ICTV BRANDS INC. (OTCMKTS:ICTV) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
PhotoMedex Amendment
As previously disclosed, on October 4, 2016, ICTV Brands Inc.
(the the Company) and its newly formed wholly-owned subsidiary
ICTV Holdings, Inc., a Nevada corporation (ICTV Holdings),
entered into an asset purchase agreement with PhotoMedex, Inc., a
Nevada corporation (PhotoMedex) and its subsidiaries, Radiancy,
Inc., a Delaware corporation (Radiancy), PhotoTherapeutics Ltd.,
a private limited company limited by shares, incorporated under
the laws of England and Wales (PHMD UK), and Radiancy (Israel)
Limited, a private corporation incorporated under the laws of the
State of Israel (Radiancy Israel and, together with PhotoMedex,
Radiancy, and PHMD UK, the PHMD Sellers), to which ICTV Holdings
agreed to acquire substantially all of the assets of the PHMD
Sellers, including, but not limited to, all of the equity
interests of Radiancy (HK) Limited, a private limited company
incorporated under the laws of Hong Kong, and LK Technology
Importao E Exportao LTDA, a private Sociedade limitada formed
under the laws of Brazil (the PhotoMedex Target Business). Such
acquisition is referred to herein as the PhotoMedex Acquisition.
The PhotoMedex Acquisition includes the acquisition from the PHMD
Sellers of proprietary products and services that address skin
diseases and conditions or pain reduction using home-use devices
for various indications including hair removal, acne treatment,
skin rejuvenation, and lower back pain; which products are sold
and distributed to traditional retail, online and infomercial
outlets for home-use products and include, without limitation,
the following: (a) no!no! Hair, (b) no!no! Skin, (c) no!no! Face
Trainer, (d) no!no! Glow, (e) Made Ya Look, (f) no!no! Smooth
Skin Care, (g) Kryobak, and (h) ClearTouch (the Consumer
Products).
On January 23, 2017, the Company, ICTV Holdings and the PHMD
Sellers entered into a first amendment to the asset purchase
agreement (the PhotoMedex First Amendment) to amend the asset
purchase agreement, dated October 4, 2016, referenced in the
preceding paragraph (as amended by the PhotoMedex First
Amendment, the PhotoMedex Purchase Agreement). The PhotoMedex
First Amendment: (i) identifies the certain liabilities of the
PHMD Sellers that ICTV Holdings will assume and become
responsible for paying, performing and discharging; (ii) revises
the definition of Business Assets to exclude leases, subleases,
and rights thereunder with respect to both real and personal
property; and (iii) amends Section 5.5(b) of the PhotoMedex
Purchase Agreement by revising the date by which the Company or
ICTV Holdings must implement employee benefit plans for certain
eligible employees to no later than 60 days after the Closing
Date.
The foregoing summary of the terms and conditions of the
PhotoMedex First Amendment does not purport to be complete and is
qualified in its entirety by reference to the full text of the
agreement. The PhotoMedex First Amendment is filed as Exhibit
10.2 herewith, and is incorporated herein by reference.
Transition Services Agreement Amendment
As previously disclosed, in connection with the PhotoMedex
Purchase Agreement, on October 4, 2016, ICTV Holdings entered
into a transition services agreement with the PhotoMedex, to
which the PHMD Sellers will make available to ICTV Holdings
certain services on a transitional basis and allow ICTV Holdings
to occupy and use a portion of the PHMD Sellers premises and
warehouses (collectively, the Transition Services), in exchange
for which ICTV Holdings shall (i) pay to the PHMD Sellers the
documented costs and expenses incurred by them in connection with
the provision of those services; (ii) pay to the PHMD Sellers the
documented lease costs including monthly rental and any utility
charges incurred under the applicable leases; (iii) reimburse the
PHMD Sellers for the documented costs and expenses incurred by
them for the continued storage of inventory and raw materials at
warehouse locations, and for services for fulfilling and shipping
orders for such inventory; and (iv) reimburse the PHMD Sellers
for the payroll, employment-related taxes, benefit costs and out
of pocket expenses paid to or on behalf of employees.
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On January 23, 2017, ICTV Holdings and the PHMD Sellers entered
into the first amendment to transition services agreement (the
First Amendment to the TSA) to amend the transition services
agreement, dated October 4, 2016, referenced in the preceding
paragraph (as amended by the First Amendment to the TSA, the
Transition Services Agreement). The First Amendment to the TSA:
(i) amends the period for which the Transitions Services are
provided by the PHMD Sellers to ICTV Holdings to commence on
January 23, 2017; and (ii) defines the certain leased offices of
Radiancy, PHMD UK and Radiancy, Israel collectively, as Premises.
The foregoing summary of the terms and conditions of the
Transition Services Agreement and the First Amendment to the TSA
does not purport to be complete and is qualified in its entirety
by reference to the full text of the agreements. The Transition
Services Agreement has been filed as Exhibit 10.3 to the Companys
Current Report on Form 8-K dated October 5, 2016, and the First
Amendment to the TSA is filed at Exhibit 10.5 herewith, and both
agreements are incorporated herein by reference.
Ermis Labs Amendment
As previously disclosed, on October 4, 2016, the Company and its
newly formed wholly-owned subsidiary Ermis Labs, Inc., a Nevada
corporation (the Purchaser), entered into an asset purchase
agreement with LeoGroup Private Debt Facility, L.P., a Delaware
limited partnership (LeoGroup) and Ermis Labs, Inc., a New Jersey
corporation (Ermis Labs), to which the Purchaser has agreed to
acquire substantially all of the assets of Ermis Labs (the Ermis
Labs Target Business). Such acquisition is referred to herein as
the Ermis Labs Acquisition.
On January 23, 2017, the Company, the Purchaser, LeoGroup and
Ermis Labs entered into a first amendment to the asset purchase
agreement (the Ermis Labs First Amendment) to amend the asset
purchase agreement, dated October 4, 2016, referenced in the
preceding paragraph (as amended by the Ermis Labs First
Amendment, the Ermis Labs Purchase Agreement), to make a
correction to the shareholder table set forth on Schedule 1.4(b).
The foregoing summary of the terms and conditions of the Ermis
Labs First Amendment does not purport to be complete and is
qualified in its entirety by reference to the full text of the
agreement. The Ermis Labs First Amendment is filed as Exhibit
10.7 herewith, and is incorporated herein by reference.
Registration Rights Agreement
On January 23, 2017, in connection with the completion of the
Private Placement (described in Item 2.01 below), the Company
entered into a registration rights agreement (the Registration
Rights Agreement) with certain accredited investors listed on
Exhibit A thereto (the Investors).
Subject to the terms and conditions in the Registration Rights
Agreement, beginning February 23, 2017, the Company shall, at its
cost, prepare and file with the Securities and Exchange
Commission (the SEC) a registration statement covering the resale
of the Companys common stock, par value $0.001 per share (the
Common Stock), (i) sold to the Investors under the securities
purchase agreement, dated October 4, 2016, among the Company and
the Investors (the Securities Purchase Agreement); and (ii) any
securities issued or issuable to the Investors upon any stock
split, dividend or other distribution, recapitalization or
similar event, or any price adjustment as a result of such stock
splits, reverse stock splits or similar events with respect to
any of the securities referenced in (i) above, but excluding any
Common Stock that may be otherwise resold without restriction or
not already covered by an existing and effective registration
statement (the securities referenced in clause (i) and (ii) above
are collectively, the Registrable Shares). The Registrable Shares
are subject to customary underwriter cutbacks. Unless otherwise
prohibited, any cutback imposed shall be allocated among the
Registrable Securities on a pro rata basis.
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to the terms of the Registration Rights Agreement, if at any time
during the period when a registration statement is required to be
filed until the Registrable Securities have been publicly sold by
the Investors or may be sold without restriction to Rule 144 of
the Securities Act of 1933, as amended (the Securities Act), and
the Company prepares and files with the SEC a registration
statement relating to an offering for its own account or the
account of others of any of its equity securities (subject to
certain limitations), then the Company shall notify each Investor
and, if within fifteen days after receipt of such notice, any
Investor requests in writing, the Company will include in such
registration statement all or any part of the Registrable
Securities each Investor requests to be registered, subject to
customary underwriter cutbacks applicable to all holders of
registration rights.
The Company has provided the Investors, and the Investors have
provided the Company, customary indemnification rights in
connection with the registration statement.
The foregoing summary of the terms and conditions of the
Registration Rights Agreement does not purport to be complete and
is qualified in its entirety by reference to the full text of the
agreement. The Registration Rights Agreement is filed as Exhibit
10.9 herewith, and is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of
Assets.
PhotoMedex Acquisition
On January 23, 2017 (the Closing Date), to the terms of the
PhotoMedex Purchase Agreement, ICTV Holdings completed the
PhotoMedex Acquisition for an aggregate purchase price of $9.5
million, for which the Company is also jointly and severally
liable, paid by ICTV Holdings as follows: (i) $3 million of the
purchase price was paid to the PHMD Sellers from an escrow fund
to the escrow agreement, entered into on October 4, 2016 among
the Company, ICTV Holdings, the PHMD Sellers, counsel to the
Company and ICTV Holdings, as escrow agent, and the Investors in
the Companys Private Placement (described in Item 3.02 below)
(the Escrow Agreement); (ii) $2 million of the purchase price
shall be paid by ICTV Holdings to the PHMD Sellers on or before
the 90th day following the Closing Date; and (iii) the
remainder of the purchase price shall be payable in the form of a
continuing royalty described in more detail below. The Company
expects to fund the payment of the purchase price and expenses
incurred in connection with the PhotoMedex Acquisition through a
combination of cash on hand and the Private Placement (described
in Item 3.02 below).
Under the PhotoMedex Purchase Agreement, the Company and ICTV
Holdings are required to pay to the PHMD Sellers a continuing
monthly royalty on net cash (invoiced amount less sales refunds,
returns, rebates, allowances and similar items) actually received
by ICTV Holdings or its affiliates from sales of the Consumer
Products. Such royalty payments commence with net cash actually
received from and after the Closing Date and continue until the
total royalty paid to PHMD Sellers totals $4,500,000, calculated
as follows: (i) 35% of net cash from the sale of all Consumer
Products sold through live television promotions made through
Home Shopping Network (HSN) in the United States, QVC in the
European Union, and The Shopping Channel (TSC) in Canada, less
(a) deductions for sales commissions actually paid and on-air
costs incurred for those amounts collected related to the sale of
Consumer Products made through HSN in the United States, QVC in
the European Union, and The Shopping Channel (TSC) in Canada, and
(b) the cost of goods sold to generate such net cash; and (ii) 6%
of net cash from the sale of all Consumer Products other than the
foregoing sales.
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ICTV Holdings will also assume certain liabilities and
obligations of the PHMD Sellers relating to the PhotoMedex Target
Business, including contractual obligations, and various other
liabilities and obligations arising out of or relating to the
PhotoMedex Target Business after the Closing Date.
The PhotoMedex Purchase Agreement contains customary
representations, warranties and covenants, as well as
indemnification provisions subject to specified limitations.The
indemnification provided by PhotoMedex under the PhotoMedex
Purchase Agreement covers breaches of representations and
warranties of the PHMD Sellers, breaches of covenants or other
obligations of the PHMD Sellers, and liabilities retained by the
PHMD Sellers.The indemnification provided by the Company and ICTV
Holdings covers breaches of representations and warranties of the
Company and ICTV Holdings, breaches of covenants or other
obligations of the Company or ICTV Holdings, and liabilities
assumed by ICTV Holdings. In the case of the indemnification
provided by PhotoMedex with respect to breaches of certain
non-fundamental representations and warranties, the obligations
of PhotoMedex are subject to a cap on losses equal to $2,250,000,
and its liability for the other indemnification, including for
breaches of fundamental representations and warranties shall not
exceed the purchase price actually received by the PHMD Sellers.
In addition, in the case of the indemnification provided by
PhotoMedex with respect to breaches of certain representations
and warranties, PhotoMedex will only become liable for
indemnified losses if the amount exceeds $100,000, whereupon
PhotoMedex will only be liable for losses in excess of such
$100,000 threshold. The Company and ICTV Holdings have the
ability to set off indemnity claims against future royalty
payments owed to the PHMD Sellers subject to following an
administrative procedure outlined in the PhotoMedex Purchase
Agreement with respect to such set off claims and the Company and
ICTV Holdings must first set-off the amount of any
indemnification claims against the royalty payments before making
a claim directly against PhotoMedex.
The foregoing summary of the terms and conditions of the
PhotoMedex Purchase Agreement and the Escrow Agreement does not
purport to be complete and is qualified in its entirety by
reference to the full text of the agreements, which have been
filed as Exhibits 10.1 and 10.2, respectively, to the Companys
Current Report on Form 8-K dated October 5, 2016 and are
incorporated herein by reference.
Ermis Labs Acquisition
On the Closing Date, to the terms of the Ermis Labs Purchase
Agreement, the Purchaser completed the Ermis Labs Acquisition for
an aggregate purchase price of $2,150,000, paid by the Purchaser
as follows: (i) $400,000 of the purchase price was paid on the
Closing Date through the issuance of 2,500,000 shares of the
Companys Common Stock to the shareholders of Ermis Labs, the
value of which was based on the closing price of the Common Stock
on the OTCQX on October 4, 2016, which was $0.16 per share; and
(ii) the remainder of the purchase price shall be payable in the
form of a continuing royalty as described in more detail below.
The issuance of the Common Stock to the Ermis Labs Purchase
Agreement is being made in reliance upon an exemption from
registration provided under Section4(a)(2) of the Securities Act.
Under the Ermis Purchase Agreement, the Purchaser is required to
pay to Ermis Labs a continuing monthly royalty of 5% of net cash
(invoiced amount less sales refunds, returns, rebates, allowances
and similar items) actually received by the Purchaser or its
affiliates from sales of the over-the-counter medicated skin care
products acquired in the Ermis Labs Acquisition, commencing with
net cash actually received by the Purchaser or its affiliates
from and after the Closing Date and continuing until the total
royalty paid to Ermis Labs totals $1,750,000; provided, however,
that the Purchaser is required to pay a minimum annual royalty
amount of $175,000 on or before December 31 of each year
commencing with calendar year ending December 31, 2017.
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The Ermis Labs Purchase Agreement contains customary
representations, warranties and covenants, as well as
indemnification provisions subject to specified limitations. The
indemnification provided by Ermis Labs and LeoGroup under the
Ermis Labs Purchase Agreement covers breaches of representations,
warranties and covenants of Ermis Labs and LeoGroup, and
liabilities retained by the Ermis Labs.The indemnification
provided by the Company and the Purchaser covers breaches of
representations, warranties and covenants of the Company and the
Purchaser, and liabilities assumed by the Purchaser. In the case
of the indemnification provided by Ermis Labs and LeoGroup with
respect to breaches of certain non-fundamental representations
and warranties, Ermis Labs and LeoGroup will only become liable
for indemnified losses if the amount exceeds $50,000, whereupon
they will be liable for all losses relating back to the first
dollar. Furthermore, the liability of Ermis Labs and LeoGroup for
breaches of any and all representations and warranties shall not
exceed the purchase price payable under the Ermis Labs Purchase
Agreement. The Purchaser has the ability to set off indemnity
claims against future royalty payments owed to the Ermis Labs
subject to following an administrative procedure outlined in the
Ermis Labs Purchase Agreement with respect to such set off
claims.
The foregoing summary of the terms and conditions of the Ermis
Labs Purchase Agreement does not purport to be complete and is
qualified in its entirety by reference to the full text of the
agreement, which has been filed as Exhibit 10.4 to the Companys
Current Report on Form 8-K dated October 5, 2016 and is
incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity
Securities.
The information set forth under Item 2.01 regarding the issuance
of shares of Common Stock to the shareholders of Ermis Labs under
the Ermis Labs Purchase Agreement is incorporated by reference
into this Item 3.02.
Private Placement
As previously disclosed, on October 4, 2016, the Company entered
into the Securities Purchase Agreement with the Investors, to
which the Investors agreed to purchase 8,823,530 shares of Common
Stock at a price of $0.34 per share, for aggregate gross proceeds
of $3,000,000 (the Proceeds). Such transaction is referred to
herein as the Private Placement. The issuance of the Common Stock
to the Securities Purchase Agreement was made in reliance upon an
exemption from registration provided under Section4(a)(2) of the
Securities Act.
On the Closing Date, to the terms of the Securities Purchase
Agreement, the Company completed the Private Placement and the
Proceeds were paid to the Company in accordance with the Escrow
Agreement. to the Securities Purchase Agreement, the Company may
complete one or more subsequent closings on or prior to February
1, 2017 for up to a maximum aggregate gross proceeds of
$7,000,000.
As described in Item 1.01 above, and to the Securities Purchase
Agreement, the Company has entered into a Registration Rights
Agreement with the Investors in connection with the closing of
the Private Placement, to which the Company will file and
maintain a registration statement with respect to the resale of
the Registrable Shares on the terms and conditions set forth
therein.
The foregoing summary of the terms and conditions of the
Securities Purchase Agreement does not purport to be complete and
is qualified in its entirety by reference to the full text of the
agreement, which has been filed as Exhibit 10.5 to the Companys
Current Report on Form 8-K dated October 5, 2016, which is
incorporated herein by reference.
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Item 8.01 Other Events.
On January 24, 2017, the Company issued a press release regarding
the completion of the PhotoMedex Acquisition, the Ermis Labs
Acquisition and the Private Placement, a copy of which is
attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Unless otherwise indicated, the following exhibits are filed
herewith:
Exhibit No.
Description of Exhibit
10.1
Asset Purchase Agreement, dated October 4, 2016, by and among
ICTV Brands Inc., ICTV Holdings, Inc., PhotoMedex, Inc.,
Radiancy, Inc., PhotoTherapeutics Ltd. and Radiancy (Israel)
Limited [Incorporated herein by reference to Exhibit 10.1 to
the Companys Current Report on Form 8-K, filed with the
Securities and Exchange Commission October 5, 2016]
10.2
First Amendment to Asset Purchase Agreement, dated January
23, 2017 by and among ICTV Brands Inc., ICTV Holdings, Inc.,
PhotoMedex, Inc., Radiancy, Inc., PhotoTherapeutics Ltd., and
Radiancy (Israel) Limited
10.3
Escrow Agreement, dated October 4, 2016, by and among ICTV
Brands Inc., ICTV Holdings, Inc., PhotoMedex, Inc., Radiancy,
Inc., PhotoTherapeutics Ltd., Radiancy (Israel) Limited,
LeoGroup Private Debt Facility, L.P., Sandra F. Pessin, Brian
L. Pessin and Bevilacqua PLLC [Incorporated herein by
reference to Exhibit 10.2 to the Companys Current Report on
Form 8-K, filed with the Securities and Exchange Commission
October 5, 2016]
10.4
Transition Services Agreement, dated October 4, 2016, by and
among ICTV Holdings, Inc., PhotoMedex, Inc., Radiancy, Inc.,
PhotoTherapeutics Ltd. and Radiancy (Israel) Limited
[Incorporated herein by reference to Exhibit 10.3 to the
Companys Current Report on Form 8-K, filed with the
Securities and Exchange Commission October 5, 2016]
10.5
First Amendment to Transition Services Agreement, dated
January 23, 2017, by and among ICTV Holdings, Inc.,
PhotoMedex, Inc., Radiancy, Inc., PhotoTherapeutics Ltd. and
Radiancy (Israel) Limited
10.6
Asset Purchase Agreement, dated October 4, 2016, by and among
ICTV Brands Inc., Ermis Labs, Inc., LeoGroup Private Debt
Facility, L.P. and Ermis Labs, Inc. [Incorporated herein by
reference to Exhibit 10.4 to the Companys Current Report on
Form 8-K, filed with the Securities and Exchange Commission
October 5, 2016]
10.7
First Amendment to Asset Purchase Agreement, dated January
23, 2017, by and among ICTV Brands Inc.,Ermis Labs, Inc.,
LeoGroup Private Debt Facility, L.P. and Ermis Labs, Inc.
10.8
Securities Purchase Agreement, dated October 4, 2016, by and
among ICTV Brands Inc., LeoGroup Private Debt Facility, L.P.,
Sandra F. Pessin and Brian L. Pessin [Incorporated herein by
reference to Exhibit 10.5 to the Companys Current Report on
Form 8-K, filed with the Securities and Exchange Commission
October 5, 2016]
10.9
Registration Rights Agreement, dated January 23, 2017, by and
among ICTV Brands Inc. and the Investors named therein
99.1
Press Release, dated January 24, 2017
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About ICTV BRANDS INC. (OTCMKTS:ICTV)
ICTV Brands, Inc., formerly International Commercial Television, Inc., sells various health, wellness and beauty products, as well as miscellaneous consumer products through a range of sales channels throughout the United States and internationally. The Company’s segments include direct response television (DRTV) Consumer and International Third Party Distributor. It develops, markets and sells products through a multi-channel distribution strategy, including DRTV, digital marketing campaigns, live home shopping, traditional retail and e-commerce market places, and its international third-party distributor network. It offers primarily health, beauty and wellness products, as well as various consumer products, including DermaWand, a skin care device; DermaVital, a skin care line; the CoralActives brand of acne treatment and skin cleansing products; Derma Brilliance, a skin care resurfacing device; Jidue, a facial massager device, and Good Planet Super Solution, a cleaning agent. ICTV BRANDS INC. (OTCMKTS:ICTV) Recent Trading Information
ICTV BRANDS INC. (OTCMKTS:ICTV) closed its last trading session up +0.013 at 0.463 with 43,700 shares trading hands.
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