Exhibit 10.3


 


EXECUTION
COPY


 


EMPLOYMENT
AGREEMENT


 


EMPLOYMENT AGREEMENT, dated as of November
18, 2014 (this “Agreement”), by and between MELA Sciences, Inc. (the “Company”), a Delaware
corporation, and Michael R. Stewart (“Employee”), an individual.


 


WITNESSETH:


 


WHEREAS, the Company desires to employ Employee,
and Employee wishes to be employed by the Company, on the terms and subject to the conditions set forth herein.


 


NOW, THEREFORE, in consideration of the
premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, the parties hereby agree as follows:


 


1.            Term.
The initial term of Employee’s employment hereunder shall commence on December 15, 2014 (the “Effective Date”)
and end on the third anniversary thereof (the “Initial Term”), unless sooner terminated in accordance with Section
5 hereof. Upon expiration of the Initial Term, Employee’s employment with the Company hereunder shall be extended for successive
one-year periods unless either party provides written notice to the other party at least 45 days prior to the end of the then current
term, of its election to terminate this Agreement at the end of such then current term. The period during which this Agreement
is in effect is hereafter referred to as the “Term.”


 


2.            Duties
and Services. Employee agrees to serve the Company as its President and Chief Executive Officer, reporting to the Board of
Directors of the Company and any authorized committee thereof (the “Board”). Employee shall have overall responsibility
for the business, strategy and operations of the Company. Employee agrees to devote his full and entire business time, attention,
skill and efforts to perform services for the Company and to faithfully and diligently discharge and fulfill his duties hereunder
to the best of his abilities and shall be engaged in other business activities only to the extent that such other activities do
not materially interfere or conflict with his obligations to the Company hereunder. In no event shall Employee’s other business
activities violate his obligations under Section 7 below. The foregoing also shall not be construed as preventing Employee from
(a) with the prior consent of the Board, serving on civic, educational, philanthropic or charitable boards or committees or on
up to two corporate boards (but not as chairman of the board), and (b) managing personal investments, so long as such activities
are permitted under the Company’s Code of Conduct and employment policies. Exhibit A to this Agreement contains a
list of the other business and professional activities in which Employee is currently engaged and have been approved to the extent
set forth on Exhibit A. Employee shall perform his duties hereunder at the Company’s principal offices, currently
located in Irvington, New York, with travel to such other places and at such times as the needs of the Company may from time-to-time
dictate or be desirable.


 




    	 



    	 



    

 


3.            Compensation.


 


(a)          During
the Term, the Company agrees to pay or cause to be paid to Employee, and Employee agrees to accept, a salary for all of Employee’s
services at the rate of $310,000 per annum (the “Base Salary”), payable in accordance with the Company’s
payroll practices and policies in effect from time to time and subject to applicable withholding of income taxes, social security
taxes and other such other payroll deductions as are required by law or applicable employee benefit programs.


 


(b)          With
respect to each fiscal year of the Company during the continued full-time employment of Employee hereunder, commencing with the
2015 fiscal year, Employee will be eligible to receive an annual cash bonus of up to 50% of Employee’s Base Salary (a
“Cash Bonus”) based on the achievement of certain performance-based targets and other objectives as may be established
by the Board based on annual Company budgets approved by the Board from time to time. The terms of Employee’s Cash Bonus
opportunity for each fiscal year shall be separately communicated to Employee by the Board, after consultation with Employee, prior
to the commencement of such fiscal year. Any Cash Bonus allocable to Employee hereunder shall be earned by Employee if and only
if Employee remains actively employed on a full-time basis with the Company and is otherwise in compliance with Employee’s
obligations under this Agreement through the end of the fiscal year to which such Cash Bonus relates. Any Cash Bonus awarded to
Employee hereunder will be payable in a single lump sum cash payment, less applicable taxes and withholdings, not later than two
and one-half months after the end of the fiscal year to which it relates in accordance with the Company’s customary practices
for annual bonus payments.


 


(c)          In
addition to Employee’s Base Salary and any Cash Bonus that may be earned and payable hereunder, Employee shall be granted
stock options subject to the Company’s customary Stock Option Agreement under the Company’s 2013 Stock Incentive Plan
(the “Plan”) to purchase up to 750,000 shares of the Company’s common stock at fair market value on the date
of grant, as provided in the Plan, subject to the following vesting schedule:


 


(i)          stock
options to purchase up to 375,000 shares of the Company’s common stock to vest in three equal installments of 125,000 shares
each on the first, second and third anniversaries of the date of this Agreement; provided, however, that vesting shall accelerate
and the right to purchase all such shares shall vest in full at such time as there is a Change in Control (as defined in Section 5(d)
hereof) of the Company; and


 


(ii)         stock
options to purchase up to 375,000 shares of the Company’s common stock to vest in three annual installments of up to 125,000
shares each upon a determination by the Board that the Company has achieved the following milestones for the 2015, 2016 and 2017
fiscal years, respectively: (A) one-third if the Company achieves the revenue plan established by the Board for such year, (B)
one-third if the Company achieves the EBITDA plan established by the Board for such year, and (C) one-third if the Company achieves
the goals established by the Board for such year as set forth in writing within 30 days after the date of this Agreement; provided,
however, that any such stock option that has not vested with respect to any particular year due to the failure to satisfy a milestone
condition for that year shall terminate as of the end of that year and shall no longer become exercisable; and provided further,
however, all such stock options that have not previously terminated shall accelerate and vest in full at such time as there is
a Change in Control (as defined in Section 5(d) hereof) of the Company.


 




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All such stock options shall be incentive stock options to the
extent permitted by applicable law.


 


4.            Employee
Benefits; Vacation; Expenses. During the Term:


 


(a)          Employee
shall be entitled to participate, in accordance with the terms and conditions thereof, in any standard group benefit plans maintained
generally for senior level employees of the Company, as the same may be in effect or amended from time to time. The foregoing,
however, shall not be construed to require the Company to establish any such plans, or to prevent the Company from modifying or
terminating any such plans once established. In addition to standard group benefit plans, during the Term the Company shall reimburse
Employee for his reasonable out-of-pocket costs of supplemental term life insurance in the coverage amount of $1 million and a
supplemental disability policy with coverage limits common to Employee’s salary level.


 


(b)          Employee
shall be entitled to vacation commencing with the 2015 fiscal year at the rate of four weeks per year, taken consecutively or in
segments, subject to the effective discharge of Employee’s duties and responsibilities hereunder. Vacation time will accrue
on a monthly basis during any such year, and any accrued vacation time not taken during the year in which it accrued shall not
have a cash value and may be rolled over to the following or any subsequent year only to the extent permitted and in accordance
with then current Company policy.


 


(c)          The
Company shall reimburse Employee for the reasonable and necessary out-of-pocket business expenses incurred by Employee for or on
behalf of the Company in furtherance of the performance of Employee’s duties hereunder in accordance with the Company’s
policies as approved by the Board from time to time, subject in all cases to the Company’s requirements with respect to reporting
and documentation of such expenses.


 


(d)          During
the first year of the Initial Term, the Company shall pay or reimburse Employee for reasonable costs of temporary housing in the
Irvington, New York area, currently estimated at $3,000 per month. After the first year of the Initial Term, the Company shall
pay Employee an automobile allowance of $1,000 per month.


 


5.            Termination.


 


(a)          Notwithstanding
anything to the contrary contained herein, Employee’s employment under this Agreement, as well as Employee’s right
to any Base Salary, Cash Bonus and/or other benefits that thereafter otherwise would accrue to Employee hereunder, shall terminate
upon the earliest to occur of the following events:


 


(i)          The
death of Employee;


 


(ii)         The
disability (as hereinafter defined) of Employee;


 




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(iii)        In
the event of Employee’s voluntary decision to terminate his employment with the Company, upon the date set forth therefor
in a written notice of such termination received by the Company from or on behalf of Employee; provided that the termination date
shall not be sooner than two weeks following the Company’s receipt of such notice;


 


(iv)        Upon
written notice of such termination to Employee from or on behalf of the Company or the Board (or at such later date specified therein)
if: (A) there shall be “Cause” (as hereinafter defined) or (B) Employee shall have advised the Company or
the Board of Employee’s intention to terminate his employment with the Company;


 


(v)         Upon
a Change of Control (as defined in Section 5(d)) of the Company unless the new controlling person or entity of the Company’s
business and/or assets determines otherwise; or


 


(vi)        Upon
written notice of such termination to Employee from or on behalf of the Company or the Board, other than under a circumstance covered
by, or when facts exist that would comprise, any of clauses (i), (ii), (iii), (iv) or (v) of this Section 5(a).


 


(b)          Employee
shall be deemed to be under a “disability” for purposes hereof, at the option of the Company by written notice
to Employee, (i) if Employee and the Board agree that Employee is disabled, or (ii) in the event that Employee shall
be unable to or shall fail to render and perform the services required of Employee under this Agreement for 30 consecutive days
or an aggregate of 60 days in any consecutive 12-month period because of physical or mental incapacity or disability, such
option to be exercisable by the Company.


 


(c)          For
purposes of this Agreement, the term “Cause” is defined as: (i) the conviction of Employee for a felony or a
crime involving moral turpitude; (ii) Employee’s material violation of any written Company policy or the material terms
of this Agreement after written notice of such failure and failure to cure within 20 business days; (iii) Employee’s
failure to follow a lawful direction of the Board after written notice of such failure and failure to cure within 20 business days;
(iv) a breach by Employee of a fiduciary responsibility owing to the Company or any of its affiliates; (v) Employee’s
failure to perform such duties as are reasonably delegated or assigned to Employee after written notice of such failure and failure
to cure within 20 business days; (vi) drug or alcohol abuse by Employee, but only if the Employee fails to seek appropriate
counseling or fails to complete a prescribed counseling program to the reasonable satisfaction of the Board; and (vii) a breach
by Employee of Section 7 of this Agreement or any other obligation relating to non-competition, non-solicitation of employees,
customers, licensees or licensors, confidentiality, or ownership and/or rights as to creations and/or proprietary information or
property, under any written agreement in effect from time to time, in favor of the Company.


 




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(d)          For
purposes of this Agreement, the term “Change of Control” is defined as: (i) any “person,” as
such term is used in sections 13(d) and 14(d) of Securities Exchange Act of 1934, as amended, (the “Exchange Act”)
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities; provided,
however, that no Change of Control shall be deemed to occur by reason of the acquisition of securities of the Company by one or
more investors in the Company in capital-raising transactions; (ii) the direct or indirect sale or exchange by the stockholders
of the Company of all or substantially all of the outstanding capital stock of the Company; (iii) a merger or consolidation
in which the Company is a party and in which the stockholders of the Company before such Change of Control do not retain, directly
or indirectly, at a least majority of the beneficial interest in the voting stock of the Company after such transaction; or (iv) an
agreement for the sale or disposition by the Company of all or substantially all the Company’s assets.


 


(e)          Severance;
Release.


 


(i)          In
the event of, and only upon, the termination of the employment of Employee under this Agreement pursuant to: (A) Section 5(a)(v)
and either (x) Employee has not been offered post-Change of Control employment by the Company or any successor entity; or
(y) if offered post-Change of Control employment by the Company or any successor entity, the position offered to Employee
would result in a material reduction in Employee’s duties, authority or responsibilities as in effect immediately prior to
such Change of Control; or (B) Section 5(a)(vi), then Employee shall be entitled to receive (I) his Base Salary and the
amount of any Cash Bonus earned hereunder but unpaid through the date of such termination, any benefits referred to in the first
sentence of Section 4(a) in which Employee has a vested right under the terms and conditions of the employee benefit plan
pursuant to which such benefits were granted (“Vested Benefits”), and (II) (a) severance in an amount equal
to Employee’s then current Base Salary for 12 months payable in equal installments, less applicable taxes and withholdings,
pursuant to the Company’s normal payroll procedures over 12 months as provided herein, and (b) provided Employee timely elects,
and remains eligible for, continued group health plan benefits to the extent authorized by and consistent with 29 U.S.C. § 1161
et seq. (commonly known as “COBRA”), reimburse Employee, on a monthly basis upon presentation of proof of payment
by Employee, for COBRA premiums in an amount such that Employee’s net cost (after tax) for continued health insurance coverage
is the same as Employee’s cost for such benefits as in effect on the date of termination and such reimbursement shall continue
until the earlier of: (i) the date that is 12 months after the date of termination, and (ii) the date Employee becomes
eligible for health benefits through another employer or otherwise become ineligible for COBRA (the “Termination Benefits”).
Any severance payments due hereunder shall commence as soon as administratively feasible within 60 days after Employee’s
termination of employment provided Employee has timely executed and returned the Release referred to in Section 5(e)(iii) and,
if a revocation period is applicable, Employee has not revoked the Release; provided, however, that if the 60-day period begins
in one calendar year and ends in a second calendar year, the severance payments shall begin to be paid in the second calendar year.
On the date that severance payments commence, the Company will pay Employee in a single lump sum payment, less applicable taxes
and withholding, the severance payments that Employee would have received on or prior to such date but for the delay imposed by
the immediately preceding sentence, with the balance of the severance payments to be paid as originally scheduled. Solely for purposes
of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), each installment payment is considered
a separate payment. To the full extent permitted by Code section 409A, it is intended that any severance amount shall be exempt
from the requirements of Code section 409A by reason of either (1) the exemption set forth in Treas. Regs. 1.409A-1(b)(9)(iii)
or (2) the short-term deferral rule under Treas. Regs. 1.409A-1(b)(4).


 




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(ii)         In
the event that Employee’s employment terminates under any circumstance other than as described in clause (i) of Section 5(e),
then the Company shall not be obligated to make any Termination Benefits to Employee or to provide any other severance, termination
or similar payments or compensation or benefits, regardless of any general or other policy, plan or practice as to severance or
employment termination in effect from time to time, other than Base Salary and any Cash Bonus earned but unpaid through the date
of such termination and any Vested Benefits.


 


(iii)        Notwithstanding
anything to the contrary set forth herein, the obligation to pay any Termination Benefits is expressly conditioned upon the execution
by Employee and delivery to the Company of, and the effectiveness (after the expiration of any and all revocation and cancellation
periods and rights) of, such separation agreement and general release from Employee, in such form as shall be required by the Company
(the “Release”) and Employee has returned all Company property and resigned from all positions with the Company
and any affiliated company. In no event shall any Termination Benefits be payable unless and until such separation agreement and
general release becomes effective and all statutory rights to rescind, revoke or terminate the same have expired unexercised.


 


(iv)        Any
Termination Benefits earned hereunder shall be in lieu of any other claim for compensation whether under this Agreement, or under
any wage continuation law or at common law or otherwise, or any and all claims to severance or similar payments or benefits which
Employee may otherwise have or make, except that Employee may still seek unemployment insurance without any adverse consequence
hereunder. Without limiting any other rights or remedies which the Company may have, the Company shall be under no obligation to
pay any Termination Benefits, and Employee shall immediately reimburse the Company in full for any and all Termination Benefits
paid to Employee hereunder if Employee violates any of the provisions of Section 7.


 


(f)          Parachute
Provisions. Payments under this Agreement shall be made without regard to whether the deductibility of such payments (or any other
payments) would be limited or precluded by Section 280G of the Code, and without regard to whether such payments would subject
Employee to the federal excise tax levied on certain “excess parachute payments” under Section 4999 of the Code; provided,
however, that if the Total After-Tax Payments (as defined below) would be increased by the limitation or elimination of any amount
payable under this Agreement, then the amount payable under this Agreement will be reduced to the extent necessary to maximize
the Total After-Tax Payments. The determination of whether and to what extent payments under this Agreement are required to be
reduced in accordance with the preceding sentence will be made by the Company’s independent auditors. In the event of any
underpayment or overpayment under this Agreement (as determined after the application of this Section 5(f)), the amount of such
underpayment or overpayment will be immediately paid by the Company to Employee or refunded by Employee to the Company, as the
case may be, with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. For purposes of this
Agreement, “Total After-Tax Payments” means the total of all “parachute payments” (as that term is defined
in Section 280G(b)(2) of the Code) made to or for the benefit of Employee (whether made hereunder or otherwise), after reduction
for all applicable federal taxes (including, without limitation, the tax described in Section 4999 of the Code).


 




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6.            Deductions
and Withholding. Employee agrees that the Company shall be entitled to withhold from any and all payments required to be made
to Employee pursuant to this Agreement all federal, state, local and/or other taxes which it determines are required to be withheld
in accordance with applicable statutes and/or regulations from time to time in effect.


 


7.            Restrictive
Covenants.


 


(a)          For
and in consideration of the rights of Employee under Sections 3, 4 and 5(e), the adequacy and sufficiency of which are hereby irrevocably
acknowledged by Employee, Employee agrees that Employee shall not, and shall not permit any person or entity directly or indirectly
controlled by Employee (alone or together with others) (the “Employee Affiliates”) to, directly or indirectly
(including, without limitation, through ownership, management, operation or control of any other person or entity, or participation
in the ownership, management, operation or control of any other person or entity, or by having any interest, as a stockholder,
lender, investor, agent, consultant, employee, partner or otherwise, in or with respect to any other person or entity) do any of
the following:


 


(i)          during
the period of Employee’s employment with the Company and for 12 months following the date of termination of Employee’s
employment for any reason (the “Restricted Period”), own, manage, operate, control, invest in, participate in,
provide consulting services to, or be involved or associated with in any capacity, any person or entity that competes directly
or indirectly with the business conducted by the Company or proposed to be conducted by the Company during the time Employee was
employed by the Company or during the Restricted Period, within the geographical areas in which the Company is doing business or
proposes to do business at the time of Employee’s termination of employment; provided that the foregoing shall not prohibit
Employee and Employee Affiliates from owning in the aggregate less than one percent of any class of securities listed on a national
securities exchange or traded publicly in the over-the-counter market; Employee acknowledges that the Company conducts business
on a nationwide and international basis, that its sales and marketing prospects are for expansion into national and international
markets not currently penetrated and that, therefore, the territorial and time limitations set forth in this Section are reasonable
and properly required for the adequate protection of the business of the Company.


 


(ii)         during
the Restricted Period, (A) solicit, encourage or entice any client, customer, vendor, licensee, licensor, consultant or supplier
of or to the Company to cease to do business with, or to reduce or modify the business such person or entity has done with or intends
to do with, or to end, reduce or modify any relationship or proposed relationship of such person or entity with, the Company, or
(B) interfere with, disrupt or attempt to disrupt or otherwise jeopardize any relationship of the Company with any client,
customer, vendor, licensee, licensor, consultant or supplier or any other person or entity with whom the Company has a business
relationship;


 




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(iii)        during
the Restricted Period, encourage, entice or induce any person who at the time of Employee’s termination of employment or
at any time during the 18-month period immediately preceding such termination is or was an employee of, or a consultant to, the
Company to leave the employ of, or to terminate any such consulting arrangement with, the Company, or, with respect to any such
employee or consultant who is then an employee of or consultant to the Company, to become an employee of, or consultant to, any
other person or entity, or employ or retain any such person; or


 


(iv)        during
the Restricted Period and at all times thereafter, disparage, criticize or make statements which may be perceived as negative,
detrimental or injurious to the Company, or any of the management, owners, business, policies or practices of the Company; provided
that the Restricted Period and any additional periods thereafter under this Section 7 shall be tolled and shall cease to run
during the period of any violation by Employee of any of Employee’s agreements and obligations under this Section 7.


 


(b)          Employee
acknowledges and agrees that Employee’s employment by the Company will necessarily involve Employee’s understanding
of and access to trade secrets and confidential or proprietary information and property, and personal information pertaining to
the business and affairs of the Company, and its licensors, clients, customers, licensees, consultants and suppliers of or to any
of them, including, without limitation, data, databases, know-how, trade secrets, marketing plans and opportunities, cost and pricing
information, strategies, forecasts, licensee and customer lists, reports and surveys, concepts and ideas, computer software, systems
and programs (including source code and documentation), and techniques and technical information, whether acquired by, or provided
or made available to, Employee before, on or after the date of this Agreement by reason of Employee being or having been an employee
of the Company and Employee agrees to keep all such information confidential. Employee and the Company have entered into that certain
Employee Confidentiality and Invention Agreement dated as of the date hereof (the “Confidentiality Agreement”)
and attached hereto as Exhibit B, the terms and conditions of which are incorporated by reference herein and made a part hereof.
The terms and provisions of this Agreement shall control and govern in respect of any conflict between the terms of this Agreement
and the Confidentiality Agreement.


 


(c)          Employee
represents that his employment with the Company will not violate or conflict with any obligations to any previous employer or other
party, including without limitation, obligations relating to nondisclosure, proprietary information, non-competition and non-solicitation.


 


(d)          Because
irreparable harm would be sustained by the Company in the event that there is a breach by Employee of any of the terms, covenants
and agreements set forth in this Section 7, in addition to any other rights and remedies that the Company may otherwise have,
the Company shall be entitled to obtain specific performance and/or injunctive relief against Employee from any court of competent
jurisdiction, without making a showing that monetary damages would be inadequate and without the requirement of posting any bond
or other security whatsoever, in order to enforce or prevent any breach or threatened breach of any of the terms, covenants and
agreements set forth in this Section 7.


 


(e)          Each
of the obligations of Employee under this Section 7 shall survive the termination of Employee’s employment by the Company
for any reason whatsoever.


 




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(f)          Employee
acknowledges that: (i) the enforcement of any of the restrictions on Employee or any other provisions contained in this Section 7
(the “Restrictive Covenants”) against Employee would not impose any undue burden upon Employee; and (ii) none
of the Restrictive Covenants are unreasonable as to duration or scope. If notwithstanding the foregoing, any provision of this
Agreement would be held to be invalid, prohibited or unenforceable in any jurisdiction for any reason (including, without limitation,
any provision which may be held unenforceable because of the scope, duration or area of its applicability), unless narrowed by
construction, such provision shall, as to such jurisdiction, be construed as if such invalid, prohibited or unenforceable provision
had been more narrowly drawn so as not to be invalid, prohibited or unenforceable (and the court making any such determination
as to any provision shall have the power to, and shall, modify such scope, duration or area or all of them, and such provision
shall then be applicable in such modified form in such jurisdiction only). If, notwithstanding the foregoing, any provision of
this Agreement would be held to be invalid, prohibited or unenforceable in any jurisdiction for any reason, such provision, as
to such jurisdiction, shall be ineffective to the extent of such invalidity, prohibition or unenforceability, without invalidating
the remaining provisions of this Agreement, or affecting the validity or enforceability of such provision in any other jurisdiction.


 


(g)          In
the event that Employee’s employment with the Company is terminated for any reason and Employee thereafter obtains employment
or engagement by another person or entity (a “Subsequent Employer”), Employee agrees to advise such Subsequent
Employer of Employee’s continuing obligations under this Agreement.


 


8.            No
Conflicts. Employee represents and warrants that Employee is not party to any agreement, contract or understanding, whether
of employment, consultancy or otherwise, in conflict with this Agreement or which would in any way restrict or prohibit Employee
from undertaking or performing services for the Company. Employee hereby acknowledges that Employee has not foregone any other
opportunity, financial or otherwise, in connection with Employee’s execution and delivery of this Agreement or Employee’s
rendering of services to the Company.


 


9.            Notices.
All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given
and effective: (i) on the date of delivery, if delivered personally; (ii) on the first business day following the date
of dispatch if delivered by a recognized next-day courier service; (iii) on the earlier of the fourth (4th) day after
mailing or the date of the return receipt acknowledgment, if mailed, by certified or registered mail, return receipt requested,
postage and fees prepaid; or (iv) on the date of transmission (subject to written confirmation of receipt), if sent by facsimile
or e-mail .pdf to the other party hereto. Any such notice, if to Employee, shall be sent to Employee’s address set forth
on the signature page hereto or Employee’s principal residence address then known to the Company, and, if to the Company,
shall be sent to the Chairman of the Board. A copy of all notices sent by Employee to the Company pursuant to this Agreement shall
also be sent to Duane Morris LLP, 30 South 17th Street, Philadelphia, PA 19103, Attn: Kathleen M. Shay. Either party may change
the address to which notices, requests, demands and other communications hereunder shall be sent by sending written notice of such
change of address to the other party in the manner hereinabove provided.


 




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10.          Assignability
and Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the heirs, executors, administrators,
successors and legal representatives of Employee, and shall inure to the benefit of and be binding upon the Company and its successors
and assigns, but the obligations of Employee may not be delegated or assigned. Employee shall not be entitled to assign, transfer,
pledge, encumber, hypothecate or otherwise dispose of this Agreement, or any of his rights hereunder, and any such attempted delegation
or disposition shall be null and void and without effect. It is hereby acknowledged and agreed that the Company shall have the
right to assign all or any part of its rights in respect of the covenants and agreements set forth in Section 7 of this Agreement
to one or more direct or indirect acquirors of any of the assets or business of, or control of, the Company, and that this Agreement
and all of the Company’s rights and obligations hereunder may be assigned or transferred by the Company to and in such event
may be assumed by any assignee of or successor to the Company.


 


11.          Waiver
and Compliance; Consents. Except as otherwise provided in this Agreement, any failure of either party to this Agreement to
comply with any obligation, covenant, agreement or condition herein may be waived by the other party hereto only by written instrument
signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever
this Agreement requires or permits consent by or on behalf of a party, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section 11.


 


12.          Entire
Agreement; Amendments. This Agreement and the Confidentiality Agreement referenced herein sets forth the entire agreement and
understanding of the parties hereto relating to the subject matter hereof, and is expressly intended to supersede any and all prior
agreements, arrangements and understandings, written or oral, relating to the subject matter hereof. With respect to the subject
matter hereof, no representation, promise or inducement has been made by either party that is not embodied in this Agreement, and
neither party shall be bound by or liable for any alleged representation, promise or inducement not so set forth. This Agreement
shall not be altered, modified, amended or terminated except by written instrument signed by each of the parties hereto.


 


13.          Headings,
Construction, Interpretation. The captions and section headings contained in this Agreement are for convenience of reference
only, do not form a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. Whenever
the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed
followed by the words “without limitation.” When used in this Agreement, words such as “herein”, “hereinafter”,
“hereof”, “hereto”, and “hereunder” shall refer to this Agreement as a whole, unless the context
clearly requires otherwise. The use of the words “either” and “any” shall not be exclusive.


 


14.          Code
Section 409A. This Agreement shall be interpreted and administered to the extent practicable in a manner consistent with
the following statement of intent: All benefits and compensation payable to Employee pursuant to this Agreement are intended to
be exempt from the definition of “nonqualified deferred compensation plan” or “deferral of compensation”
under Code Section 409A in accordance with one or more exemptions available under the Treasury Regulations promulgated under
Code Section 409A. To the extent that any benefit or payment is or becomes subject to Code Section 409A, this Agreement
is intended to comply with the requirements of Code Section 409A as applicable to such benefit or payment.


 




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15.          Governing
Law; Venue. This Agreement and the legal relations among the parties shall be governed by the internal laws of the State of
New York, without regard to principles of conflict of laws. Any litigation arising in connection with or related to this Agreement
or any of the subject hereof shall be tried solely by and in the United States District Court for the Southern District of New
York, provided that, if such litigation shall not be permitted to be tried by such court, then such litigation shall be held solely
in the state courts of New York sitting in New York City. Each party hereto irrevocably consents to and confers personal jurisdiction
on the United States District Court for the Southern District of New York, or, if (but only if) the litigation in question shall
not be permitted to be tried by such court, on the state courts of New York sitting in New York City, and expressly waives any
objection to the venue of such court, as the case may be and any argument that any case filed should be transferred to a more convenient
forum.


 


16.          Mutual
Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT, OR THE EMPLOYMENT OF EMPLOYEE, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
EACH PARTY HERETO AGREES THAT EITHER OF THEM MAY FILE A COPY OF THIS AGREEMENT UNDER SEAL WITH THEY COURT AS WRITTEN EVIDENCE OF
THE KNOWING, VOLUNTARY, AND BARGAINED AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR
CONTROVERSY WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.


 


17.          Knowing
and Voluntary Agreement. The parties to this Agreement acknowledge and agree that each of them has had a full and fair opportunity
to carefully read and review the terms and provisions of this Agreement and consult with their own attorney concerning the meaning
and effect of this Agreement. By executing this Agreement, each of the parties hereto represents, acknowledges, and agrees that
such party fully understands his or its right to discuss all aspects of this Agreement with his or its own attorney, that to the
extent he or it wanted to talk to his or its attorney he or it has availed herself or itself of that right, that he or it has carefully
read and fully understands all the provisions of this Agreement, and that he or it is knowingly and voluntarily entering into this
Agreement and signing it of his or its own free will.


 


18.          Interpretation.
In the event any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or disfavoring either party by virtue of the authorship
of any of the provisions of this Agreement. No provision of this Agreement shall be construed against either party on the grounds
that such party or its counsel drafted that provision.


 




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19.          Counterparts;
Signatures. This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had
signed the same document. All counterparts shall be construed together and shall constitute one Agreement. This Agreement and any
amendments hereto, to the extent signed and delivered by means of a facsimile machine or electronic transmission, shall be treated
in all manner and respects as an original Agreement and shall be considered to have the same binding legal effect as if it were
the original signed version thereof delivered in person. At the request of either party hereto the other party hereto shall re-execute
original forms thereof and deliver them to such requesting party. No party hereto shall raise the use of a facsimile machine or
electronic transmission to deliver a signature or the fact that any signature was transmitted or communicated through the use of
facsimile machine or electronic transmission as a defense to the formation of a contract and each such party forever waives any
such defense.


 


[Balance of page intentionally left blank;
signature page follows.]


 




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IN WITNESS WHEREOF, the parties hereto have
executed this Employment Agreement as of the day and year first above written.


 


	 	COMPANY:
	 	 
	 	MELA SCIENCES, INC.
	 	 	 
	 	By:	/s/ Jeffrey F. O’Donnell
	 	 	Jeffrey F. O’Donnell,
	 	 	Chairman of the Board
	 	 	 
	 	EMPLOYEE:
	 	 
	 	/s/ Michael R. Stewart
	 	Michael R. Stewart


 




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EXHIBIT A


 


Other Activities


 


Board of Directors of Polymerx


 




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EXHIBIT B


 


Confidentiality Agreement


 


This EMPLOYEE CONFIDENTIALITY AND INVENTION
AGREEMENT is made, as of _______________, 2014, by and between MELA Sciences, Inc. (the “Company”), a Delaware corporation,
and Michael R. Stewart (the “Employee”).


 


As a result of his employment by the Company,
the Employee has had or will have access to and has or will become acquainted with various trade secrets and other proprietary
and confidential information and property of the Company, the disclosure or use of which for any purposes other than in the Company’s
business would unreasonably and unfairly impair the Company’s ability to conduct its business profitably.


 


THEREFORE, as a condition of and in consideration
of the Company’s employment or continuation of employment of the Employee, the Employee agrees with the Company as follows,
intending to be legally bound hereby:


 


1.            Certain
Definitions. For purposes of this Agreement, the terms defined below have the meanings indicated.


 


1.1           “Affiliate.”
“Affiliate” means and includes any of the Company’s subsidiaries (whenever formed or acquired), and any corporation,
limited liability company, partnership, joint venture, association or other entity in which the Company owns or comes to own more
than twenty percent of the voting stock or other ownership interest or which owns or comes to own twenty percent or more of the
Company’s outstanding common stock, and any of the Company’s clients, customers, licensees, licensors, franchisees
and franchisors.


 


1.2           “Confidential
Matter.” “Confidential Matter” means and includes the following:


 


All proprietary and confidential information of the Company
consisting of techniques; formulas; designs; processes; programs; marketing data; equipment; documents; files; electronically recordable
data or concepts; computer software and hardware; inventions; improvements; books; papers; compilations of information; records;
specifications; names, addresses, names of agents and employees, buying habits and practices of existing and potential clients,
customers and other Affiliates; various financial and operating data; names, marketing methods, practices and related information
regarding the Company’s existing and potential joint venture partners, licensees, licensors, vendors, suppliers and distributors;
costs of materials; prices the Company obtains or has obtained or at which it sells, has sold or intends to sell its products or
services; lists or other written records used in the Company’s business; information regarding the Company’s financial
condition; compensation paid to the Company’s consultants and employees and other terms of employment; and any of the foregoing
that may have been or may be conceived, originated, discovered or developed by the Company or the Employee or any other employees
or consultants of the Company while employed or engaged by the Company or on the basis of or using any Confidential Matter. All
of the foregoing are owned and held in strict confidence by the Company or by Affiliates to which the Company has a duty of confidentiality.
Nevertheless, “Confidential Matter” excludes any of the foregoing that has entered the public domain through no fault
of the Employee, that an authorized executive officer of the Company has authorized for public dissemination, that was known to
or possessed by the Employee prior to his employment by the Company and other than through disclosure or delivery by the Company,
or that was learned or obtained by the Employee from sources having no duty of confidentiality to the Company that were or are
unconnected with and unrelated to his employment by the Company.


 




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2.            Nondisclosure;
Property.


 


2.1           Nondisclosure.
The Employee acknowledges and agrees that, as an employee of the Company, he has had and/or will have access to and has and/or
will become acquainted with Confidential Matter, all of which the Employee will regard and protect as trade secrets owned by the
Company and all of which are used or contemplated to be used in the Company’s business. The Employee represents, warrants
and agrees that, except as required by the Company in the course of his employment with the Company, he will not at any time, whether
during or after his employment by the Company, directly or indirectly, use or permit others to use, or disclose or communicate
to any person or entity, any Confidential Matter, without the prior written consent of an executive officer of the Company in the
particular case.


 


2.2           Property.
The Employee agrees that he will not make or retain any originals, copies or reproductions of or excerpts from any of the Confidential
Matter for his use or the use of others and, on request by the Company or on termination of the Employee’s employment with
the Company, the Employee will deliver to the Company all tangible property that is or embodies any of the Confidential Matter,
whether prepared or developed by or with the assistance of the Employee or otherwise coming into his possession, control or knowledge.


 


2.3           Nondisclosure
to the Company. The Employee further represents and warrants that the Employee has not disclosed and will not disclose to the
Company or any Affiliate any trade secrets or other proprietary or confidential information that may not lawfully be so disclosed
by the Employee, by virtue of the ownership of the same by another person or entity or otherwise.


 


3.            Inventions,
Designs and Patents.


 


3.1           Disclosure
and Assignment of Inventions. The Employee agrees that he will promptly and fully disclose to the Company, and the Company
agrees to keep confidential, all inventions, designs, creations, processes, technical or other developments, improvements, ideas
and discoveries (collectively, “Inventions”), whether patentable or not, of which the Employee obtains knowledge or
information during his employment with the Company and for a period of one year thereafter and which relate to the existing or
contemplated products, services or business of or to any research or experimental, developmental or creative work carried on or
contemplated by the Company, whether or not conceived, originated, made, developed or reduced to practice by the Employee alone
or with others during regular working hours or at other times. All Inventions are and shall remain the exclusive property of the
Company. The Employee agrees that he will assign, and hereby does assign, to the Company or its designee, all of the Employee’s
right, title and interest in and to all Inventions, whether patentable or not, conceived, originated, made, developed or reduced
to practice by the Employee, alone or with others, while he is an employee with the Company.


 




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3.2           Cooperation.
The Employee agrees to assist the Company to obtain any and all patents, copyrights, trademarks and service marks relating to Inventions
and to execute all documents and do all things necessary to obtain letters patent and copyright, trademark and service mark registrations
therefor, to vest the Company or its designee with full and exclusive title thereto and to protect the same against infringement
by others, all as and to the extent the Company may request and at the Company’s expense, for no consideration to the Employee
other than the Employee’s salary or wages.


 


3.3           Exceptions.
Sections 3.1 and 3.2 shall not, however, apply to an Invention developed entirely on the Employee’s own time without using
the Company’s or any Affiliate’s equipment, supplies, facilities or trade secret information except for those Inventions
that either (a) relate at the time of conception or reduction to practice of the Invention to the Company’s business or demonstrably
anticipated research or development of the Company, or (b) result from any work performed by the Employee for the Company. The
Employee has provided to the Company a complete and accurate written list, which the Company agrees to keep confidential, of all
unpatented Inventions owned, conceived, originated, made, developed or reduced to practice by the Employee (whether or not prior
to the Employee’s employment with the Company) qualifying for the exception in the first sentence of this section 3.3.


 


4.            Trade
Secrets of Third Parties. The Employee acknowledges and understands that, in dealing with existing and potential Affiliates,
suppliers, contracting parties and other third parties with which the Company has business relations or potential business relations,
the Company frequently receives confidential and proprietary information and materials from such third parties subject to the Company’s
understanding that the Company will maintain the confidentiality thereof and will require its employees and consultants to do so.
The Employee agrees to treat all such information and materials as Confidential Matter subject to this Agreement.


 


5.            Injunctive
Relief. The Employee acknowledges and agrees that his failure to perform any of his covenants in this Agreement would cause
irreparable injury to the Company and cause damages to the Company that would be difficult or impossible to ascertain or quantify.
Accordingly, without limiting any remedies that may be available with respect to any breach of this Agreement, the Employee consents
to the entry of an injunction to restrain any breach of this Agreement.


 


6.            Severability.
The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision
hereof.


 


7.            Attorneys’
Fees. If suit is brought to enforce or interpret this Agreement, the prevailing party shall be entitled to recover as an element
of costs of suit, and not as damages, reasonable attorneys’ fees and expenses and all expert witnesses’ fees and expenses
incurred by the prevailing party. In such event, the “prevailing party” shall be the party that is entitled to recover
costs of suit, whether or not the suit proceeds to final judgment, the party not entitled to recover costs shall not recover attorneys’
or expert witnesses’ fees or expenses and no sum for attorneys’ and expert witnesses’ fees and expenses shall
be counted in calculating the amount of a judgment for purposes of determining whether a party is entitled to recover costs or
attorneys’ or expert witnesses’ fees or expenses.


 




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8.            Headings.
The section headings in this Agreement are for convenience of reference only and are not part of this Agreement.


 


9.            Notices.
Any notice, consent or other communication to be given under or in connection with this Agreement shall be in writing and shall
be deemed duly given and received when delivered personally, when transmitted by facsimile if receipt is acknowledged by the addressee,
one day after being deposited for next-day delivery with a nationally recognized overnight delivery service or three days after
being mailed by first class mail, charges or postage prepaid, properly addressed, if to the Company, at 50 South Buckhout Street,
Irvington, New York 10533 (Facsimile number: (914) 591-3785), and, if to the Employee, at his address or facsimile number appearing
on the records of the Company. Either the Company or the Employee may change its or his address for this purpose from time to time
by notice to the other.


 


10.          Successors.
This Agreement shall inure to the benefit of and bind the Company and the Employee and their respective successors, assigns, heirs,
legatees, devisees and personal representatives.


 


11.          Entire
Agreement. This Agreement contains the entire agreement of the Company and the Employee and supersedes all prior or contemporaneous
negotiations, correspondence, understandings and agreements, whether written or oral, between them, with respect to the subject
matter hereof.


 


12.          Survival.
All agreements, representations, warranties and acknowledgments herein shall survive any termination of the Employee’s employment
with the Company for any reason.


 


13.          The
Company’s Right to Terminate. Nothing herein shall be interpreted to impair or otherwise affect the right and power of
the Company to terminate its employment of the Employee, which is at will.


 


14.          Acknowledgement.
THE EMPLOYEE HEREBY WARRANTS AND ACKNOWLEDGES THAT HE HAS CAREFULLY READ AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS AGREEMENT.


 


(Signature page follows.)


 




    	B-4



    	 



    

 


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


 


	 	EMPLOYEE:
	 	 
	 	 
	 	Michael R. Stewart
	 	 
	 	MELA SCIENCES, INC.
	 	 	 






	 	By:	 



 


	 	Name:	 



 


	 	Title:	 


 




    	B-5