Item 1.01. Entry into a Material Definitive Agreement.
On August 30, 2016, PhotoMedex, Inc. (the
“Company”) (Nasdaq and TASE: PHMD) and its subsidiary PhotoMedex Technology, Inc. (“PTECH”) entered into
an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Pharma Cosmetics Laboratories Ltd., an Israeli corporation,
and its subsidiary Pharma Cosmetics Inc., a Delaware corporation (together “PHARMA”) to acquire the Neova® skincare
business (the “Transferred Business”) from PTECH, for a total purchase price of $1.8 million (the “Purchase Price”).
The Purchase Price is subject to a post-closing
working capital adjustment, pursuant to which the Purchase Price paid to the Company at closing will be adjusted up or down by
an amount equal to the difference between the defined actual working capital and the target net working capital of $200,000. Target
working capital is defined as the net Accounts Receivable less trade Accounts Payable related to the Transferred Business as of
the closing date. The closing is anticipated to occur in September 2016.
The Asset Purchase Agreement provides that
PHARMA will make offers of employment to certain employees of the Transferred Business.
The Asset Purchase Agreement contains customary
representations, warranties and covenants by each of the Company, PTECH and PHARMA, as well customary indemnification provisions
among the parties.
The parties entered into several ancillary
agreements as part of this transaction, including an Escrow Agreement and a Transition Services Agreement.
Under the Escrow Agreement, $250,000 of
the Purchase Price (the "Escrow Amount") will be placed into an escrow account held by U.S. Bank National Association
as Escrow Agent. The funds shall remain in escrow for one year following the closing of the transaction.
Under the Transition Services Agreement,
PHMD will continue to provide certain accounting, benefit, payroll, regulatory, IT support and other services to PHARMA for periods
ranging from approximately three to up to nine months following the closing. During those periods, PHARMA will arrange to transition
the services it receives to its own personnel. PHARMA shall also have the right to continue occupying certain portions of
PHMD’s Willow Grove, Pennsylvania facility and the Orangeburg, New York facility of PHMD’s Radiancy, Inc. subsidiary
for a period of time.
The foregoing description of the Asset
Purchase Agreement, its ancillary agreements and the transactions contemplated thereby does not purport to be complete and is subject
to, and qualified in its entirety by, reference to the copies of the Asset Purchase Agreement, the Escrow Agreement, and the Transition
Services Agreement, which are incorporated by reference as exhibits to this Form 8-K.