

                    	
                      $940,000

                    
	
                      January
      1, 2018

                    	
                      $877,500

                    
	
                      January
      1, 2019

                    	
                      $815,000

                    
	
                      January
      1, 2020

                    	
                      $752,500

                    

            

             

            
              
                 

              

              
                5

                
                  

                

              

              
                 

              

            

          

        

      

      The
Minimum Face Amount required shall be reduced by the aggregate amount of any
Incentive Payments previously earned and paid pursuant to section
5.1.

       

      
        	
                7.

              	
                Business
      Expenses

              

      

       

      
        	
                 
      

              	
                7.1.

              	
                IEC
      shall pay or reimburse Executive for all commercially reasonable business
      out-of-pocket expenses that Executive incurs during both the CEO Term and
      the Advisory Term in performing his duties under this Agreement upon
      presentation of documentation and in accordance with the expense
      reimbursement policy of IEC as approved by the Board (or a committee
      thereof) and in effect from time to
time.

              

      

       

      
        	
                 
      

              	
                7.2.

              	
                During
      the CEO Term, IEC shall reimburse Executive for all reasonable gasoline
      and repair costs for his vehicle, provided that such reimbursements shall
      not exceed the sum of $3000 in any given calendar
  year.

              

      

       

      
        	
                8.

              	
                Termination

              

      

       

      
        	
                 
      

              	
                8.1.

              	
                Termination of CEO
      Employment and Advisory
Employment.

              

      

       

      
        	
                 
      

              	
                8.1.1.

              	
                Notice.  IEC
      may terminate Executive’s CEO employment or Advisory employment for any
      reason during their respective Terms, and Executive may voluntarily
      terminate his employment for any reason during the Terms, in each case
      (other than a termination by IEC for Cause) at any time upon not less than
      thirty (30) days’ written notice to the other
  party.

              

      

       

      
        	
                
                

              	
                8.1.2. 

              	
                                     Accrued
      Amounts. Upon the termination of Executive’s CEO employment with
      IEC for any reason, Executive shall be entitled to the following: (i) any
      Base Salary earned but unpaid through the date of termination, (ii) any
      accrued but unused vacation time, (iii) any unreimbursed business expenses
      in accordance with Section 7.1 hereof, and (iv) to the extent not
      theretofore paid or provided, any other amounts or benefits required to be
      paid or provided under any plan, program, policy or practice or other
      contract or agreement of IEC through the date of
      termination.  Upon the termination of Executive’s Advisory
      Employment, Executive shall be entitled to (i) any advisory compensation
      earned but unpaid through the date of termination; (ii) any unreimbursed
      business expenses in accordance with Section 7.1 hereof; and  (iii) to the extent not
      theretofore paid or provided, any other amounts or benefits required to be
      paid or provided under any plan, program, policy or practice or other
      contract or agreement of IEC through the date of termination
      (collectively, “Accrued Amounts”).

              

      

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                8.1.3.

              	
                Upon
      termination by the Company for Cause or by the Executive without Good
      Reason, Executive shall forfeit all unvested equity and unearned Incentive
      Payments.

              

      

       

      
        	
                 
      

              	
                8.2.

              	
                Payments Upon Certain
      Other Terminations.

              

      

       

      Upon
certain other terminations, Executive may be entitled to additional payments as
provided below.

       

      
        	
                 
      

              	
                8.2.1.

              	
                Termination During CEO
      Term by IEC without Cause or by Executive for Good Reason or due to a
      Change in Control.  If Executive’s employment is
      terminated during the CEO Term (i) by IEC without Cause (other than upon
      Executive’s death, or Disability); (ii) by Executive for Good Reason, or
      (iii) following a Change in Control and without Cause or for Good
      Reason,  Executive shall be entitled to the
      following:

              

      

       

      
        	
                 
      

              	
                8.2.1.1.

              	
                Accrued
      Amounts pursuant to Section 8.1.2;

              

      

       

      
        	
                 
      

              	
                8.2.1.2.

              	
                Two
      (2) times Executive’s Annual Base Salary payable in twenty-four (24) equal
      monthly installments as in effect immediately prior to the date of
      termination; plus (i) the higher of Executive’s (a) actual annual
      incentive for the year in which the Termination occurs or (b) target
      annual incentive for such year, (ii) pro rated by a fraction equal to the
      number of days of the year through the date of Termination divided by 365,
      payable within sixty (60) days of Termination, unless delayed for §409A
      compliance as set forth in section
8.2.9;

              

      

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                8.2.1.3.

              	
                $375,000,
      representing the lost opportunity to earn the incentives provided for in
      Section 5.1 payable within sixty (60) days of Termination, unless delayed
      for §409A compliance provided that, the amount of any such incentives
      previously earned and paid to Executive pursuant to Section 5.1 shall be
      deducted from the $375,000 due Executive pursuant to this
      Section;

              

      

       

      
        	
                 
      

              	
                8.2.1.4.

              	
                (i)
      all unvested equity held by Executive shall be deemed immediately vested,
      and (ii) any restrictions applicable to any restricted shares held by
      Executive shall be removed.  Any stock options may be exercised,
      in whole or in part, at any time on or before the earlier to occur of (x)
      the expiration date of the option and (y) the first anniversary of the
      date of such Termination; and

              

      

       

      
        	
                 
      

              	
                8.2.1.5.

              	
                continuation
      of Executive’s medical benefits on the same terms and conditions as if
      Executive were an active senior executive of IEC until Executive and his
      spouse become 65 and eligible for Medicare Supplemental Insurance, or such
      earlier time as Executive becomes eligible for medical benefits from a
      subsequent employer or other company (“Benefits Continuation”)(all such
      severance payments and Benefits Continuation referred to collectively, as
      the “Severance Payments”).

              

      

       

      
        	
                 
      

              	
                8.2.2.

              	
                Termination By IEC
      During Advisory Term without Cause or by Executive for Good Reason.
      If Executive’s engagement is terminated during the Advisory Term (i) by
      IEC without Cause (other than upon Executive’s death, or Disability); or
      (ii) following a Change in Control and without Cause or for Good Reason,
      Executive shall be entitled to the
following:

              

      

       

      
        	
                 
      

              	
                8.2.2.1.

              	
                Accrued
      Amounts pursuant to Section 8.1.2;

              

      

       

      
        	
                 
      

              	
                8.2.2.2.

              	
                The
      balance of advisory compensation paid annually through the end of the
      Advisory Term;

              

      

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                8.2.2.3.

              	
                The
      product of “AA” times “BB”, (representing the lost opportunity to earn the
      Incentive Payments provided for in Section 5.1), where “AA” equals
      $375,000 minus any amounts previously earned and paid to Executive
      pursuant to said section, and BB equals the
  following:

              

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	
                                        Year Termination

                                      	
                                        “BB” Factor

                                      
	 	 
	
                                        2011

                                      	
                                        1.0

                                      
	 	 
	
                                        2012

                                      	
                                        .9

                                      
	 	 
	
                                        2013

                                      	
                                        .8

                                      
	 	 
	
                                        2014

                                      	
                                        .7

                                      
	 	 
	
                                        2015

                                      	
                                        .6

                                      
	 	 
	
                                        2016

                                      	
                                        .5

                                      
	 	 
	
                                        2017

                                      	
                                        .4

                                      
	 	 
	
                                        2018

                                      	
                                        .3

                                      
	 	 
	
                                        2019

                                      	
                                        .2

                                      
	 	 
	
                                        2020

                                      	
                                        .1

                                      

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

           

        

      

      
        	
                 
      

              	
                8.2.2.4.

              	
                (i)
      all unvested equity held by Executive shall be deemed immediately vested,
      and (ii) any restrictions applicable to any restricted shares held by
      Executive shall be removed.   Any stock options may be
      exercised, in whole or in part, at any time on or before the earlier to
      occur of (x) the expiration date of the option and (y) the first
      anniversary of the date of such
Termination.

              

      

       

      
        	
                 
      

              	
                8.2.2.5.

              	
                continuation
      of Executive’s medical benefits on the same terms and conditions as if
      Executive were an active senior executive of IEC until Executive and his
      spouse become 65 and eligible for Medicare Supplemental Insurance, or such
      earlier time as Executive becomes eligible for medical benefits from a
      subsequent employer or other company (“Benefits Continuation”)(all such
      severance payments and Benefits Continuation referred to collectively, as
      the “Severance Payments”).

              

      

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                8.2.3.

              	
                IEC’s
      obligation to make the Severance Payments shall be conditioned upon each
      of the following:  (i) Executive’s continued compliance with his
      obligations under Section 9 of this Agreement; and (ii) Executive’s
      execution, delivery and non-revocation of a valid and enforceable general
      release of claims (the “Release”) in form and substance satisfactory to
      IEC, which must be delivered to IEC within ten (10) business days after
      termination.  In the event that Executive breaches any of the
      covenants set forth in Section 9 of this Agreement, Executive will
      immediately return to IEC any portion of the Severance Payments that have
      been paid to Executive pursuant to this Section.  Subject to
      Section 8.2.9, the Severance Payments will commence to be paid to
      Executive as soon as practicable following the effectiveness of the
      Release.

              

      

       

      
        	
                 
      

              	
                8.2.4.

              	
                Termination upon
      Death.  If Executive’s employment is terminated during
      either the CEO Term or the Advisory Term due to Executive’s death, the
      following amounts shall be paid to Executive’s
  estate:

              

      

       

      
        	
                 
      

              	
                8.2.4.1.

              	
                Accrued
      Amounts pursuant to Section 8.1.2;

              

      

       

      
        	
                 
      

              	
                8.2.4.2.

              	
                Proceeds
      of insurance policies then in force in accordance with Section 6.3.1,
      6.3.2 and 6.3.3 of this Agreement, or in accordance with any additional
      plan, policy or practice of IEC.

              

      

       

      
        	
                 
      

              	
                8.2.4.3.

              	
                Any
      insurance proceeds shall be paid to Executive’s designated beneficiary or
      estate consistent with Executive’s
election.

              

      

       

      
        	
                 
      

              	
                8.2.5.

              	
                Termination for
      Disability During CEO Term.

              

      

       

      
        	
                 
      

              	
                8.2.5.1.

              	
                If
      Executive is terminated for disability during the CEO Term, he shall be
      entitled to receive (a) two (2) times Executive’s Annual Base Salary as in
      effect immediately prior to the date of terminatin, payable in twenty-four
      (24) equal monthly installments, reduced by any payments received by him
      pursuant to IEC’s Long Term Disability coverage, or any applicable plan,
      policy or practice, plus (b) Executive’s target annual incentive for the
      year in which the Termination occurs, (ii) pro rated by a fraction equal
      to the number of days of the year through the date of Termination divided
      by 365, payable within sixty (60) days of Termination, unless delayed for
      §409A compliance.

              

      

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                8.2.5.2.

              	
                In
      addition, Executive shall be entitled to receive $375,000, representing
      the lost opportunity to earn the incentives provided for in Section 5.1
      payable within sixty (60) days of Termination, unless delayed for §409A
      compliance, provided that, the amount of any such incentives previously
      earned and paid to Executive pursuant to Section 5.1 shall be deducted
      from the $375,000 due Executive pursuant to this
  Section.

              

      

       

      
        	
                 
      

              	
                8.2.5.3.

              	
                (i)
      all unvested equity held by Executive shall be deemed immediately vested,
      and (ii) any restrictions applicable to any restricted shares held by
      Executive shall be removed.  Any stock options may be exercised,
      in whole or in part, at any time on or before the earlier to occur of (x)
      the expiration date of the option and (y) the first anniversary of the
      date of such Termination; and

              

      

       

      
        	
                 
      

              	
                8.2.5.4.

              	
                If
      such termination for Disability occurs prior to Executive’s 65th
      birthday, Executive shall retain employee status for purposes of IEC’s
      benefits programs (except participation in IEC’s 401(k) plan) until the
      earlier of age 65 or receipt of retirement benefits from
    IEC.

              

      

       

      
        	
                 
      

              	
                8.2.5.5.

              	
                If
      after such termination for Disability Executive recovers and is not
      offered his CEO position back, his termination shall be treated as a
      termination by IEC without Cause, and he shall be entitled to receive the
      benefits provided for in Section 8.2.1 except for any such benefits which
      have already been received.

              

      

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                8.2.5.6.

              	
                If
      Executive is offered the CEO position by IEC and refuses to re-commence
      employment, such termination shall be treated as a termination by
      Executive, and he shall be entitled only to receive any Accrued
      Amounts.

              	 

      

       

      
        	
                 
      

              	
                8.2.6.

              	
                Termination for
      Disability During Advisory
Term.

              

      

       

      
        	
                 
      

              	
                8.2.6.1.

              	
                If
      Executive is terminated for disability during the Advisory Term, he shall
      be entitled to receive two (2) times Executive’s annual advisory
      compensation as in effect immediately prior to the date of termination,
      payable in twenty-four (24) equal monthly installments, reduced by any
      payments received by him pursuant to IEC’s Long Term Disability coverage,
      or any applicable plan, policy or
practice.

              

      

       

      
        	
                 
      

              	
                8.2.6.2.

              	
                In
      addition, Executive shall be entitled to receive $375,000, representing
      the lost opportunity to earn the incentives provided for in Section 5.1
      payable within sixty (60) days of Termination, unless delayed for §409A
      compliance, provided that, the amount of any such incentives previously
      earned and paid to Executive pursuant to Section 5.1 shall be deducted
      from the $375,000 due Executive pursuant to this
  Section.

              

      

       

      
        	
                 
      

              	
                8.2.6.3.

              	
                (i)
      all unvested equity held by Executive shall be deemed immediately vested,
      and (ii) any restrictions applicable to any restricted shares held by
      Executive shall be removed.  Any stock options may be exercised,
      in whole or in part, at any time on or before the earlier to occur of (x)
      the expiration date of the option and (y) the first anniversary of the
      date of such Termination.

              

      

       

      
        	
                 
      

              	
                8.2.6.4.

              	
                If
      such termination for Disability occurs prior to Executive’s 65th
      birthday, Executive shall retain employee status for purposes of IEC’s
      benefits programs (except participation in IEC’s 401(k) plan) until the
      earlier of age 65 or receipt of retirement benefits from
    IEC.

              

      

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                8.2.7.

              	
                Definitions.
      For purposes of this Section 8.2, the following terms shall have the
      following meanings:

              

      

       

      
        	
                 
      

              	
                8.2.7.1.

              	
                “Cause”
      shall mean Executive’s (i) substantial and material failure, or refusal to
      perform the duties of CEO of IEC which is not cured within ten (10) days
      of Executive receiving written notice of such failure, provided that that
      a failure to meet the business plan of IEC alone, or good faith errors in
      judgment made by the Executive, shall not constitute grounds for
      termination of the Executive for Cause ; (ii) continuing failure or
      refusal to observe material policies generally applicable to officers or
      employees of IEC unless such failure is capable of being cured and is
      cured within ten (10) days of Executive receiving written notice of such
      failure; (iii) failure to cooperate with any internal investigation of
      IEC; (iv) commission of any act of fraud, theft or financial dishonesty
      with respect to IEC; (v)  conviction of any felony, or an
      indictment of a crime which is of such impropriety or magnitude that it
      substantially adversely affects the business or  the reputation
      of IEC ; (vi) material violation of the provisions of this Agreement
      unless such violation is capable of being cured and is cured within ten
      (10) days of Executive receiving written notice of such violation; or (vi)
      refusal to follow any legal and proper directive of the Board which is not
      cured within ten (10) days of Executive receiving written
      notice.

              

      

       

      
        	
                 
      

              	
                8.2.7.2.

              	
                “Change
      in Control” means:  (a) the date of the acquisition by any
      “person” (within the meaning of Section 13(d)(3) or 14(d)(2) of the
      Exchange Act, excluding IEC and or any of its subsidiaries, of beneficial
      ownership (within the meaning of Rule 13d-3 under the Exchange Act) of 25%
      or more of either the then outstanding shares of stock of IEC or the then
      outstanding voting securities entitled to vote generally in the election
      of directors; or (b) the date the individuals who constitute the board as
      of the effective date of this Agreement (the “Incumbent Board”) cease for
      any reason to constitute at least two-thirds of the members of the board,
      provided that any person becoming a director subsequent to the effective
      date of this Agreement whose election, or nomination for election by IEC’s
      shareholders, was approved by a vote of at least a majority of the
      directors then comprising the Incumbent Board (other than any individual
      whose nomination for election to the board was not endorsed by IEC’s
      management prior to, or at the time of, such individual’s initial
      nomination for election ) shall be, for the purposes of this Agreement,
      considered as though such person were a member of the Incumbent Board; or
      (c) the date of consummation of a merger, consolidation, recapitalization,
      reorganization, sale or disposition of all or a substantial portion of
      IEC’s assets or the issuance of shares of stock of IEC in connection with
      the acquisition of the stock or assets of another entity; provided,
      however, that a Change in Control shall not occur under this clause(c) if
      consummation of the transaction would result in at least 51% of the total
      voting power represented by the voting securities of IEC (or, if not IEC,
      the entity that succeeds to all or substantially all of the Company’s
      business) outstanding immediately after such transaction being
      beneficially owned (within the meaning of Rule 13d-3 promulgated pursuant
      to the Exchange Act) by at least 51% of the holders of outstanding voting
      securities of IEC immediately prior to the transaction, with the voting
      power of each such continuing holder relative to other such continuing
      holders not substantially altered in the transaction; or (d) the date IEC
      files a report or proxy statement with the Securities and Exchange
      Commission pursuant to the Exchange Act disclosing in response to Form 8-K
      or Schedule 14A (or any successor schedule, form or report of item
      therein) that a change in control of IEC has or may have occurred, or will
      or may occur in the future, pursuant to any then existing contract or
      transaction.

              

      

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                8.2.7.3.

              	
                “Disability”
      shall mean Executive is entitled to receive long-term disability benefits
      under the long-term disability plan of IEC in which Executive
      participates, or, if there is no such plan, Executive’s inability, due to
      physical or mental ill health, to perform the essential functions of
      Executive’s job, with or without a reasonable accommodation, for 180 days
      during any 365-day period irrespective of whether such days are
      consecutive.

              

      

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                8.2.7.4.

              	
                “Good
      Reason” shall mean (i) a material and adverse change in Executive’s duties
      or responsibilities; (ii) a reduction in Executive’s CEO Base Salary or
      incentive opportunity pursuant to Section 5.1; or (iii) a relocation of
      Executive’s principal place of employment by more than fifty (50) miles.
      Good Reason shall only apply during the CEO
  Term.

              

      

       

      
        	
                 
      

              	
                8.2.8.

              	
                Additional Benefits
      Continuation.  Notwithstanding the foregoing, upon any
      termination of executive’s employment during the Advisory Term without
      cause, IEC shall continue to pay Executive’s medical, dental and long term
      care insurance premiums for Executive and his spouse until December 31,
      2020.  For purposes of clarification, in the event of
      Executive’s death, such insurance shall continue on Executive’s spouse
      until December 31, 2020.

              

      

       

      
        	
                 
      

              	
                8.2.9.

              	
                Section 409A Specified
      Employee.  If Executive is a “specified employee” for
      purposes of Section 409A of the United States Internal Revenue Code of
      1986, as amended (the “Code”), and the regulations thereunder, to the
      extent required to comply with Section 409A of the Code, any Severance
      Payments or Incentive Payments required to be made pursuant to Section 8.2
      which are subject to Section 409A of the Code shall not commence until one
      day after the day which is six (6) months from the date of termination,
      with the first payment equaling six (6) months of his Base Salary at the
      rate in effect immediately prior to the date of
    termination.

              

      

       

      
        	
                 
      

              	
                8.2.10.

              	
                Exclusive
      Remedy.  The foregoing payments upon termination of
      Executive’s employment shall constitute the exclusive severance payments
      due Executive upon a termination of his employment under this
      Agreement.

              

      

       

      
        	
                 
      

              	
                8.3.

              	
                Resignation from All
      Positions.  Upon the termination of Executive’s
      employment with IEC for any reason (other than the cessation of the CEO
      Term on December 31, 2010), Executive shall be deemed to have resigned, as
      of the date of such termination, from all positions he then holds as an
      officer, director, employee and member of the Board (and any committee
      thereof) and the board of directors (and any committee thereof) of any of
      IEC’s affiliates.

              

      

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                8.4.

              	
                Cooperation.  Following
      the termination of Executive’s employment with IEC for any reason,
      Executive agrees to reasonably cooperate with IEC upon reasonable request
      of the Board and to be reasonably available to IEC with respect to matters
      arising out of Executive’s services to IEC.  IEC shall pay
      Executive a reasonable fee for any such services and promptly reimburse
      Executive for expenses reasonably incurred in connection with such
      matters.

              

      

       

      
        	
                9.

              	
                Restrictive
      Covenants

              

      

       

      
        	
                 
      

              	
                9.1.

              	
                Unauthorized
      Disclosure.  Executive agrees and understands that in his
      capacity as CEO of IEC, Executive has been and will be exposed to and has
      and will receive information relating to the confidential affairs of IEC
      and its affiliates, including, without limitation, technical information,
      intellectual property, business and marketing plans, strategies, customer
      information, software, other information concerning the products,
      promotions, development, financing, expansion plans, business policies and
      practices of IEC and its affiliates and other forms of information
      considered by IEC and its affiliates to be confidential or in the nature
      of trade secrets (including, without limitation, ideas, research and
      development, know-how, formulas, technical data, designs, drawings,
      specifications, customer and supplier lists, pricing and cost information
      and business and marketing plans and proposals) (collectively, the
      “Confidential Information”).  Executive agrees that at all times
      during Executive’s employment with IEC and thereafter, Executive shall not
      disclose such Confidential Information, either directly or indirectly, to
      any individual, corporation, partnership, limited liability company,
      association, trust or other entity or organization, including a government
      or political subdivision or an agency or instrumentality thereof (each a
      “Person”) other than in connection with Executive’s employment with IEC
      without IEC’s prior written consent and shall not use or attempt to use
      any such information in any manner other than in connection with his
      employment with IEC, unless required by law to disclose such information,
      in which case Executive shall provide IEC with written notice of such
      requirement as far in advance of such anticipated disclosure as
      possible.  This confidentiality covenant has no temporal,
      geographical or territorial restriction.  Upon termination of
      Executive’s employment with IEC, Executive shall promptly supply to IEC
      all property, keys, notes, memoranda, writings, lists, files, reports,
      customer lists, correspondence, tapes, disks, cards, surveys, maps, logs,
      machines, technical data and any other tangible product or document which
      has been produced by, received by or otherwise submitted to Executive
      during Executive’s employment with IEC, and any copies thereof in his (or
      capable of being reduced to his) possession; provided however, that
      Executive may retain his full rolodex or similar address and telephone
      directories.

              

      

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                9.2.

              	
                Non-Competition.  By
      and in consideration of IEC’s entering into this Agreement and in further
      consideration of Executive’s exposure to the Confidential Information of
      IEC, Executive agrees that he shall not, during the CEO and Advisory Terms
      and for a period of thirty-six (36) months thereafter (the “Restriction
      Period”), directly or indirectly, perform similar employment functions for
      or on behalf of  any Restricted Enterprise (as defined below);
      provided that in no event shall ownership of one percent (1%) or less of
      the outstanding securities of any class of any issuer whose securities are
      registered under the Securities Exchange Act of 1934, as amended, standing
      alone, be prohibited by this Section 9.2, so long as Executive does not
      have, or exercise, any rights to manage or operate the business of such
      issuer other than rights as a stockholder thereof.  For purposes
      of this paragraph, “Restricted Enterprise” shall mean any Person that is
      actively engaged in any geographic area in any business which is either
      (i) in competition with the business of IEC; or (ii) proposed to be
      conducted by IEC in IEC’s business plan as in effect at that
      time.  During the Restriction Period, upon request of IEC,
      Executive shall notify IEC of Executive’s then current employment
      status.  Notwithstanding the foregoing, that it shall not be a
      violation of this Agreement for Executive to serve on the boards of
      directors of other companies which do not compete with IEC and educational
      institutions, in both cases with the Board’s prior written consent, which
      shall not be unreasonably withheld.

              

      

       

      
        	
                 
      

              	
                9.3.

              	
                Non-Solicitation of
      Employees.  During the Restriction Period, Executive
      shall not directly or indirectly contact, induce or solicit (or assist any
      Person to contact, induce or solicit) for employment any person who is, or
      within thirty-six (36) prior to the date of such solicitation was, an
      employee of IEC or any of its
affiliates.

              

      

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                9.4.

              	
                Interference with
      Business Relationships.  During the Restriction Period
      (other than in connection with carrying out his responsibilities for IEC
      and its affiliates), Executive shall not directly or indirectly contact,
      induce or solicit (or assist any Person to contact, induce or solicit) any
      customer or client of IEC or its subsidiaries to terminate its
      relationship or otherwise cease doing business in whole or in part with
      IEC or its subsidiaries, or directly or indirectly interfere with (or
      assist any Person to interfere with) any material relationship between IEC
      or its subsidiaries and any of its or their customers or clients so as to
      cause harm to IEC or its
affiliates.

              

      

       

      
        	
                 
      

              	
                9.5.

              	
                Extension of
      Restriction Period.  The Restriction Period shall be
      tolled for any period during which Executive is in breach of any of
      Sections 9.2, 9.3 or 9.4 hereof.

              

      

       

      
        	
                 
      

              	
                9.6.

              	
                Proprietary
      Rights.  Executive shall disclose promptly to IEC any and
      all inventions, discoveries, and improvements (whether or not patentable
      or registrable under copyright or similar statutes), and all patentable or
      copyrightable works, initiated, conceived, discovered, reduced to
      practice, or made by him, either alone or in conjunction with others,
      during Executive’s employment with IEC and related to the business or
      activities of IEC and its affiliates (the
      “Developments”).  Except to the extent any rights in any
      Developments constitute a work made for hire under the U.S. Copyright Act,
      17 U.S.C. § 101 et
      seq. that are owned ab initio by IEC and/or
      its applicable affiliate, Executive assigns all of his right, title and
      interest in all Developments (including all intellectual property rights
      therein) to IEC or its nominee without further compensation, including all
      rights or benefits therefor, including without limitation the right to sue
      and recover for past and future infringement.  Executive
      acknowledges that any rights in any Developments constituting a work made
      for hire under the U.S. Copyright Act, 17 U.S.C § 101 et seq. are owned
      upon creation by IEC and/or its applicable affiliate as Executive’s
      employer.  Whenever requested to do so by IEC, Executive shall
      execute any and all applications, assignments or other instruments which
      IEC shall deem necessary to apply for and obtain trademarks, patents or
      copyrights of the United States or any foreign country or otherwise
      protect the interests of IEC and its affiliates therein.  These
      obligations shall continue beyond the end of Executive’s employment with
      IEC with respect to inventions, discoveries, improvements or copyrightable
      works initiated, conceived or made by Executive while employed by IEC, and
      shall be binding upon Executive’s employers, assigns, executors,
      administrators and other legal representatives.  In connection
      with his execution of this Agreement, Executive has informed IEC in
      writing of any interest in any inventions or intellectual property rights
      that he holds as of the date hereof as set forth on Exhibit A
      hereto (the “Existing Inventions”).  Notwithstanding anything to
      the contrary herein, the Developments shall not include any Existing
      Inventions.  If IEC is unable for any reason, after reasonable
      effort, to obtain Executive’s signature on any document needed in
      connection with the actions described in this Section 9.6, Executive
      hereby irrevocably designates and appoints IEC and its duly authorized
      officers and agents as Executive’s agent and attorney in fact to act for
      and on Executive’s behalf to execute, verify and file any such documents
      and to do all other lawfully permitted acts to further the purposes of
      this Section 9.6 with the same legal force and effect as if executed by
      Executive.

              

      

       

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                9.7.

              	
                Confidentiality of
      Agreement.  Other than with respect to information
      required to be disclosed by applicable law, the parties hereto agree not
      to disclose the terms of this Agreement to any Person; provided that
      Executive may disclose this Agreement and/or any of its terms to
      Executive’s immediate family, financial advisors and attorneys, so long as
      Executive instructs every such Person to whom Executive makes such
      disclosure not to disclose the terms of this Agreement
      further.

              

      

       

      
        	
                 
      

              	
                9.8.

              	
                Remedies.  Executive
      agrees that any breach of the terms of this Section 9 would result in
      irreparable injury and damage to IEC for which IEC would have no adequate
      remedy at law; Executive therefore also agrees that in the event of said
      breach or any threat of breach, IEC shall be entitled to an immediate
      injunction and restraining order to prevent such breach and/or threatened
      breach and/or continued breach by Executive and/or any and all Persons
      acting for and/or with Executive, without having to prove damages, in
      addition to any other remedies to which IEC may be entitled at law or in
      equity, including, without limitation, the obligation of Executive to
      return any Severance Payments made by IEC to IEC.  The terms of
      this paragraph shall not prevent IEC from pursuing any other available
      remedies for any breach or threatened breach hereof, including, without
      limitation, the recovery of damages from Executive.  Executive
      and IEC further agree that the provisions of the covenants contained in
      this Section 9 are reasonable and necessary to protect the businesses of
      IEC and its affiliates because of Executive’s access to Confidential
      Information and his material participation in the operation of such
      businesses.

              

      

       

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                9.9.

              	
                Litigation
      Support.  Executive agrees to make himself reasonably
      available in the event IEC needs him to participate in any litigation
      involving the company.  Executive shall be entitled to full
      reimbursement of all reasonable expenses incurred during such litigation
      support, upon presentation of appropriate documentation to IEC in
      accordance with IEC’s standard reimbursement policies and
      procedures.  Any such litigation support during the Advisory
      Term shall be counted towards the seven (7) days per month required
      pursuant to section 3.2.

              

      

       

      10.           Representations.

       

      Executive
and IEC each represents and warrants that (i) he or it is not subject to any
contract, arrangement, policy or understanding, or to any statute, governmental
rule or regulation, that in any way limits his or its ability to enter into and
fully perform his or its obligations under this Agreement; and (ii) he or it is
not otherwise unable to enter into and fully perform his or its obligations
under this Agreement.

       

      11.           Non-Disparagement.

       

      From and
after the Effective Date and following termination of Executive’s employment
with IEC, Executive agrees not to make any statement (other than statements made
in connection with carrying out his responsibilities for IEC and its affiliates)
that is intended to become public, or that should reasonably be expected to
become public, and that criticizes, ridicules, disparages or is otherwise
derogatory of IEC or any of its subsidiaries, affiliates, employees, officers,
directors or stockholders.  IEC shall cause its officers and directors
not to make any statement that
criticizes, ridicules, disparages or is otherwise derogatory of Executive and
further agrees that IEC will be financially responsible for any breach of this
provision by its directors and officers.

       

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

      12.           Withholding.

       

      IEC may
withhold from any amounts payable under this Agreement such Federal, state local
or foreign taxes as shall be required to be withheld pursuant to any applicable
law or regulation.  Executive shall be solely responsible for the
payment of all taxes relating to the payment or provision of any amounts or
benefits hereunder.

       

      
        	
                13.

              	
                Dispute
      Resolution.    

              

      

       

      Except
with respect to an action by IEC to enforce Section 9 of this Agreement and
without prejudice to the rights of IEC with respect to payment of severance
payments under Section 8.2.3 hereof, any dispute arising under pursuant to this
Agreement will be decided by binding arbitration in Rochester, New York in
accordance with the rules of the American Arbitration
Association.  The arbitrator shall be an individual mutually
acceptable to each party.  In the event that the parties cannot agree
on the selection of an arbitrator, IEC shall submit a list of no less than three
(3) arbitrators to Executive, and Executive shall designate the
arbitrator.  IEC shall reimburse Executive’s reasonable legal expenses
with respect to any such dispute based on a claim by Executive, unless the
arbitrator determines that Executive’s claims were brought in bad faith, in
which case no such reimbursement shall be made.  No reimbursement
shall be made in any dispute based on a claim by IEC in which IEC
prevails.

       

      14.           Miscellaneous.

       

      
        	
                
                

              	
                14.1.

              	
                Indemnification.  IEC
      shall indemnify Executive to the fullest extent provided under IEC’s
      By-Laws and permitted by state law.  IEC shall also maintain
      director and officer liability insurance in such amounts and subject to
      such limitations as the Board shall, in good faith, deem appropriate for
      coverage of directors and officers of
IEC.

              

      

       

      
        	
                
                

              	
                14.2.

              	
                Amendments and Waivers.  This
      Agreement and any of the provisions hereof may be amended, waived (either
      generally or in a particular instance and either retroactively or
      prospectively), modified or supplemented, in whole or in part, only by
      written agreement signed by the parties hereto; provided that, the
      observance of any provision of this Agreement may be waived in writing by
      the party that will lose the benefit of such provision as a result of such
      waiver.  The waiver by any party hereto of a breach of any
      provision of this Agreement shall not operate or be construed as a further
      or continuing waiver of such breach or as a waiver of any other or
      subsequent breach, except as otherwise explicitly provided for in such
      waiver.  Except as otherwise expressly provided herein, no
      failure on the part of any party to exercise, and no delay in exercising,
      any right, power or remedy hereunder, or otherwise available in respect
      hereof at law or in equity, shall operate as a waiver thereof, nor shall
      any single or partial exercise of such right, power or remedy by such
      party preclude any other or further exercise thereof or the exercise of
      any other right, power or remedy.

              

      

       

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

      
        	
                
                

              	
                14.3.

              	
                Assignment; No
      Third-Party Beneficiaries.  This Agreement, and
      Executive’s rights and obligations hereunder, may not be assigned by
      Executive, and any purported assignment by Executive in violation hereof
      shall be null and void.  Nothing in this Agreement shall confer
      upon any Person not a party to this Agreement, or the legal
      representatives of such Person, any rights or remedies of any nature or
      kind whatsoever under or by reason of this
  Agreement.

              

      

       

      
        	
                
                

              	
                14.4.

              	
                Notices.  Unless
      otherwise provided herein, all notices, requests, demands, claims and
      other communications provided for under the terms of this Agreement shall
      be in writing.  Any notice, request, demand, claim or other
      communication hereunder shall be sent by (i) personal delivery (including
      receipted courier service) or overnight delivery service; (ii) facsimile
      during normal business hours, with confirmation of receipt, to the number
      indicated, (iii) reputable commercial overnight delivery service
      courier; or (iv) registered or certified mail, return receipt requested,
      postage prepaid and addressed to the intended recipient as set forth
      below:

              

      

       

      If to
IEC:    Carl Sassano (or current Chairman of the Board's
Compensation

      Committee)

      c/o IEC Electronics Corp.

      105 North Street

      Newark, New York 14513

       

       

      If to
Executive: to his home address as set forth in IEC's personnel
records.

       

      

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

       

       

      All such
notices, requests, consents and other communications shall be deemed to have
been given when received.  Either party may change its facsimile
number or its address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties hereto
notice in the manner then set forth.

       

      
        	
                
                

              	
                14.5.

              	
                Governing
      Law.  This Agreement shall be construed and enforced in
      accordance with, and the rights and obligations of the parties hereto
      shall be governed by, the laws of the State of New York, without giving
      effect to the conflicts of law principles
  thereof.

              

      

       

      
        	
                
                

              	
                14.6.

              	
                Severability.  Whenever
      possible, each provision or portion of any provision of this Agreement,
      including those contained in Section 9 hereof, will be interpreted in such
      manner as to be effective and valid under applicable law but the
      invalidity or unenforceability of any provision or portion of any
      provision of this Agreement in any jurisdiction shall not affect the
      validity or enforceability of the remainder of this Agreement in that
      jurisdiction or the validity or enforceability of this Agreement,
      including that provision or portion of any provision, in any other
      jurisdiction.  If any term or provision of
      this Agreement is rendered unenforceable as a matter of law or by any
      lawful decision or order of any court, governmental agency, or tribunal
      with jurisdiction and that event produces a material change in the
      respective rights and obligations of the parties under this Agreement,
      then the parties shall promptly and  in good faith meet to negotiate
      revised terms that will both comply with the law and any lawful decision
      or order of any court, governmental agency or tribunal with jurisdiction
      and accomplish the intent and purposes of the parties underlying this
      Agreement.  If the parties are not able to negotiate revised terms
      within a reasonable period of time, then either party may submit that
      dispute to binding arbitration, pursuant to the terms of this Agreement,
      with the understanding that the arbitrator assigned shall have the
      authority to decide whether there has been a material change and, if so,
      the manner and extent to which the terms of the Agreement shall be revised
      to both abide by the law or any lawful decision or order of any court,
      governmental agency, or tribunal with jurisdiction and accomplish the
      purpose and intent of the parties underlying this Agreement. In
      addition, should a court or arbitrator determine that any provision or
      portion of any provision of this Agreement, including those contained in
      Section 9 hereof, is not reasonable or valid, either in period of time,
      geographical area, or otherwise, the parties hereto agree that such
      provision should be interpreted and enforced to the maximum extent which
      such court or arbitrator deems reasonable or
  valid.

              

      

       

      
        
           

        

        
          23

          
            

          

        

        
           

        

         

      

      
        	
                
                

              	
                14.7.

              	
                Entire Agreement.  This
      Agreement constitutes the entire agreement between the parties hereto, and
      supersedes all prior representations, agreements and understandings
      (including any prior course of dealings), both written and oral, between
      the parties hereto with respect to the subject matter
    hereof.

              

      

       

      
        	
                
                

              	
                14.8.

              	
                Counterparts.  This
      Agreement may be executed in any number of counterparts, each of which
      shall be deemed an original, but all such counterparts shall together
      constitute one and the same
instrument.

              

      

       

      
        	
                
                

              	
                14.9.

              	
                Binding
      Effect.  This Agreement shall inure to the benefit of,
      and be binding on, the successors of each of the parties, including,
      without limitation, Executive’s heirs and the personal representatives of
      Executive’s estate and any successor to all or substantially all of the
      business and/or assets of IEC.

              

      

       

      
        	
                
                

              	
                14.10.

              	
                General Interpretive
      Principles.  The name assigned this Agreement and
      headings of the sections, paragraphs, subparagraphs, clauses and
      sub-clauses of this Agreement are for convenience of reference only and
      shall not in any way affect the meaning or interpretation of any of the
      provisions hereof.  Words of inclusion shall not be construed as
      terms of limitation herein, so that references to “include,” “includes”
      and “including” shall not be limiting and shall be regarded as references
      to non-exclusive and non-characterizing
  illustrations.

              

      

       

      
        	
                
                

              	
                14.11.

              	
                Mitigation.  Notwithstanding
      any other provision of this Agreement, (a) Executive will have no
      obligation to mitigate damages for any breach or termination of this
      Agreement by IEC, whether by seeking employment or otherwise; and (b) the
      amount of any payment or benefit due Executive after the date of such
      breach or termination will not be reduced or offset by any payment or
      benefit that Executive may receive from any other
  source.

              

      

       

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

      
        	
                
                

              	
                14.12.

              	
                Section 409A
      Compliance.  This Agreement is intended to comply with
      Section 409A of the Code (to the extent applicable) and, to the extent it
      would not adversely impact IEC, IEC agrees to interpret, apply and
      administer this Agreement in the least restrictive manner necessary to
      comply with such requirements and without resulting in any diminution in
      the value of payments or benefits to
Executive.

              

      

       

      

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

       

      IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.

       

      
        
          
            	 
      	
                    IEC
      ELECTRONICS CORP.

                     

                    By:  /s/ Carl
      Sassano

                           
      Name: Carl Sassano

                           
      Title:  Chair, Compensation Committee

                     

                  
	 
      	
                    /s/ W. Barry
      Gilbert  4/24/09

                       W.
      Barry Gilbert,
Individually

                  

          

        

      

      

       

      

       

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      

       

      

       

      Exhibit
A

       

      Existing
Inventions

       

      

       

      None.Exhibit
4.1

    NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

    

    Date of
Issuance: April 22, 2009

    

    $70,000

    

    8%
CONVERTIBLE DEBENTURE

    DUE April
22, 2011

    

             THIS
DEBENTURE is one of two duly authorized and issued 8% Convertible Debentures of
Skins, Inc., a Nevada corporation, having a principal place of business at
1 Newark
Street, Suite 25A, Hoboken New Jersey  07030  (the "Company"),
designated as its 8% Convertible Debenture, due April 22, 2011 (the
Debenture").

    

             FOR
VALUE RECEIVED, the Company promises to pay to JED or its registered assigns
(the "Holder"), the principal sum of Seventy Thousand Dollars ($70,000) on April
22, 2011 or such earlier date as the Debentures are required or permitted to be
repaid as provided hereunder (the "Maturity Date"), and to pay interest to the
Holder on the aggregate unconverted and then outstanding principal amount of
this Debenture at the rate of 8% per annum, payable on the Maturity Date, unless
the Debenture is converted to shares of common stock in accordance with the
terms and conditions herein.

    

    THE
COMPANY MAY PREPAY ANY PORTION OF THE PRINCIPAL AMOUNT  AT 125% OF
SUCH AMOUNT ALONG WITH ANY ACCRUED INTEREST OF THIS DEBENTURE AT ANY TIME UPON
SEVEN DAYS WRITTEN NOTICE TO THE HOLDER

    

             This
Debenture is subject to the following additional provisions:

    

             Section
1. This Debenture is exchangeable for an equal aggregate principal amount of
Debentures of different authorized denominations, as requested by the Holder
surrendering the same. No service charge will be made for such registration of
transfer or exchange.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

             Section
2. This Debenture may be transferred or exchanged only in compliance with
applicable federal and state securities laws and regulations. Prior to due
presentment to the Company for transfer of this Debenture, the Company and any
agent of the Company may treat the Person in whose name this Debenture is duly
registered on the Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or not
this Debenture is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.

    

             Section
3. Events of Default.

    

                      a)
"Event of Default", wherever used herein, means any one of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body):

    

                               i)
any default in the payment of the principal of, interest (including Late Fees)
on, or liquidated damages in respect to this Debenture, free of any claim
of  subordination, as and when the same shall become due and payable
(whether on a Conversion Date or the Maturity Date or by acceleration or
otherwise) which default is not cured, if  possible to cure, within 3
days of notice of such default sent by the Holder;

    

                               ii)
the Company or any of its subsidiaries shall commence, or there shall be
commenced against the Company or any such subsidiary a case under any applicable
bankruptcy or insolvency laws as now or hereafter in effect or any successor
thereto, or the Company commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Company or any subsidiary thereof or there is commenced
against the Company or any subsidiary thereof any such bankruptcy, insolvency or
other proceeding which remains undismissed for a period of 60 days; or the
Company or any subsidiary thereof is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the Company or any subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its property which
continues undischarged or unstayed for a period of 60 days; or the Company or
any subsidiary thereof makes a general assignment for the benefit of creditors;
or the Company shall fail to pay, or shall state that it is unable to pay, or
shall be unable to pay, its debts generally as they become due; or the Company
or any subsidiary thereof shall call a meeting of its creditors with a view to
arranging a composition, adjustment or restructuring of its debts; or the
Company or any subsidiary thereof shall by any act or failure to act expressly
indicate its consent to, approval of or acquiescence in any of the foregoing; or
any corporate or other action is taken by the Company or any subsidiary thereof
for the purpose of effecting any of the foregoing; or

    (iii)     the
Company shall fail to timely file all reports required to be filed by it with
the SEC pursuant to Section 13 or 15(d) of the Securities and Exchange Act of
1934, as amended (the “Exchange Act”), or otherwise required by the Exchange
Act.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

                      b)
If any Event of Default occurs and is continuing, the full principal amount of
this Debenture, together with interest and other amounts owing in respect
thereof, to the date of acceleration shall become at the Holder's election,
immediately due and payable in cash.. The Holder need not provide and the
Company hereby waives any presentment, demand, protest or other notice of any
kind, and the Holder may immediately and without expiration of any grace period
enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such declaration may be rescinded and
annulled by Holder at any time prior to payment hereunder and the Holder shall
have all rights as a Debenture holder until such time, if any, as the full
payment under this Section shall have been received by it. No such rescission or
annulment shall affect any subsequent Event of Default or impair any right
consequent thereon.

    

             Section
4. Conversion.

    

                      a)       i)
Holder's Conversion Right. At any time after the Original Issue Date until this
Debenture is no longer outstanding, this Debenture, including interest and
principal, shall be convertible into shares of Common Stock at a price of thirty
five percent (35%) of the lowest closing bid price at market (e.g. a $0.10
lowest closing bid price would result in a conversion price of $0.35),
determined on the then current trading market for the Company’s common stock,
for 10 trading days prior to conversion (the “Set Price”) at the option of the
Holder, in whole at any time and from time to time.  The Holder shall
effect conversions by delivering to the Company the form of Notice of Conversion
attached hereto as Annex A (a "Notice of Conversion"), specifying the date on
which such conversion is to be effected (a "Conversion Date"). If no Conversion
Date is specified in a Notice of Conversion, the Conversion Date shall be the
date that such Notice of Conversion is provided hereunder. To effect conversions
hereunder, the Holder shall not be required to physically surrender Debentures
to the Company. The Company shall deliver any objection to any Notice of
Conversion within 2 Business Days of receipt of such notice. In the event of any
dispute or discrepancy, the records of the Holder shall be controlling and
determinative in the absence of manifest error. If the Company does not request
the issuance of the shares underlying this Debenture after receipt of a Notice
of Conversion within 4 Business days following the period allowed for any
objection, Mark Klein shall, in his personal capacity, be responsible for any
differential in the value of the converted shares underlying this Debenture
between the value of the closing price on the date the shares should have been
delivered and the date the shares are delivered.  The Holder and any
assignee, by acceptance of this Debenture, acknowledge and agree that, by reason
of the provisions of this paragraph, following conversion of a portion of this
Debenture, the unpaid and unconverted principal amount of this Debenture may be
less than the amount stated on the face hereof.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

                               ii)
If the Company, at any time while this Debenture is outstanding: (A) shall pay a
stock dividend or otherwise make a distribution or distributions on shares of
its Common Stock or any other equity or equity equivalent
securities  payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company
pursuant to this Debenture, including as interest  thereon), (B)
subdivide outstanding shares of Common Stock into a larger number of shares, (C)
combine (including by way of reverse stock split) outstanding shares of Common
Stock into a smaller number of shares, or (D) issue by reclassification of
shares of the Common Stock any shares of capital stock of the Company, then the
Set Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
before such event and of which the denominator shall be the number of shares of
Common Stock outstanding after such event. Any adjustment made pursuant to this
Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

    

                               iii)  Whenever
the Set Price is adjusted pursuant to any of Section 4, the Company shall
promptly mail to each Holder a notice setting forth the Set Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.

    

                               iv)
If (A) the Company shall declare a dividend (or any other distribution) on the
Common Stock; (B) the Company shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock; (C) the Company
shall  authorize the granting to all holders of the Common Stock
rights or warrants to subscribe for or purchase any shares of capital stock of
any class or of any rights; (D) the approval  of any stockholders of
the Company shall be required in connection with any reclassification of the
Common Stock, any consolidation or merger to which the Company is a party,
any  sale or transfer of all or substantially all of the assets
of  the Company, of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property; (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company; then, in each case, the Company shall cause to be
filed at each office or agency maintained for the purpose of conversion of the
Debentures, and shall cause to be mailed to the Holders at their last addresses
as they shall  appear upon the stock books of the Company, at least 20
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or
if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of  which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. Holders are entitled to convert
Debentures during the 20-day period commencing the date of such notice to the
effective date of the event triggering such notice.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

                               v)
If, at any time while this Debenture is outstanding, (A) the Company effects any
merger or consolidation of the Company with or into another Person, (B) the
Company effects any sale of all or substantially all of its assets in one or a
series of related transactions, (C) any tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares for other
securities, cash or property, or (D) the Company effects any reclassification of
the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property (in any such case, a "Fundamental Transaction"), then upon any
subsequent conversion of this Debenture, the Holder shall have the right to
receive, for each Underlying Share that would have been issuable upon such
conversion absent such Fundamental Transaction, the same kind and amount of
securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been, immediately prior
to  such Fundamental Transaction, the holder of one share
of  Common Stock (the "Alternate Consideration"). For purposes of any
such conversion, the determination of the Set Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in
such  Fundamental Transaction, and the Company shall apportion the Set
Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities,
cash  or property to be received in a Fundamental Transaction,
then  the Holder shall be given the same choice as to the Alternate
consideration it receives upon any conversion of this Debenture following such
Fundamental Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new debenture consistent with the
foregoing provisions and evidencing the Holder's right to convert such debenture
into Alternate Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this paragraph
(c) and insuring that this Debenture (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction. If any Fundamental Transaction constitutes or results in a Change
of Control Transaction, then at the request of the Holder delivered before the
90th
day after such Fundamental Transaction, the Company (or any such successor or
surviving entity) will purchase the Debenture from the Holder for a purchase
price, payable in cash within five Trading Days after such request (or,
if  later, on the effective date of the Fundamental Transaction),
equal to the 100% of the remaining unconverted principal amount of this
Debenture on the date of such request, plus all accrued and unpaid interest
thereon, plus all other accrued and unpaid amounts due
hereunder.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

                      (d)
The Company covenants that it will at all times reserve and keep available out
of its authorized and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of the Debenture

    

                      (e)
Any and all notices or other communications or deliveries to be provided by the
Holders hereunder, including, without limitation,  any Notice of
Conversion, shall be in writing and delivered personally,  by
facsimile, sent by a nationally recognized overnight courier  service,
addressed to the Company, at the address set forth or such
other  address or facsimile number as the Company may specify for such
purposes by notice to the Holders delivered in accordance with this Section. Any
and all notices or other communications or deliveries to be provided by the
Company hereunder shall be in writing and delivered personally, by facsimile,
sent by a nationally recognized overnight courier service addressed to each
Holder at the facsimile telephone   number or address of such
Holder appearing on the books of the Company,   or if no such
facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other    communication
or deliveries hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior to
5:30 p.m. (New York   City time), (ii) the date after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile  telephone number specified in this Section later than 5:30
p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York
City  time) on such date, (iii) the second Business Day following the
date of  mailing, if sent by nationally recognized overnight courier
service, or  (iv) upon actual receipt by the party to whom such notice
is required to be given.

    

             Section
5. Definitions. For the purposes hereof, in addition to the terms defined
elsewhere in this Debenture: (a) capitalized terms not otherwise defined herein
have the meanings given to such terms in the Purchase Agreement, and (b) the
following terms shall have the following meanings:

    

                      "Business
Day" means any day except Saturday, Sunday and any day which shall be a federal
legal holiday in the United States or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.

    

                      "Common
Stock" means the common stock, $.001 par value per  share, of the
Company and stock of any other class into which such shares may hereafter have
been reclassified or changed.

    

                      "Person"
means a corporation, an association, a partnership, organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.

    

                        "Securities
Act" means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

                      "Set
Price" shall have the meaning set forth in Section 4.

    

             Section
6. Except as expressly provided herein, no provision of this Debenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, interest and liquidated damages (if any)
on, this Debenture at the time, place, and rate, and in the coin or currency,
herein prescribed. This Debenture is a direct debt obligation of the Company.
This Debenture ranks pari passu with all other Debentures now or hereafter
issued under the terms set forth herein. As long as this Debenture is
outstanding, the Company shall not and shall cause it subsidiaries not to,
without the consent of the Holder, (a) amend its certificate of incorporation,
bylaws or other charter documents so as to adversely affect any rights of the
Holder; (b) repay, repurchase or offer to repay, repurchase or otherwise acquire
more than a de minimis number of shares of its Common Stock or other equity
securities other than as to the Underlying Shares to the extent permitted or
required under the Transaction Documents or as otherwise permitted by the
Transaction Documents; or (c) enter into any agreement with respect to any of
the foregoing.

    

             Section
7. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company
shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated Debenture, or in lieu of or in substitution for a
lost, stolen or destroyed Debenture, a new Debenture for the principal amount of
this Debenture so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such Debenture, and of the
ownership hereof, and indemnity, if requested, all reasonably satisfactory to
the Company.

    

             Section
8. So long as any portion of this Debenture is outstanding, the Company will not
and will not permit any of its subsidiaries to, directly or indirectly, enter
into, create, incur, assume or suffer to exist any indebtedness of any kind, on
or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom that is senior in any
respect to the Company's obligations under the Debentures without the prior
consent of the Holder, which consent shall not be unreasonably
withheld.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

             Section
9. All questions concerning the construction, validity, enforcement and
interpretation of this Debenture shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by any of the Transaction Documents (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the state and federal
courts sitting in the City of New York, Borough of Manhattan (the "New York
Courts"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Debenture and agrees that such
Service  shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Debenture or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Debenture,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses
incurred

    with the
investigation, preparation and prosecution of such action or
proceeding.

    

             Section
10. Any waiver by the Company or the Holder of a breach of any provision of this
Debenture shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Debenture. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Debenture. Any waiver
must be in writing.

    

             Section
11.   For six months from the date of this Debenture, the Holders
shall be entitled to “piggyback” registration rights on registrations initiated
by the Company on forms which permit the general sale of securities to the
public, subject to customary cut-backs if deemed necessary or advisable by the
underwriters for any such registration; except for any draw down or “Pipe”
transactions.

    

             Section
12. If any provision of this Debenture is invalid, illegal or unenforceable, the
balance of this Debenture shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances. If it shall be found that any
interest or other amount deemed interest due hereunder violates applicable laws
governing usury, the applicable rate of interest due hereunder shall
automatically be lowered to equal the maximum permitted rate of interest. The
Company covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Debentures as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

          Section
13. Whenever any payment or other obligation hereunder shall be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day.

                                  *********************

    

             IN
WITNESS WHEREOF, the Company has caused this Convertible Debenture to be
duly executed by a duly authorized officer as of the date first above
indicated.

    

    
      
        
          
            
              
                	 
      	
                        Skins,
      Inc.

                      	 
	 
      	 
      	 
      	 
	 
      	
                        By:

                      	 
      	 
	 
      	 
      	
                        Name:

                      	 
	 
      	 
      	
                        Title:

                      	 

              

            

          

        

      

    

    

    
      
        
          
            	
                     

                  
	
                    Mark
      Klein, as to his

                  

          

        

      

    

    Obligation
under Paragraph 4 only.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ANNEX
A

    

    NOTICE OF
CONVERSION

    

     The
undersigned hereby elects to convert principal under the 8% Convertible
Debenture of Skins, Inc. (the "Company"), due on April 22, 2011, into
____________ shares of common stock, $.001 par value per share (the "Common
Stock"), of the Company according to the conditions hereof, as of the date
written below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any.

    

    By the
delivery of this Notice of Conversion the undersigned represents and warrants to
the Company that its ownership of the Company's Common Stock does not exceed the
amounts determined in accordance with Section 13(d) of the Exchange Act,
specified under Section 4 of this Debenture.

    

    Conversion
calculations:

    

                            Date
to Effect Conversion: ____________________

    

    35% of the lowest closing bid price
for 10 trading days prior to conversion.

    

    _____________________________________

    

                            Principal
Amount of Debentures to be Converted:

    

    _______________________________________

    

                            Interest
Amount of Debentures to be Converted

    

    ___________________________________

    

                            Number
of shares of Common Stock to

                            be
issued:

    _________________________________

    

                            Signature:
____________________________

    

                            Name:
_______________________________

    

                           Address:______________________________

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

    

    Date of
Issuance: April 22 2009

    

    $104,250.00

    

    8%
CONVERTIBLE DEBENTURE

    DUE April
22, 2011

    

             THIS
DEBENTURE is one of two duly authorized and issued 8% Convertible Debentures of
Skins, Inc., a Nevada corporation, having a principal place of business at
1 Newark
Street, Suite 25A, Hoboken New Jersey  07030  (the "Company"),
designated as its 8% Convertible Debenture, due April 22, 2011 (the
"Debenture").

    

             FOR
VALUE RECEIVED, the Company promises to pay to JED or its registered assigns
(the "Holder"), the principal sum of $104,250 (One Hundred and Four Thousand,
Two Hundred and Fifty Dollars) on April 22, 2011 or such earlier date as the
Debentures are required or permitted to be repaid as provided hereunder (the
"Maturity Date"), and to pay interest to the Holder on the aggregate unconverted
and then outstanding principal amount of this Debenture at the rate of 8% per
annum, payable on the Maturity Date, unless the Debenture is converted to shares
of common stock in accordance with the terms and conditions herein.

    

    THE
COMPANY MAY PREPAY ANY PORTION OF THE PRINCIPAL AMOUNT  AT 125% OF
SUCH AMOUNT ALONG WITH ANY ACCRUED INTEREST OF THIS DEBENTURE AT ANY TIME UPON
SEVEN DAYS WRITTEN NOTICE TO THE HOLDER

    

             This
Debenture is subject to the following additional provisions:

    

             Section
1. This Debenture is exchangeable for an equal aggregate principal amount of
Debentures of different authorized denominations, as requested by the Holder
surrendering the same. No service charge will be made for such registration of
transfer or exchange.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

             Section
2. This Debenture may be transferred or exchanged only in compliance with
applicable federal and state securities laws and regulations. Prior to due
presentment to the Company for transfer of this Debenture, the Company and any
agent of the Company may treat the Person in whose name this Debenture is duly
registered on the Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or not
this Debenture is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.

    

             Section
3. Events of Default.

    

                      a)
"Event of Default", wherever used herein, means any one of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body):

    

                               i)
any default in the payment of the principal of, interest (including Late Fees)
on, or liquidated damages in respect to this Debenture, free of any claim of
subordination, as and when the same shall become due and payable (whether on a
Conversion Date or the Maturity Date or by acceleration or otherwise) which
default is not cured, if  possible to cure, within 3 days of notice of
such default sent by the Holder;

    

                               ii)
the Company or any of its subsidiaries shall commence, or there shall be
commenced against the Company or any such subsidiary a case under any applicable
bankruptcy or insolvency laws as now or hereafter in effect or any successor
thereto, or the Company commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Company or any subsidiary thereof or there is commenced
against the Company or any subsidiary thereof any such bankruptcy, insolvency or
other proceeding which remains undismissed for a period of 60 days; or the
Company or any subsidiary thereof is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the Company or any subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its property which
continues undischarged or unstayed for a period of 60 days; or the Company
or any subsidiary thereof makes a general assignment for the benefit of
creditors; or the Company shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or the
Company or any subsidiary thereof shall call a meeting of its creditors with a
view to arranging a composition, adjustment or restructuring of its debts; or
the Company or any subsidiary thereof shall by any act or failure to act
expressly indicate its consent to, approval of or acquiescence in any of the
foregoing; or any corporate or other action is taken by the Company or any
subsidiary thereof for the purpose of effecting any of the foregoing;
or

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (iv)    the
Company shall fail to timely file all reports required to be filed by it with
the SEC pursuant to Section 13 or 15(d) of the Securities and Exchange Act of
1934, as amended (the “Exchange Act”), or otherwise required by the Exchange
Act.

    

                      b)
If any Event of Default occurs and is continuing, the full principal amount of
this Debenture, together with interest and other amounts owing in respect
thereof, to the date of acceleration shall become at the Holder's election,
immediately due and payable in cash.. The Holder need not provide and the
Company hereby waives any presentment, demand, protest or other notice of any
kind, and the Holder may immediately and without expiration of any grace period
enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such declaration may be rescinded and
annulled by Holder at any time prior to payment hereunder and the Holder shall
have all rights as a Debenture holder until such time, if any, as the full
payment under this Section shall have been received by it. No such rescission or
annulment shall affect any subsequent Event of Default or impair any right
consequent thereon.

    

             Section
4. Conversion.

    

                      a)       i)
Holder's Conversion Right. At any time after the Original Issue Date until this
Debenture is no longer outstanding, this Debenture, including interest and
principal, shall be convertible into shares of Common Stock at a price of thirty
five percent (35%) of the lowest closing bid price at market (e.g. a $0.10
lowest closing bid price would result in a conversion price of $0.35), for 10
trading days prior to conversion (the “Set Price”) at the option of the Holder,
in whole at any time and from time to time.  In lieu of conversion,
the Holder may exchange this Debenture (including all principal and all accrued
interest) for assuming convertible non-trade debt of the Company in the amount
of One Hundred and Four Thousand, Two hundred and Fifty Dollars ($104,250.00).
The Holder shall effect conversions by delivering to the Company the form of
Notice of Conversion attached hereto as Annex A (a "Notice of Conversion"),
specifying the date on which such conversion is to be effected (a "Conversion
Date"). If no Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion is provided
hereunder. To effect conversions hereunder, the Holder shall not be required to
physically surrender Debentures to the Company. The Company shall deliver any
objection to any Notice of Conversion within 2 Business Days of receipt of such
notice. In the event of any dispute or discrepancy, the records of the Holder
shall be controlling and determinative in the absence of manifest error. If the
Company does not request the issuance of the shares underlying this Debenture
after receipt of a Notice of Conversion within 4 Business days following the
period allowed for any objection, Mark Klein shall, in his personal capacity, be
responsible for any differential in the value of the converted shares underlying
this Debenture between the value of the closing price on the date the shares
should have been delivered and the date the shares are delivered.  The
Holder and any assignee, by acceptance of this Debenture, acknowledge and agree
that, by reason of the provisions of this paragraph, following conversion of a
portion of this Debenture, the unpaid and unconverted principal amount of this
Debenture may be less than the amount stated on the face
hereof.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

                               ii)
If the Company, at any time while this Debenture is outstanding: (A) shall pay a
stock dividend or otherwise make a distribution or distributions on shares of
its Common Stock or any other equity or equity equivalent
securities  payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company
pursuant to this Debenture, including as interest  thereon), (B)
subdivide outstanding shares of Common Stock into a larger number of shares, (C)
combine (including by way of reverse stock split) outstanding shares of Common
Stock into a smaller number of shares, or (D) issue by reclassification of
shares of the Common Stock any shares of capital stock of the Company, then the
Set Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
before such event and of which the denominator shall be the number of shares of
Common Stock outstanding after such event. Any adjustment made pursuant to this
Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

    

                               iii)  Whenever
the Set Price is adjusted pursuant to any of Section 4, the Company shall
promptly mail to each Holder a notice setting forth the Set Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.

    

                               iv)
If (A) the Company shall declare a dividend (or any other distribution) on the
Common Stock; (B) the Company shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock; (C) the Company
shall  authorize the granting to all holders of the Common Stock
rights or warrants to subscribe for or purchase any shares of capital stock of
any class or of any rights; (D) the approval  of any stockholders of
the Company shall be required in connection with any reclassification of the
Common Stock, any consolidation or merger to which the Company is a party,
any  sale or transfer of all or substantially all of the assets of the
Company, of any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property; (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company; then, in each case, the Company shall cause to be filed at each
office or agency maintained for the purpose of conversion of the Debentures, and
shall cause to be  mailed to the Holders at their last addresses as
they shall  appear upon the stock books of the Company, at least 20
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or
if a record  is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. Holders are entitled to convert
Debentures during the 20-day period commencing the date of such notice to the
effective date of the event triggering such notice.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

                               v)
If, at any time while this Debenture is outstanding, (A) the Company effects any
merger or consolidation of the Company with or into another Person, (B) the
Company effects any sale of all or substantially all of its assets in one or a
series of related transactions, (C) any tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares for other
securities, cash or property, or (D) the Company effects any reclassification of
the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property (in any such case, a "Fundamental Transaction"), then upon any
subsequent conversion of this Debenture, the Holder shall have the right to
receive, for each Underlying Share that would have been issuable upon such
conversion absent such Fundamental Transaction, the same kind and amount of
securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been, immediately prior
to  such Fundamental Transaction, the holder of one share
of  Common Stock (the "Alternate Consideration"). For purposes of any
such conversion, the determination of the Set Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in
such  Fundamental Transaction, and the Company shall apportion the Set
Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities,
cash  or property to be received in a Fundamental Transaction,
then  the Holder shall be given the same choice as to the Alternate
consideration it receives upon any conversion of this Debenture following such
Fundamental Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new debenture consistent with the
foregoing provisions and     evidencing the Holder's
right to convert such debenture into Alternate Consideration. The terms of any
agreement pursuant to which a Fundamental Transaction is effected shall include
terms requiring any such successor or surviving entity to comply with the
provisions of this paragraph (c) and insuring that this Debenture (or any such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction. If any Fundamental Transaction
constitutes or results in a Change of Control Transaction, then at the request
of the Holder delivered before the 90th day
after such Fundamental Transaction, the Company (or any such successor or
surviving entity) will purchase the Debenture from the Holder for a purchase
price, payable in cash within five Trading Days after such request (or,
if  later, on the effective date of the Fundamental Transaction),
equal to the 100% of the remaining unconverted principal amount of this
Debenture on the date of such request, plus all accrued and unpaid interest
thereon, plus all other accrued and unpaid amounts due
hereunder.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

                      (d)
The Company covenants that it will at all times reserve and keep available out
of its authorized and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of the Debenture

    

                      (e)
Any and all notices or other communications or deliveries to be provided by the
Holders hereunder, including, without limitation,  any Notice of
Conversion, shall be in writing and delivered personally,  by
facsimile, sent by a nationally recognized overnight courier  service,
addressed to the Company, at the address set forth or such
other  address or facsimile number as the Company may specify for such
purposes by notice to the Holders delivered in accordance with this Section. Any
and all notices or other communications or deliveries to be provided by the
Company hereunder shall be in writing and delivered personally, by facsimile,
sent by a nationally recognized overnight courier service addressed to each
Holder at the facsimile telephone   number or address of such
Holder appearing on the books of the Company,   or if no such
facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other    communication
or deliveries hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior to
5:30 p.m. (New York   City time), (ii) the date after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile  telephone number specified in this Section later than 5:30
p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York
City  time) on such date, (iii) the second Business Day following the
date of  mailing, if sent by nationally recognized overnight courier
service, or  (iv) upon actual receipt by the party to whom such notice
is required to be given.

    

             Section
5. Definitions. For the purposes hereof, in addition to the terms defined
elsewhere in this Debenture: (a) capitalized terms not otherwise defined herein
have the meanings given to such terms in the Purchase Agreement, and (b) the
following terms shall have the following meanings:

    

                      "Business
Day" means any day except Saturday, Sunday and any day which shall be a federal
legal holiday in the United States or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.

    

                      "Common
Stock" means the common stock, $.001 par value per  share, of the
Company and stock of any other class into which such shares may hereafter have
been reclassified or changed.

    

                      "Person"
means a corporation, an association, a partnership, organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

                        "Securities
Act" means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

    

                      "Set
Price" shall have the meaning set forth in Section 4.

    

             Section
6. Except as expressly provided herein, no provision of this Debenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, interest and liquidated damages (if any)
on, this Debenture at the time, place, and rate, and in the coin or currency,
herein prescribed. This Debenture is a direct debt obligation of the Company.
This Debenture ranks pari passu with all other Debentures now or hereafter
issued under the terms set forth herein. As long as this Debenture is
outstanding, the Company shall not and shall cause it subsidiaries not to,
without the consent of the Holder, (a) amend its certificate of incorporation,
bylaws or other charter documents so as to adversely affect any rights of the
Holder; (b) repay, repurchase or offer to repay, repurchase or otherwise acquire
more than a de minimis number of shares of its Common Stock or other equity
securities other than as to the Underlying Shares to the extent permitted or
required under the Transaction Documents or as otherwise permitted by the
Transaction Documents; or (c) enter into any agreement with respect to any of
the foregoing.

    

             Section
7. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company
shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated Debenture, or in lieu of or in substitution for a
lost, stolen or destroyed Debenture, a new Debenture for the principal amount of
this Debenture so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such Debenture, and of the
ownership hereof, and indemnity, if requested, all reasonably satisfactory to
the Company.

    

             Section
8. So long as any portion of this Debenture is outstanding, the Company will not
and will not permit any of its subsidiaries to, directly or indirectly, enter
into, create, incur, assume or suffer to exist any indebtedness of any kind, on
or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom that is senior in any
respect to the Company's obligations under the Debentures without the prior
consent of the Holder, which consent shall not be unreasonably
withheld.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

             Section
9. All questions concerning the construction, validity, enforcement and
interpretation of this Debenture shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by any of the Transaction Documents (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the state and federal
courts sitting in the City of New York, Borough of Manhattan (the "New York
Courts"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Debenture and agrees that such
Service  shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Debenture or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Debenture,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the
investigation, preparation and prosecution of such action or
proceeding.

    

             Section
10. Any waiver by the Company or the Holder of a breach of any provision of this
Debenture shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Debenture. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Debenture. Any waiver
must be in writing.

    

            Section
11.  For six months from the date of this Debenture, the Holders shall
be entitled to “piggyback” registration rights on registrations initiated by the
Company on forms which permit the general sale of securities to the public,
subject to customary cut-backs if deemed necessary or advisable by the
underwriters for any such registration; except for any draw down or “Pipe”
transactions.

    

             Section
12. If any provision of this Debenture is invalid, illegal or unenforceable, the
balance of this Debenture shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances. If it shall be found that any
interest or other amount deemed interest due hereunder violates applicable laws
governing usury, the applicable rate of interest due hereunder shall
automatically be lowered to equal the maximum permitted rate of interest. The
Company covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Debentures as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

             Section
13. Whenever any payment or other obligation hereunder shall be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day.

                                  *********************

    

             IN
WITNESS WHEREOF, the Company has caused this Convertible Debenture to be
duly executed by a duly authorized officer as of the date first above
indicated.

    

    
      
        
          
            	 
      	
                    Skins,
      Inc.

                  	 
	 
      	 
      	 
	 
      	
                    By:

                  	 
      	 
	 
      	 
      	
                    Name:

                  	 
	 
      	 
      	
                    Title:

                  	 

          

        

      

    

    

    
      
        
          	
                   

                
	
                  Mark
      Klein, as to his

                

        

      

    

    Obligation
under Paragraph 4 only.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ANNEX
A

    

    NOTICE OF
CONVERSION

    

     The
undersigned hereby elects to convert principal under the 8% Convertible
Debenture of Skins, Inc. (the "Company"), due on April 22, 2011, into
____________ shares of common stock, $.001 par value per share (the "Common
Stock"), of the Company according to the conditions hereof, as of the date
written below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any.

    

    By the
delivery of this Notice of Conversion the undersigned represents and warrants to
the Company that its ownership of the Company's Common Stock does not exceed the
amounts determined in accordance with Section 13(d) of the Exchange Act,
specified under Section 4 of this Debenture.

    

    Conversion
calculations:

    

                            Date
to Effect Conversion: ____________________

    

           35%
of the lowest closing bid price for 10 trading days prior to
conversion.

    

    _____________________________________

    

          Assumption
of debt:   _______________

    

                            Principal
Amount of Debentures to be Converted:

    

    _______________________________________

    

                            Interest
Amount of Debentures to be Converted

    

    ___________________________________

    

                            Number
of shares of Common Stock to

                            be
issued:

    _________________________________

    

                            Signature:
____________________________

    

                            Name:
_______________________________

    

                          Address:______________________________

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