TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (this "Agreement") is made as of June 22, 2015 (the "Effective Date") by and between PhotoMedex, Inc., a Nevada corporation ("PHMD"), PhotoMedex Technology, Inc., a Delaware corporation ("P-Tech" and, together with PHMD, the "Sellers" and each, a "Seller"), and MELA Sciences, Inc., a Delaware corporation ("Purchaser" and, together with the Sellers, the "Parties" and each individually, a "Party").  Capitalized terms used but not expressly defined in this Agreement shall have the meanings ascribed to them in the Purchase Agreement (as defined below).

WHEREAS, contemporaneously with the execution of this Agreement, the Parties are entering into an Asset Purchase Agreement (the "Purchase Agreement"), pursuant to which Purchaser, among other things, is acquiring from the Sellers all of the Business Assets;

WHEREAS, as of the date hereof, the Sellers provide certain services to the Business and the Business provides certain services to the Sellers;

WHEREAS, in order to ensure an orderly transition of the Business Assets to Purchaser, the Parties have agreed to enter into this Agreement, pursuant to which Purchaser shall make available to the Sellers and their Subsidiaries, and the Sellers and their Subsidiaries shall make available to Purchaser, certain services as more specifically set forth herein and on Exhibit A and Exhibit B, on a transitional basis, subject to the terms and conditions set forth herein;

WHEREAS, pursuant to that certain Lease Agreement, dated as of September 25, 2013, by and between Liberty Property Limited Partnership (the "Landlord") and PHMD (the "Lease," a copy of which is attached hereto as Exhibit C), PHMD leases from the Landlord Suite 100, a 10,672 square foot premises (the "Premises"), of the building (the "Building") known as 100 Lakeside Drive, Horsham, Pennsylvania 19044, on the terms and subject to the conditions set forth therein;

WHEREAS, pursuant to the Purchase Agreement, PHMD is assigning to Purchaser, and Purchaser is assuming from PHMD, the Lease and certain liabilities thereunder;

WHEREAS, in order to facilitate each Seller's operation of its business historically conducted at the Premises, for a fixed period of time from and after the date hereof, the Parties have agreed to the Sellers' continued occupancy and use of a portion of the Premises on the terms and subject to the conditions set forth herein; and

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

 

(a)            Purchaser shall provide to the Sellers or their Subsidiaries, as specified on Exhibit A, each of the services listed on Exhibit A (collectively, the "Seller Transition Services"), in each case, for the period of time specified opposite such Seller Transition Service

on Exhibit A, each terminable as provided herein.  The Sellers, as specified on Exhibit A, shall provide to Purchaser each of the services listed on Exhibit B (collectively, the "Purchaser Transition Services" and, together with the Seller Transition Services, the "Transition Services"), in each case, for the period of time specified opposite such Purchaser Transition Service on Exhibit B, each terminable as provided herein.  In addition to the foregoing, Purchaser agrees to respond in good faith to any reasonable request by the Sellers for access to any additional services that are currently being provided by the Continuing Employees to the Sellers and their Subsidiaries and which are not currently contemplated by Exhibit A and the Sellers agree to respond in good faith to any reasonable request by Purchaser for access to any additional services that are currently being provided to the Business by the Sellers and/or their Subsidiaries and which are not currently contemplated by Exhibit B.  Any such additional services mutually agreed upon by the Parties shall constitute Seller Transition Services or Purchaser Transition Services, as the case may be, under this Agreement and shall be subject in all respects to the provisions of this Agreement as if fully set forth on Exhibit A or Exhibit B, as applicable, as of the date hereof.

(b)            The obligation of a Party to provide a Transition Service shall terminate upon the expiration of the period set forth opposite such Transition Service on Exhibit A or Exhibit B, as applicable; provided, however, that if the Party receiving a Transition Service (the "Recipient") reasonably requests, and the Party providing such Transition Service (the "Provider") agrees (such agreement not to be unreasonably withheld, conditioned or delayed), that the Provider continue to provide any Transition Service(s) after the expiration of the period set forth opposite such Transition Service on Exhibit A or Exhibit B, as applicable, such Transition Service so provided by the Provider shall continue to constitute a Transition Service under this Agreement and shall be subject to the provisions of this Agreement for the duration of the agreed upon extension period (except as otherwise agreed by the Parties in writing in connection with the grant of any such extension).

(c)            The Sellers agree to continue to assign sufficient resources and qualified personnel as are reasonably required to provide the Purchaser Transition Services in a manner substantially consistent with the recent historical provision of such services by the Sellers and their Subsidiaries.  Purchaser agrees to assign sufficient resources and qualified personnel as are reasonably required to provide the Seller Transition Services in a manner substantially consistent with the recent historical provision of such services by the Continuing Employees to the Sellers and their Subsidiaries.  Without limiting the generality of the foregoing, each Party will use commercially reasonable efforts to designate the personnel providing Transition Services prior to the date hereof to performing such Transition Services for the other Party, but in any event, the personnel providing Transition Services pursuant to this Agreement shall have at least comparable skill and experience to the personnel providing such Transition Services prior to the date hereof.  The Provider may not subcontract to a third party, or otherwise make arrangements for a third party to provide to the Recipient any of the Transition Services without the prior written consent of the Recipient.  The quantity of Transition Services to be provided under this Agreement shall be substantially consistent with the recent historical provision of the applicable Transition Service.  Notwithstanding anything to the contrary in this Section 1(c), the Provider may modify from time to time the manner of performing Transition Service(s) to the extent such Provider is making changes to allow for adherence to the then-existing policies, practices and methodologies that such Provider uses to provide similar services and functions, so long as such changes do not adversely affect the agreed upon level of service for the applicable Transition Service.

 

(a)            For such time as any employees of the Provider are providing any Transition Service(s) under this Agreement, (i) such employees will remain employees of the Provider and shall not be deemed to be employees of the Recipient for any purpose, and (ii) the Provider shall be solely responsible for the payment and provision of all wages, bonuses and commissions, employee benefits, including severance and worker's compensation, and the withholding and payment of applicable Taxes relating to such employment.

 

(b)            Except as provided in Section 2(c), no fees or expenses shall be due or owing by any Party in connection with the receipt or provision of Transition Services hereunder.

 

(c)            To the extent set forth on Exhibit A or Exhibit B hereto, the Recipient shall reimburse the Provider for the reasonable and documented out of pocket costs and expenses, if any, incurred by the Provider in providing the applicable Transition Service(s), but excluding payments made to employees of the Provider pursuant to Section 2(a) (the "Expenses").  The Provider shall provide the Recipient with monthly invoices (each, an "Invoice"), which shall set forth in reasonable detail the Expenses for each applicable Transition Service for the relevant period and shall provide to the Recipient, upon the Recipient's reasonable request, evidence and supporting documentation for all such Expenses.  The Expenses shall be payable by the Recipient to the Provider within thirty (30) days of the Recipient's receipt of an Invoice.

 

(a)            Each Party covenants that the Transition Services provided by it shall be provided (i) in good faith, in accordance with applicable Legal Requirements, (ii) in the manner required by Section 1(c), (iii) subject to Section 1(c), with at least the same level of care, skill and prudence historically provided (including as to the nature, quality and service levels) and (iv) in any event, with no less than a commercially reasonable degree of care, skill and prudence.

 

(b)            Purchaser agrees to indemnify and hold harmless the Sellers and their Subsidiaries from and against any damages, loss, cost, or liability (including legal fees and expenses and the cost of enforcing this indemnity) arising out of or resulting from (i) a material breach of this Agreement by Purchaser, (ii) a third party claim regarding Purchaser's performance, purported performance or nonperformance of this Agreement, or (iii) the gross negligence or willful misconduct of Purchaser, its employees, or a third party acting on its behalf in connection with the provision of Transition Services.

 

(c)            The Sellers agrees to indemnify and hold harmless Purchaser from and against any damages, loss, cost, or liability (including legal fees and expenses and the cost of enforcing this indemnity) arising out of or resulting from (i) a material breach of this Agreement by the Sellers, (ii) a third party claim regarding the Sellers' performance, purported performance or nonperformance of this Agreement, or (iii) the gross negligence or willful misconduct of the Sellers, their employees, or a third party acting on their behalf in connection with the provision of Transition Services.

 

A Provider shall not be responsible for failure or delay in delivery of any Transition Service, nor shall a Recipient be responsible for failure or delay in receiving such Transition Service, if caused by an act of God or public enemy, war, government acts, regulations or orders, fire, flood, embargo, quarantine, epidemic, labor stoppages or other disruptions or any other event which is beyond the reasonable control of the defaulting Party.  The Party suffering a force majeure event shall notify the other Party as soon as reasonably practicable and the Provider shall resume the performance of its obligations as soon as reasonably practicable after the removal of the cause of the failure or delay.  If any such occurrence prevents a Party from providing any Transition Services, such Party shall cooperate and reasonably assist the Recipient of the affected Transition Services in its efforts to obtain an alternative source for such service.

Each Party acknowledges that the other Party possesses, and will continue to possess, information that has been created, discovered or developed by such Party and/or in which property rights have been assigned or otherwise conveyed to such Party, which information has commercial value and is not in the public domain.  The proprietary information of each Party will be and remain the sole property of such Party and its assigns.  Each Party shall use the same degree of care that it normally uses to protect its own proprietary information, but no less than a reasonable degree of care, to prevent the disclosure to third parties of information that has been identified as proprietary to such Party from another Party or that should be understood to be proprietary based on the nature of the information and the manner of its disclosure.  No Party shall make any use of the information of the other Party which has been identified as proprietary, or that should be understood to be proprietary based on the nature of the information and the manner of its disclosure, except as contemplated or required by the terms of this Agreement.  Notwithstanding the foregoing, this Section 5 shall not apply to any information that a Party can demonstrate: was (a) at the time of disclosure to it, in the public domain through no fault of such Party; (b) received hereunder after disclosure to it from a third party without a duty of confidentiality; or (c) independently developed by the receiving Party.  Upon demand of the disclosing Party at any time, or upon expiration or termination of this Agreement with respect to any Transition Service, the receiving Party agrees to promptly return or destroy, at the disclosing Party's option, any proprietary information of the disclosing Party.  If any such proprietary information cannot feasibly be returned or destroyed, the receiving Party shall continue to hold such proprietary information in confidence with the same degree of care that it normally uses to protect its own proprietary information, but no less than a reasonable degree of care.

 

terminating on December 31, 2015, or, in the Sellers' sole discretion, such earlier date upon 30 days' prior written notice from the Sellers to Purchaser (the "License Term").  Subject to the provisions of this Section 6, Sellers accept the License Premises in its "as is" condition.

Nothing in this Agreement is to be construed as an assignment or grant of any right, title or interest in any trademark, copyright, design or trade dress, patent right or other intellectual or industrial property right.

 

The Parties are independent contractors under this Agreement.  Except as expressly set forth herein, no Party has the authority to, and each Party agrees that it shall not, directly or indirectly contract any obligations of any kind in the name of or chargeable against another Party without such Party's prior written consent.

 

The Sellers may assign this Agreement or any of their rights or obligations under this Agreement without the prior written consent of the Purchaser.  The Purchaser may not assign this Agreement or any of its rights or obligations under this Agreement without the prior written consent of the Sellers.  This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.  Nothing in this Agreement, express or implied, is intended to confer upon any Person other than the Parties, or their

respective successors or permitted assigns, any rights or remedies under or by reason of this Agreement.  Any attempted assignment in violation of this Section 10 shall be null and void.

 

All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand, (b) sent by facsimile, or (c) sent by mail, certified or registered mail with postage prepaid or by a nationally recognized next-day or overnight delivery service, in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a Party may designate by notice to the other Parties).  All such notices, consents, waivers and other communications shall be deemed to have been given when received (x) if delivered by hand, on the day of such delivery, if prior to 5:00 p.m., (y) if by mail, certified or registered mail, next-day or overnight delivery, on the day delivered, and (z) if by facsimile, on the business day on which received.

This Agreement, including the Exhibits hereto, together with the Purchase Agreement and the exhibits, schedules and appendices thereto, contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters.

This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to conflicts of laws principles that would otherwise cause the application of the laws of another jurisdiction.  Any action or Proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against any Party in the courts of the State of New York located in New York, New York, or, if it has or can acquire jurisdiction, in the United States District Court for the Southern District of New York, and each Party consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or Proceeding and waives any objection to venue laid therein.  Process in any action or Proceeding referred to in the preceding sentence may be served on any Party anywhere in the world.

 

Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Sellers and the Purchaser, or in the case of a waiver, by the Party against whom the waiver is to be effective.  No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

 

Each Party agrees (a) to furnish upon request to the other Parties such further information, (b) to execute and deliver to the other Parties such other documents, and (c) to do such other acts and things, all as the other Parties may reasonably request for the purpose of carrying out the provisions and purposes of this Agreement.

 

This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.  Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed original counterpart of this Agreement

 

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.