Item
1.01. Entry into a Material Definitive Agreement.
On
October 4, 2016, PhotoMedex, Inc. (the “Company”) (Nasdaq and TASE: PHMD) and its subsidiaries Radiancy, Inc., a
Delaware corporation (“Radiancy US”), PhotoTherapeutics Ltd., a private limited company incorporated under the
laws of England and Wales (“PHMD UK”), and Radiancy (Israel) Limited, an Israel corporation (“Radiancy
Israel” and, together with the Company, Radiancy, and PHMD UK, “PHMD”) entered into an Asset Purchase
Agreement (the “Asset Purchase Agreement”) with ICTV Brands, Inc., a Nevada corporation (“ICTV
Parent”), and its subsidiary ICTV Holdings, Inc. a Nevada corporation (the “Purchaser” and together with
together with ICTV Parent, “ICTV”) pursuant to which ICTV will acquire PHMD’s consumer products division,
including its no!no!® hair and skin products and the Kyrobak™ back pain management products (all such consumer
products, the “Consumer Products”) and the shares of capital stock of Radiancy (HK) Limited, a private limited
company incorporated under the laws of Hong Kong (the “Hong Kong Foreign Subsidiary”), and LK Technology
Importaçăo E Exportaçăo LTDA, a private Sociedade limitada formed under the laws of Brazil (the
“Brazilian Foreign Subsidiary” and together with the Hong Kong Foreign Subsidiary, the
“Foreign Subsidiaries”) (collectively, the “Transferred Business”) from PHMD, for a total purchase
price of $9.5 million (the “Purchase Price”). The closing (“Closing”) is anticipated to occur
no later than 120 days from the date of the Agreement, or by February 1, 2017 (the date of Closing, the “Closing
Date”).
Payment
of Purchase Price
The
Purchase Price will be paid as follows:
-
ICTV placed
Three Million Dollars ($3,000,000) in immediately available funds in an escrow account
in ICTV’s counsel’s IOLTA Trust Account to be held by ICTV’s counsel as escrow agent under an escrow agreement
among PHMD, ICTV and certain investors in ICTV Parent’s securities (the “Escrow Agreement”). These funds will
be paid to PHMD on the Closing Date of this transaction.
-
On or before
the ninetieth (90th) day following the Closing Date of this transaction, ICTV will pay PHMD Two Million Dollars ($2,000,000) in
immediately available funds.
-
The remaining
Four Million Five Hundred Thousand Dollars ($4,500,000) will be paid by ICTV to PHMD under a continuing royalty on net cash (invoiced
amount less sales refunds, returns, rebates, allowances and similar items) actually received by ICTV or its Affiliates from sales
of the Consumer Products commencing with net cash
actually received by the Purchaser or its Affiliates from and after the Closing Date of this transaction and continuing until
the total royalty paid to PHMD reaches that amount. Royalty payments will be made on a monthly basis in arrears within thirty
days of each month end. PHMD will receive thirty five percent (35%) of net cash actually received by ICTV through Consumer Products
sold through live television promotions less certain deductions and six percent (6%) of all other sales of Consumer Products.
Acquisition
of Foreign Subsidiaries
As
part of this Transaction, ICTV will also acquire from PHMD all of the shares of capital stock of the Foreign Subsidiaries.
Shareholder
Vote
The
sale of the Transferred Business will result in the disposition of substantially all of PHMD’s assets, requiring shareholder
approval of the transaction. The Company will prepare and file the appropriate documents to obtain such approval from its shareholders
by October 19, 2016.
Additional
Terms
The
Asset Purchase Agreement provides that ICTV will make offers of employment to certain employees of the Transferred Business and
that PHMD will not solicit such employees (or any other employees of ICTV) for employment or other services for a period of five
years and that PHMD will not compete with ICTV with respect to the Transferred Business for a period of five years. It also
contains customary representations, warranties and covenants by the Company, each of its subsidiaries and ICTV, as well customary
indemnification provisions among the parties.
Closing
Conditions; Termination
The
Closing is subject to customary closing conditions, including, without limitation, the accuracy of all representations and warranties
of PHMD and ICTV, the performance of all covenants of PHMD and ICTV, the receipt of all authorizations, consents and approvals
of all governmental authorities or agencies or any required consents of third parties, delivery of all documents required for
the transfer of the acquired assets, including all intellectual property assignments and lease assignments and the requisite approvals
of the shareholders of the Company and ICTV Parent.
The
Asset Purchase Agreement may be terminated by mutual written consent of the parties, by PHMD or ICTV if there has been a
material misrepresentation or a breach of any covenant or agreement contained in the Asset Purchase Agreement by the
other party if such material misrepresentation or breach has not been promptly cured after at least fourteen (14) day’s
written notice by the non-offending party, or by PHMD or ICTV if the other party has not met the conditions to closing
contained in the Asset Purchase Agreement by February 1, 2017.
Ancillary
Agreements
In
connection with the sale of the Transferred Business, on October 4, 2016, the parties entered into an Escrow Agreement and a Transition
Services Agreement.
Under
the Escrow Agreement, ICTV deposited $3,000,000 of the Purchase Price into an escrow account which will be released to
PHMD upon closing.
Under
the Transition Services Agreement, PHMD will continue to provide certain accounting, benefit, payroll, regulatory, IT support
and other services to ICTV for periods ranging from approximately three to up to nine months following the Closing. During those
periods, ICTV will arrange to transition the services it receives to its own personnel. In consideration for such services,
ICTV will pay to PHMD the documented costs and expenses incurred by PHMD in connection with the provision of those services and
the documented lease costs including monthly rental and any utility charges incurred under the applicable leases and will reimburse
PHMD for the documented costs and expenses incurred for the continued storage of inventory and raw materials at warehouse locations,
and for services for fulfilling and shipping orders for such inventory and the payroll, employment-related taxes, benefit costs
and out of pocket expenses paid to or on behalf of employees. ICTV shall also have the right to continue occupying certain portions
of the Orangeburg, New York facility of PHMD’s Radiancy, Inc. subsidiary
for a period of time.
The
foregoing description of the Asset Purchase Agreement, the Escrow Agreement and the Transition Services Agreement 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.