Document:

EX-10.41:

 

Conformed Copy

Exhibit 10.41

FIRST AMENDMENT OF LEASE

     AGREEMENT (this “Agreement”), made as of December 21, 2004, between 111 CHELSEA COMMERCE LP
(“Landlord”), a Delaware limited partnership with an address c/o Taconic Investment Partners LLC,
111 Eighth Avenue, New York, New York 10011, and WEBMD, INC. (“Tenant”), a Georgia corporation with
an address at 669 River Drive, Center Two, Elmwood Park, New Jersey 07407.

Statement of Facts

     By lease dated as of June 30, 2004 (the “Lease”), Landlord leased to Tenant and Tenant hired
from Landlord a portion of the seventh (7th) floor in the building (the “Building”)
located at 111 8th Avenue, New York, New York (such portion of the seventh
(7th) floor in the Building being hereinafter collectively referred to as the “Original
Premises”), upon all of the terms, covenants, conditions and provisions more particularly contained
in the Lease.

     Except as otherwise set forth in this Agreement, all capitalized terms used in this Agreement
shall have the meanings ascribed to them in the Lease.

     Landlord and Tenant now desire to amend the Lease by, among other things, adding to the
Original Premises another portion of the seventh (7th) floor of the Building, upon all
of the terms, covenants and conditions contained in this Agreement.

     NOW, THEREFORE, for ten ($10.00) dollars and other good and valuable consideration, the
receipt and adequacy of which is hereby mutually acknowledged, Landlord and Tenant hereby agree to
the following:

Terms and Conditions

     1. Additional Premises.

          Effective from and after the date hereof, (a) the term “this Lease,” as used in the Lease,
shall be deemed to refer to the Lease, as amended by this Agreement, (b) the term “Premises,” as
such term is used in the Lease, shall mean the Original Premises and the portion of the seventh
(7th) floor of the Building substantially where shown in hatching on Exhibit A hereto
(which by this reference is made a part hereof) (such portion of the seventh (7th) floor
of the Building being hereinafter referred to as the “Additional Premises”), (c) the floor plan of
the Original Premises attached to the Lease shall be amended to include the floor plan of the
Additional Premises attached as Exhibit A hereto, and “Premises Area” shall be increased by 5,736
Rentable Square Feet. Except as otherwise provided in this Agreement, the Additional Premises shall
be leased to, and hired by, Tenant upon all of the terms, covenants and conditions contained in the
Lease, as amended by this Agreement.

          2. Use and Occupancy. Effective from and after the date hereof, Section 3.3 of the Lease shall be amended by
deleting the word “Demised” therefrom.

 

     3. Fixed Rent.

          (a) Effective from and after the date hereof, the Fixed Rent payable under subsection 2.01(a)
of the Lease, as amended by this Agreement, shall be increased by:

          (i) One Hundred Eighty-Three Thousand Five Hundred Fifty-Two and 00/100 Dollars
($183,552.00 per annum ($15,296.00 per month) for the First Rent Period;

          (ii) One Hundred Eighty-Seven Thousand Two Hundred Twenty-Three and 04/100 Dollars
($187,223.04) per annum ($15,601.92 per month) for the Second Rent Period;

          (iii) One Hundred Ninety Thousand Nine Hundred Sixty-Seven and 50/100 Dollars
($190,967.50) per annum ($15,913.96 per month) for the Third Rent Period;

          (iv) One Hundred Ninety-Four Thousand Seven Hundred Eighty-Six and 85/100 Dollars
($194,786.85) per annum ($16,232.24 per month) for the Fourth Rent Period;

          (v) One Hundred Ninety-Eight Thousand Six Hundred Eighty-Two and 59/100 Dollars
($198,682.59) per annum ($16,556.88 per month) for the Fifth Rent Period;

          (vi) Two Hundred Twenty-Five Thousand Six Hundred and 24/100 Dollars ($225,600.24) per
annum ($18,800.02 per month) for the Sixth Rent Period;

          (vii) Two Hundred Thirty Thousand One Hundred Twelve and 24/100 Dollars ($230,112.24)
per annum ($19,176.02 per month) for the Seventh Rent Period;

          (viii) Two Hundred Thirty-Four Thousand Seven Hundred Fourteen and 49/100 Dollars
($234,714.49) per annum ($19,559.54 per month) for the Eighth Rent Period;

          (ix) Two Hundred Thirty-Nine Thousand Four Hundred Eight and 78/100 Dollars
($239,408.78) per annum ($19,950.73 per month) for the Ninth Rent Period; and

          (x) Two Hundred Forty-Four Thousand One Hundred Ninety-Six and 95/100 Dollars
($244,196.95) per annum ($20,349.75 per month) for the Tenth Rent Period.

          (b) Tenant covenants and agrees to pay such increases in Fixed Rent in the manner and in
accordance with, and subject to, the terms, covenants and conditions of the Lease, as amended by
this Agreement.

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          (c) (i) Subparagraph (c)(ii) below, and not Section 2.2 of the Lease, shall apply to the Fixed
Rent described above in respect of the Additional Premises.

               (ii) Notwithstanding anything to the contrary contained herein, upon execution and delivery of
this Agreement, Tenant shall pay to Landlord the sum of Fifteen Thousand Two Hundred Ninety-Six
Dollars and 00/100 ($15,296.00) representing the installment of Fixed Rent for the first
(1st) full calendar month of the Term after the Commencement Date in respect of the
Additional Premises. If the date (the “Additional Premises Rent Payment Date”) on which Tenant’s
obligation to pay Fixed Rent in respect of the Additional Premises commences occurs on a date other
than the first (1st) day of any calendar month, Tenant shall also pay to Landlord, on
the Additional Premises Rent Payment Date, a sum equal to Fifteen Thousand Two Hundred Ninety-Six
Dollars and 00/100 ($15,296.00), prorated on a daily basis for the period from the Additional
Premises Rent Payment Date to the last day of the month in which the Rent Payment Date occurs,
based on the number of calendar days in such month.

          (d) (i) Subparagraph (d)(ii) below, and not Section 2.3 of the Lease, shall apply to the Fixed
Rent described above in respect of the Additional Premises.

               (ii) Notwithstanding anything to the contrary set forth in subparagraph 3(a) above, so long as
no Event of Default in respect of a monetary obligation under the Lease, as amended by this
Agreement, or a material non-monetary obligation under the Lease, as amended by this Agreement,
shall then have occurred and be continuing, Tenant shall have no obligation to pay the first
$91,776 of Fixed Rent payable under the Lease, as amended by this Agreement, in respect of the
Additional Premises; provided, however, that if at the time Tenant would otherwise be entitled to
the abatement of Fixed Rent provided for in this subparagraph, but for the fact that at such time
such Event(s) of Default have occurred and are continuing, such abatement shall be reinstated if
and when all of such event(s) that caused such Event(s) of Default are cured, provided Landlord
accepts such cure and has not terminated the Lease as a result of any of such Event(s) of Default.

     4. Real Estate Tax Increase.

          Effective from and after the date hereof, subsection 7.1(b) of the Lease shall be amended by
increasing Tenant’s Share by 0.25%.

     5. Compliance with Laws.

          Effective from and after the date hereof:

          (a) Subsections 8.2(b) and (c), and subsection 8.3(c) of the Lease shall be amended by
increasing the number “375” to “399”;

          (b) Subsection 8.3(c) of the Lease shall be amended by deleting the amount “$14,666.84”
therefrom, and by inserting the amount “$15,672.60” in lieu thereof.

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     6. Electricity.

          Effective from and after the date hereof:

          (a) Clause (viii) of subsection 5.2(a) of the Lease, and subsection 10.1(a) of the Lease shall
be amended by deleting “1200 amp” and “1200 ampere,” respectively, therefrom, and by inserting
“1300 ampere” in lieu thereof; and

          (b) Subsection 10.1(a) of the Lease shall be amended further by deleting “960 amperes”
therefrom, and by inserting “1040 amperes” in lieu thereof.

     7. Heat, Ventilation And Air-Conditioning.

          Effective from and after the date hereof:

          (a) Subsection 10.2(d) of the Lease shall be amended by increasing “250 tons” to “266 tons”;
and

          (b) The following shall be added to Section 10.2 of the Lease as subsection (f):

“(f) To the extent that Tenant’s HVAC System includes computer room air-conditioning
units (“CRACs”) that use a water based cooling medium, Landlord will provide to
Tenant glycol water sufficient to operate up to 15 tons of CRACs from the Building’s
glycol system, at no additional charge, 24 hours per day, 365 days per year. Tenant
shall have the right to tap into the Building’s glycol system, at Tenant’s expense.
Except for such expense, there shall be no tap-in or other charge to Tenant for the
initial work necessary to tap into the Building glycol system. Landlord shall have
the right from time to time during the term of this Lease, at Landlord’s expense, to
substitute for such glycol water another water based cooling medium that is
sufficient to operate up to 15 tons of CRACs.”

     8. Building Emergency Generator.

          Effective from and after the date hereof, Subsection 10.9(a) of the Lease shall be amended by
increasing “400 amperes” to “425 amperes.”

     9. Landlord’s Contribution.

          Effective from and after the date hereof, Article 30 of the Lease shall be amended by
increasing the amount Four Million Seven Hundred Sixteen Thousand and 00/100 Dollars
($4,716,000.00) to Five Million Three Hundred Ninety-Three Thousand Five Hundred Seventeen and
78/100 Dollars ($5,393,517.78), and by increasing the amounts $923,000.00 to $980,360.00.

4

 

     10. Security Deposit; Guaranty.

          (a) Tenant has deposited with Landlord the sum of Ninety-One Thousand Seven Hundred
Seventy-Six and 00/100 Dollars ($91,776.00) as additional security for the full and faithful
performance of all of the obligations of Tenant under the Lease, as amended by this Agreement, in
the form of an amendment to the Letter of Credit, which additional security shall increase, and be
a part of, the Security Deposit.

          (b) From and after the date hereof:

               (i) The amount of One Million Three Hundred Thirty-Eight Thousand Three Hundred Fifty and
00/100 Dollars ($1,338,350.00) set forth in Section 32.1 of the Lease shall be increased to One
Million Four Hundred Thirty Thousand One Hundred Twenty-Six and 00/100 Dollars ($1,430,126.00);

               (ii) The amount of $669,175.00 set forth in Section 32.3 of the Lease shall be increased to
$715,063.00;

               (iii) The amounts of $5,353,400.00 set forth in Section 32.6(b) of the Lease shall be
increased to $5,720,504;

               (iv) The amounts of $4,568,850.00 set forth in Section 32.6(b) of the Lease shall be increased
to $4,878,594.

          (c) Together with the execution of this Agreement, WebMD Corporation is executing and
delivering to Landlord a Ratification of Guaranty in respect of this Agreement.

     11. Subject Space. No part of the Additional Premises constitutes “Subject Space,” as
such term is defined and used in Article 35 of the Lease.

     12. Broker.

          (a) Each of Landlord and Tenant represents and warrants to the other that it has not dealt
with any broker in connection with this Agreement other than Taconic Management Company, CB Richard
Ellis Real Estate Services, Inc. and Williams Real Estate Co., Inc. (collectively, “Broker”) and
that to the best of its knowledge and belief, no other broker, finder or similar Person procured or
negotiated this Agreement or is entitled to any fee or commission in connection herewith.

          (b) Each of Landlord and Tenant shall indemnify, defend, protect and hold the other party
harmless from and against any and all losses, liabilities, damages, claims, judgments, fines,
suits, demands, costs, interest and expenses of any kind or nature (including reasonable attorneys’
fees and disbursements) which the indemnified party may incur by reason of any claim of or
liability to any broker, finder or like agent (other than Broker) arising out of any dealings
claimed to have occurred between the indemnifying party and the claimant in connection with this
Agreement, or the above representation being false. The provisions of this Paragraph shall survive
the Expiration Date or earlier termination of the Term.

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          (c) Based on the representations, warranties and obligations of Tenant set forth in
subparagraphs (a) and (b) above, Landlord agrees to pay to Broker pursuant to separate agreements
any commission payable to Broker in connection with this Agreement.

     13. Miscellaneous.

          (a) Except as otherwise provided herein, all of the terms, covenants, conditions and
provisions of the Lease shall remain and continue unmodified, in full force and effect.

          (b) This Agreement sets forth the entire agreement between the parties regarding the letting
of the Additional Premises to Tenant, superseding all prior agreements and understandings, written
and oral, regarding the letting of the Additional Premises to Tenant, and may not be altered or
modified except by a writing signed by both parties.

          (c) Landlord and Tenant each represent and warrant to the other that it has not relied upon
any representation or warranty, express or implied, in entering into this Agreement, except those
which are set forth herein.

          (d) This Agreement has been executed in the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York.

          (e) The covenants and agreements herein contained shall bind and inure to the benefit of
Landlord, its successors and assigns, and Tenant, its successors and assigns. If any of the
provisions of this Agreement, or its application to any situation, shall be invalid or
unenforceable to any extent, the remainder of this Agreement, or the application thereof to
situations other than that as to which it is invalid or unenforceable, shall not be affected
thereby, and every provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.

          (f) The captions of this Agreement are for convenience and reference only and in no way
define, limit or describe the scope or intent of this Agreement.

          (g) Submission by Landlord of the within Agreement for execution by Tenant shall confer no
rights nor impose any obligation on Landlord unless and until both Landlord and Tenant shall have
executed this Agreement and duplicate originals thereof shall have been delivered by Landlord and
Tenant to each other.

          (h) The Statement of Facts first set forth in this Agreement and the exhibits and schedules
attached hereto are incorporated into this Agreement and are, and shall for all purposes be deemed
to be, a part of this Agreement.

          (i) This Agreement may be executed in one or more original counterparts, all of which shall
constitute the same document.

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

	 	 	 	 	 
	 	 	111 CHELSEA COMMERCE LP
	 
	 	 	 	 
	 	 	By: Taconic Chelsea Holdings LLC,

managing member
	 
	 	 	 	 
	 	 	By: Taconic SL Principals LLC,

managing member
	 
	 	 	 	 
	                                                       
	 

	 	By:	 	 /s/ Paul Pariser
	 

	 	 	 
	 

	 	Name:	 	Paul Pariser
	 

	 	Title:	 	Authorized Signatory
	                                                        
	 
	 	 	 	 
	 	 	WEBMD, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ David A. Dutkus
	 

	 	 	 	 
	 

	 	Name:
	 	David A. Dutkus
	 

	 	Title:
	 	Vice President — Legal

7<PAGE>

                                                                    EXHIBIT 10.4

                         ELECTRO-OPTICAL SCIENCES, INC.
                            2005 STOCK INCENTIVE PLAN

      1. Purpose. The purpose of the Electro-Optical Sciences, Inc. 2005 Stock
Incentive Plan (the "Plan") is to establish a flexible vehicle through which
Electro-Optical Sciences, Inc. (the "Company"), may offer equity-based
compensation incentives to key employees and other persons (including, without
limitation, directors, officers, consultants and scientific collaborators)
employed or engaged by the Company and/or its subsidiaries (collectively,
"Eligible Persons") to attract, motivate, reward and retain such Eligible
Persons and to further align the interests of such Eligible Persons with those
of the stockholders of the Company.

      2. Types of Awards. Awards under the Plan may be in the form of (a)
options to purchase shares of the Company's common stock, no par value per share
(the "Common Stock") granted pursuant to Section 6 below, including options
intended to qualify as "incentive stock options" ("ISOs") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
options which do not qualify as ISOs, and (b) stock awards granted pursuant to
Section 7 below (collectively, "Awards").

      3. Administration.

            (a) Compensation Committee. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee"). The Compensation Committee shall be comprised of
independent outside directors.

            (b) Authority of Compensation Committee. Subject to the limitations
of the Plan, the Compensation Committee, acting in its sole and absolute
discretion, shall have full power and authority to administer the Plan,
including, without limitation, the power to (i) determine the eligibility and
the particular persons to whom awards shall be made under the Plan, (ii) grant
awards to such persons and prescribe the terms and conditions of such awards,
(iii) construe, interpret and apply the provisions of the Plan and of any
agreement or other instrument evidencing an award granted under the Plan, (iv)
cancel, modify or waive the Company's rights with respect to, or modify,
discontinue, suspend or terminate any or all outstanding Awards held by
Participants, subject to any required consent under Paragraph 11, (v) prescribe,
amend and rescind rules and regulations relating to the Plan, including rules
governing its own operations, (vi) amend the Plan in any respect, including,
without limitation, to correct any defect, supply any omission and reconcile any
inconsistency in the Plan, (vii) amend any outstanding Award in any respect,
including, without limitation, to accelerate the time or times at which the
Award becomes vested or exercisable, (viii) carry out any responsibility or duty
specifically reserved to the Compensation Committee under the Plan, and (ix)
make any and all determinations and interpretations and take such other actions
as may be necessary or desirable in order to carry out the provisions, intent
and purposes of the Plan.

            All decisions of the Compensation Committee, shall be reasonable and
made in good faith and shall be conclusive and binding on all Participants in
the Plan.

<PAGE>

            (c) Procedures. A majority of the members of the Compensation
Committee shall constitute a quorum. The Compensation Committee may act by the
vote of a majority of its members present at a meeting at which there is a
quorum or by unanimous written consent. Members of the Compensation Committee
shall abstain from participating in and deciding matters which directly affect
their individual ownership interest under the Plan.

            (d) Indemnification. The Company shall indemnify and hold harmless
each member of the Compensation Committee and any employee or director of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan is delegated from and against any loss, cost,
liability (including any sum paid in settlement of a claim with the approval of
the Board of Directors of the Company (the "Board"), damage and expense
(including legal and other expenses incident thereto) arising out of or incurred
in connection with the Plan, unless and except to the extent attributable to
such person's fraud or willful misconduct.

            (e) Compliance with Code Section 162(m). In the event the Company
becomes a "publicly-held corporation" as defined in Code Section 162(m)(2), the
Company may establish a Compensation Committee of outside directors meeting the
requirements of CoDe Section 162(m)(2) to (i) approve Awards that might
reasonably be anticipated to result in the payment of employee remuneration that
would otherwise exceed the limit on employee remuneration deductible for income
tax purposes by the Company pursuant to Code Section 162(m); and (ii) administer
the Plan. In such event, Awards under the Plan shall be granted upon
satisfaction of the conditions to such grants provided pursuant to Code
Section 162(m) and any Treasury Regulations promulgated thereunder.

      4. Share Limitations. Subject to adjustment pursuant to Section 9 below,
the maximum number of shares of Common Stock that may be issued under the Plan
is 1,000,000. The number of shares authorized for issuance under this Plan and
all other share amounts set forth in this Plan reflect the 1-for-2 reverse split
of the Company's Common Stock authorized by the Board of Directors of the
Company on May 13, 2005. In determining the number of shares that remain
issuable under the Plan at any time after the date the Plan is adopted, the
following shares will be deemed not to have been issued (and will be deemed to
remain available for issuance) under the Plan: (i) shares remaining under an
Award made under the Plan that terminates or is canceled without having been
exercised or earned in full; (ii) shares subject to an award under the Plan
where cash is delivered to the holder of the Award in lieu of such shares; (iii)
shares of restricted stock awarded under the Plan that are forfeited in
accordance with the terms of the applicable Award; and (iv) shares that are
withheld in order to pay the purchase price of shares acquired upon the exercise
of Awards granted under the Plan or to satisfy the tax withholding obligations
associated with such exercise. The number of shares of Common Stock issued in
connection with an award under the Plan will be determined net of any
previously-owned shares tendered by the holder of the Award in payment of the
exercise price or of applicable withholding taxes. The number of shares
available for grant and issuance under the Plan shall automatically be increased
on the first day of each of January 2006 and January 2007 by the lesser of: (i)
three percent (3%) of the number of shares of Common Stock issued and
outstanding on the preceding December 31, and (ii) a lesser number of shares of
Common Stock determined by the Board of Directors of the Company.

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<PAGE>

      5. Eligibility. Awards under the Plan may be made to any Eligible Person
as the Compensation Committee may select. Each such person to whom an Award is
granted under the Plan is referred to herein as a "Participant".

      6. Stock Options. Subject to the provisions of the Plan, the Compensation
Committee may grant options to eligible personnel upon such terms and conditions
as the Compensation Committee deems appropriate. Each option granted under the
Plan shall be designated as either statutory or non-statutory and each option
designated as a statutory option shall be further designated as qualified or
non-qualified. The terms and conditions of any option shall be evidenced by a
written option agreement or other instrument approved for this purpose by the
Compensation Committee ("Option Agreement").

            (a) Date of Grant. Except as may be otherwise provided in an Option
Agreement, the date of grant of an option under this Plan shall be the date as
of which the Compensation Committee approves the grant.

            (b) Exercise Price. The exercise price per share of Common Stock
covered by an option granted under the Plan may not be less than the Fair Market
Value (as defined below) per share of the Common Stock at the time of grant (or,
in the case of an ISO granted to a Participant who, at the time the option is
granted, owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or a "subsidiary" of the Company within
the meaning of Section 424 of the Code, 110% of the Fair Market Value per
share).

            (c) Option Term. No option granted under the Plan may be exercisable
(if at all) more than ten years after the date the option is granted (or, in the
case of an ISO granted to a ten percent stockholder described in Section 422 of
the Code, five years after the date the option is granted).

            (d) Vesting and Exercise of Options. The Compensation Committee, in
its sole discretion, may establish such vesting and other conditions and
restrictions on the exercise of an option and/or upon the issuance of Common
Stock in connection with the exercise of an option as it deems appropriate.
Subject to satisfaction of applicable withholding requirements, once vested and
exercisable, an option may be exercised by delivering a written notice (the
"Notice") to the Secretary of the Company. The Notice shall state: (i) that the
Participant elects to exercise the option; (ii) the number of shares with
respect to which the option is being exercised (the "Option Shares"); (iii) the
method of payment for the Option Shares; (iv) the date upon which the
Participant desires to consummate the purchase of the Option Shares (which date
must be prior to the termination of such option); and (v) any additional
provisions consistent with the Plan as the Compensation Committee may from time
to time require. The exercise date of an option shall be the date on which the
Company receives the Notice from the Participant. The Compensation Committee,
acting in its sole discretion, may permit the exercise price to be paid in whole
or in part in cash or by check, by means of a cashless exercise procedure to the
extent permitted by law, in the form of unrestricted shares of Common Stock (to
the extent of the Fair Market Value thereof) or, subject to applicable law, by
any other form of consideration deemed appropriate.

            (e) Rights as a Stockholder. No shares of Common Stock shall be
issued in respect of the exercise of an option until full payment of the
exercise price and the applicable tax withholding obligation with respect to
such exercise has been made or provided for. The holder

                                       3
<PAGE>

of an option shall have no rights as a stockholder with respect to any shares
covered by the option until the option is validly exercised, the exercise price
is paid fully and applicable withholding obligations are satisfied.

            (f) Termination of Employment or other Service. Unless otherwise
determined by the Compensation Committee at grant or, if no rights of the
Participant are reduced, thereafter, and subject to earlier termination in
accordance with the provisions hereof, the following rules apply with regard to
options held by a Participant at the time of his or her termination of
employment or other service with the Company and its subsidiaries.

                  (i) Termination by Reason of Death or Disability. If a
Participant's employment or other service terminates by reason of death or
Disability (as defined below), then (1) any portion of an option held by the
Participant which is not then exercisable shall thereupon terminate, and (2) any
portion of an option held by the Participant which is then exercisable shall
remain exercisable by the Participant (or beneficiary) for a period of one year
following such termination of employment or other service or, if sooner, until
the expiration of the term of the option, and, to the extent not exercised
within such period, shall thereupon terminate. For purposes of the Plan, the
term Disability shall mean, unless the Compensation Committee determines
otherwise at the time of grant, the inability of a person to perform the
essential functions of his or her position, with or without reasonable
accommodation, by reason of a physical or mental incapacity or illness which is
expected to result in death or to be of indefinite duration of not less than 12
months.

                  (ii) Termination for Cause. If a Participant's employment or
other service is terminated by the Company or any of its subsidiaries for Cause
(as defined below), then any option held by the Participant, whether or not then
exercisable, shall immediately terminate and cease to be exercisable. For
purposes of the Plan, a termination for "Cause" means (1) in the case where
there is no employment, consulting or similar service agreement between the
Participant and the Company or any of its subsidiaries or where such an
agreement exists but does not define "cause" (or words of like import), a
termination classified by the Company or any of its subsidiaries, as a
termination due to the Participant's (i) commission of, or entry of a plea of
guilty or no contest to any felony, fraud, misappropriation, embezzlement or
other crime of moral turpitude; (ii) commission of, or entry of a plea of guilty
or no contest to any crime or offense involving money or property of the
Company; (iii) dishonesty or fraud; or (iv) insubordination, willful misconduct,
refusal to perform services or materially unsatisfactory performance of duties,
or (2) in the case where there is an employment, consulting or similar service
agreement between the Participant and the Company or any of its subsidiaries
that defines "cause" (or words of like import), a termination that is or would
be deemed for "cause" (or words of like import) under such agreement.

                  (iii) Other Termination. If a Participant's employment or
other service terminates for any reason (other than death, Disability or Cause)
or no reason, then (1) any portion of an option held by the Participant which is
not then exercisable shall thereupon terminate, and (2) any portion of an option
held by the Participant which is then exercisable shall remain exercisable
during the ninety (90) day period following such termination or, if sooner,
until the expiration of the term of the option and, to the extent not exercised
within such period, shall thereupon terminate.

                                       4
<PAGE>

            (g) Nontransferability. No option shall be assignable or
transferable except upon the Participant's death to a beneficiary designated by
the Participant in a manner prescribed or approved for this purpose by the
Compensation Committee or, if no designated beneficiary shall survive the
Participant, pursuant to the Participant's will or by the laws of descent and
distribution. During a Participant's lifetime, options may be exercised only by
the Participant or the Participant's guardian or legal representative.
Notwithstanding the foregoing, the Compensation Committee may permit the inter
vivos transfer of a Participant's options (other than options designated as
ISOs) by gift to such persons and on such terms and conditions as the
Compensation Committee deems appropriate.

      7. Stock Awards. Subject to the provisions of the Plan, the Compensation
Committee may grant stock awards to eligible Participants upon such terms and
conditions as the Compensation Committee deems appropriate. The terms and
conditions of any stock award shall be evidenced by a written stock award
agreement or other instrument approved for this purpose by the Compensation
Committee. A stock award may take the form of the issuance and transfer to the
recipient of shares of Common Stock or a grant of stock units representing a
right to receive shares of Common Stock in the future and, in either case, may
be subject to designated vesting conditions and transfer restrictions.

            (a) Purchase Price. The purchase price payable for shares of Common
Stock transferred pursuant to a stock award must be at least equal to their Fair
Market Value on the date of the grant.

            (b) Stock Certificates for Non-Vested Stock. Shares of Common Stock
issued pursuant to a non-vested stock award may be evidenced by book entries on
the Company's stock transfer records pending satisfaction of the applicable
vesting conditions. If a stock certificate for shares is issued before the stock
award vests, the certificate will bear an appropriate legend to reflect the
nature of the conditions and restrictions applicable to the shares, and the
Company may require that any or all such stock certificates be held in custody
by the Company until the applicable conditions are satisfied and other
restrictions lapse. The Compensation Committee may establish such other
conditions as it deems appropriate in connection with the issuance of
certificates for shares issued pursuant to non-vested stock awards, including,
without limitation, a requirement that the recipient deliver a duly signed stock
power, endorsed in blank, for the shares covered by the award.

            (c) Stock Certificates for Vested Stock. The recipient of a vested
stock award will be entitled to receive a certificate, free and clear of
conditions and restrictions (except as may be imposed in order to comply with
applicable law or the terms of any stockholders' agreement), for vested shares
covered by the award, subject, however, to the payment or satisfaction of
withholding tax obligations in accordance with Section 10.

            (d) Rights as a Stockholder. Unless otherwise determined by the
Compensation Committee, (i) the recipient of a stock award will be entitled to
receive dividend payments, if any (or, in the case of an award of stock units,
dividend equivalent payments), on or with respect to the shares that remain
covered by the award (which the Compensation Committee may specify are payable
on a deferred basis and are forfeitable to the same extent as the underlying
award), (ii) the recipient of a non-vested stock award may exercise voting
rights if and to the extent that shares of Common Stock have been issued to him
pursuant to the award, and (iii) the

                                       5
<PAGE>

recipient will have no other rights as a stockholder with respect to such shares
unless and until the shares are issued to him free of all conditions and
restrictions under the Plan.

            (e) Termination of Employment or other Service Before Vesting;
Forfeiture. Unless the Compensation Committee determines otherwise, a non-vested
stock award will be forfeited upon the termination of a recipient's employment
or other service with the Company and its subsidiaries. If a non-vested stock
award is forfeited, any certificate representing shares subject to such award
will be canceled on the books of the Company and the recipient will be entitled
to receive from the Company an amount equal to any cash purchase price paid by
him for such shares. If an award of stock units is forfeited, the recipient will
have no further right to receive the shares of Common Stock represented by such
units.

            (f) Nontransferability. With respect to any stock Award, unless and
until all applicable vesting conditions, if any, are satisfied and vested shares
are issued, neither the stock Award nor any shares of Common Stock issued
pursuant to the Award may be sold, assigned, transferred, disposed of, pledged
or otherwise hypothecated other than to the Company in accordance with the terms
of the Award or the Plan. Any attempt to do any of the foregoing before such
time shall be null and void and, unless the Compensation Committee determines
otherwise, shall result in the immediate forfeiture of the shares or the Award,
as the case may be.

      8. Fair Market Value. For purposes of the Plan, the Fair Market Value of a
share of Common Stock, as of any date shall mean, unless otherwise required by
other applicable law, the closing sale price per share of Common Stock as
published by the principal national securities exchange on which the Common
Stock is traded on such date or, if there is no sale of Common Stock on such
date, the average of the bid and asked prices on such exchange at the close of
trading on such date, or if shares of the Common Stock are not listed on a
national securities exchange on such date, the closing price or, if none, the
average of the bid and asked prices in the over-the-counter market at the close
of trading on such date, or if the Common Stock is not traded on a national
securities exchange or the over-the-counter market, the Compensation Committee
shall determine its Fair Market Value in such a manner as it deems appropriate
(such determination will be made in good faith as required by Section 422(c)(1)
of the Code, may be based on the advice of an independent investment banker or
appraiser recognized to be an expert in making such valuations and will take
into consideration the factors listed in 26 C.F.R.Section 20.2031.2).

      9. Capital Changes; Acquisition Events.

            (a) Capital Changes. The maximum number and class of shares that may
be issued under the Plan, the number and class of shares covered by each
outstanding Award and, if applicable, the exercise price per share shall all be
adjusted proportionately or as otherwise appropriate to reflect any increase or
decrease in the number of issued shares of Common Stock resulting from a
split-up or consolidation of shares or any like capital adjustment, or the
payment of any stock dividend, and/or to reflect a change in the character or
class of shares covered by the Plan arising from a readjustment or
recapitalization of the Company's capital stock.

            (b) Acquisition Events. In the event of a merger, consolidation,
mandatory share exchange or other similar business combination of the Company
with or into any other entity ("Successor Entity") or any transaction in which a
Successor Entity acquires all the issued and outstanding capital stock of the
Company, or all or substantially all the assets of the Company

                                       6
<PAGE>

(each, an "Acquisition Event"), outstanding options may be assumed or an
equivalent option may be substituted by the Successor Entity or a parent of the
Successor Entity. If and to the extent that outstanding options are not assumed
or replaced with substantially equivalent options in connection with an
Acquisition Event, then each Participant shall have the right to exercise in
full all of his or her outstanding options, whether or not such options are
otherwise vested or exercisable, but contingent upon the occurrence of the
Acquisition Event, for a period of at least twenty (20) days prior to the
consummation of the Acquisition Event, in which case the Company shall notify
the Participant in writing or electronically that his or her options shall
become fully exercisable at least thirty (30) days prior to the consummation of
the Acquisition Event, and any outstanding options which are not exercised prior
to the consummation of the Acquisition Event shall thereupon terminate.
Notwithstanding the preceding sentence, if and to the extent outstanding options
are not assumed or replaced with substantially equivalent options in connection
with an Acquisition Event, the Compensation Committee, acting in its sole
discretion and without the consent of any Participant, may provide for the
cancellation of any outstanding options in exchange for payment in cash or other
property of the Fair Market Value of the shares of Common Stock covered by such
options (whether or not otherwise vested or exercisable), reduced by the
exercise price thereof (and any applicable withholdings thereon). The
Compensation Committee, acting in its sole discretion, may accelerate vesting of
non-vested stock awards, provide for cash settlement and/or make such other
adjustments to the terms of any outstanding stock award as it deems appropriate
in the context of an Acquisition Event.

            (c) Fractional Shares. In the event of any adjustment in the number
of shares covered by any option pursuant to the provisions hereof, any
fractional shares resulting from such adjustment shall be disregarded, and each
such option shall cover only the number of full shares resulting from the
adjustment.

            (d) Determinations Final. All adjustments under this Section 9 shall
be made by the Compensation Committee, and its determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive.

      10. Tax Withholding. As a condition to the exercise of any Award or the
delivery of any shares of Common Stock pursuant to any Award or the lapse of
restrictions on any Award, or in connection with any other event that gives rise
to a federal or other governmental tax withholding obligation on the part of the
Company or any of its subsidiaries relating to an Award (including, without
limitation, an income tax deferral arrangement pursuant to which employment tax
is payable currently), the Company and/or the subsidiary may (a) deduct or
withhold (or cause to be deducted or withheld) from any payment or distribution
to an award recipient whether or not pursuant to the Plan or (b) require the
recipient to remit cash (through payroll deduction or otherwise), in each case
in an amount sufficient in the opinion of the Company to satisfy such
withholding obligation. If the event giving rise to the withholding obligation
involves a transfer of shares of Common Stock, then, at the sole discretion of
the Compensation Committee, the recipient may satisfy the withholding obligation
described under this Section by electing to have the Company withhold shares of
Common Stock or by tendering previously-owned shares of Common Stock, in each
case having a Fair Market Value equal to the amount of tax to be withheld (or by
any other mechanism as may be required or appropriate to conform with local tax
and other rules); provided, however, that no shares may be withheld if and to
the extent that such withholding would result in the recognition of additional
accounting expense by the Company.

                                       7
<PAGE>

      11. Amendment and Termination. The Board may amend or terminate the Plan,
provided, however, that no such action may adversely affect the rights of the
holder of any outstanding Award in a material way without the written consent of
the holder. Except as otherwise provided in Section 9, any amendment which would
increase the number of shares of Common Stock which may be issued under the Plan
or modify the class of persons eligible to receive Awards under the Plan shall
be subject to the approval of the Company's stockholders if and to the extent
that such approval is necessary or desirable to comply with applicable law or
exchange or listing requirements. The Board or the Compensation Committee may
amend the terms of any agreement or certificate made or issued hereunder at any
time and from time to time, provided, however, that any amendment which would
adversely affect the rights of the holder in a material way may not be made
without his or her written consent.

      12. No Rights Conferred. Nothing contained in the Plan or in any Option
Agreement shall confer upon any recipient of an Award any right with respect to
the continuation of his employment or other service with the Company or its
subsidiaries or interfere in any way with the right of the Company and its
subsidiaries at any time to terminate such employment or other service or to
increase or decrease, or otherwise adjust, the other terms and conditions of the
recipient's employment or other service.

      13. Compliance with Law.

            (a) Compliance with Securities Laws. No Awards shall be granted and
no shares of Common Stock shall be issued or delivered pursuant to the Plan,
unless the issuance and delivery of such shares complies with applicable law,
including, without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the requirements of any stock
exchange or market upon which the Common Stock may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

            The Compensation Committee in its discretion may, as a condition to
the delivery of any shares pursuant to any Award granted under the Plan, require
the applicable Participant (i) to represent in writing that the shares received
pursuant to such Award are being acquired for investment and not with a view to
distribution and (ii) to make such other representations and warranties as are
deemed reasonably appropriate by the Compensation Committee. Stock certificates
representing shares acquired under the Plan that have not been registered under
the Securities Act shall, if required by the Compensation Committee, bear such
legends as may be required by the applicable Option Agreement, if any.

            (b) No Right to an Award or Grant. Neither the adoption of the Plan
nor any action of the Compensation Committee shall be deemed to give an
employee, director or consultant any right to be granted an Award to purchase
Common Stock, receive an Award under the Plan except as may be evidenced by an
Option Agreement duly executed on behalf of the Company, and then only to the
extent of and on the terms and conditions expressly set forth in the Option
Agreement. The Plan will be unfunded. The Company will not be required to
establish any special or separate fund or to make any other segregation of funds
or assets to assure the payment of any Award.

            (c) No Restriction of Corporate Action. Nothing contained in the
Plan or in any Option Agreement will be construed to prevent the Company or any
Subsidiary or Affiliate of

                                       8
<PAGE>

the Company from taking any corporate action which is deemed by the Company or
by its Subsidiaries and Affiliates to be appropriate or in its best interest,
whether such action would have an adverse effect on the Plan or any Award made
under the Plan. No Participant or beneficiary of a Participant will have any
claim against the Company or any affiliate as a result of any corporate action.

      14. Transfer Orders; Placement of Legends. All certificates for shares of
Common Stock delivered under the Plan shall be subject to such stock-transfer
orders and other restrictions as the Company may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange or market upon which the Common Stock may then be listed, and
any applicable federal or state securities law. The Company may cause a legend
or legends to be placed on any such certificates to make appropriate reference
to such restrictions.

      15. Decisions and Determinations to be Final. All decisions and
determinations made by the Compensation Committee pursuant to the provisions
hereof shall be final, binding and conclusive.

      16. Governing Law. All rights and obligations under the Plan and each
Option Agreement or instrument shall be governed by and construed in accordance
with the laws of the State of New York, without regard to its principles of
conflict of laws.

      17. Term of the Plan. The Plan shall become effective on the date of its
adoption by the Board, subject to the approval of the Company's stockholders
within 12 months of such date. Unless sooner terminated by the Compensation
Committee, the Plan shall terminate on the tenth anniversary of the date of its
adoption by the Board. The rights of any person with respect to an Award granted
under the Plan that is outstanding at the time of the termination of the Plan
shall not be affected solely by reason of the termination of the Plan and shall
continue in accordance with the terms of the Award (as then in effect or
thereafter amended) and the Plan.

      18. Supersession. This Plan supersedes the Electro-Optical Sciences, Inc.
2003 Stock Incentive Plan, as amended, (the "Prior Plan). Although options may
be outstanding under the Prior Plan, no Awards will be granted under the Prior
Plan after December 31, 2004.

      19. Code Section 409A Compliance. This Plan is intended to provide for
statutory and non-statutory stock option benefits that are not deemed to be
deferred compensation and thus are not subject to the provisions of Code
Section 409A. If the Plan is deemed to be subject to Code Section 409A, however,
the Company may modify the Plan and any Awards granted under the Plan to comply
with Code Section 409A guidance; provided, however, that the present value of
Awards granted to Participants after such modification shall not be less than
the present value of the Awards granted to Participants prior to the
modification.

      20. Section 16 Compliance. It is intended that the Plan and any Award made
to a Participant subject to Section 16 of the Exchange Act meet all of the
requirements of Rule 16b-3. If any provisions of the Plan or any Award would
disqualify the Plan or the Award, or would otherwise not comply with Rule 16b-3,
such provision or Award will be construed or deemed amended to conform to Rule
16b-3.

      21. Related Agreements: Lock-Up.

            (a) As a condition to the issuance of shares of Common Stock
pursuant to a stock

                                       9
<PAGE>

award or upon exercise of an option granted pursuant to the Plan, the recipient
shall, at the request of the Board, be required to become a party to any
stockholders' or similar agreement(s) to which the Company and some or all of
its stockholders may from time to time be party.

            (b) As a condition to the issuance of shares of Common Stock
pursuant to a stock award or upon exercise of an option granted pursuant to the
Plan, the recipient shall, at the request of the Compensation Committee, agree
that he or she will not, without the prior written consent of the managing
underwriter, if any, for any public offering of the Company's securities, during
the period commencing. on the date of the final prospectus relating to such
public offering and ending on the date specified by the Company and the managing
underwriter (such period not to exceed one hundred eighty (180) days), (i) lend,
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock (whether such shares or any such securities are
then owned by the recipient or are thereafter acquired), or (ii) enter into any
swap or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. In order to
enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the securities of the recipient (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such period.

                                       10

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