As filed with the Securities and Exchange Commission on January 21, 2005
Registration No. 333-121864
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________
PHOTOMEDEX, INC.
(Exact name of registrant as specified in its charter)
|
Delaware |
3845 |
59-2058100 |
|
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
147 Keystone Drive
Montgomeryville, Pennsylvania 18936
(215) 619-3600
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Jeffrey F. O'Donnell
Chief Executive Officer
PhotoMedex, Inc.
147 Keystone Drive
Montgomeryville, Pennsylvania 18936
(215) 619-3600
(Name and address, including zip code, and telephone number, including area code, of agent for service)
___________
Copies to:
|
Jenkens & Gilchrist, LLP
Attn: Jeffrey P. Berg, Esq.
Kenneth M.H. Hoff, Esq.
12100 Wilshire Boulevard, 15th Floor
Los Angeles, California 90025-5244
Phone: (310) 820-8800 |
Perkins Coie LLP
Attn: Faith M. Wilson, Esq.
1201 Third Avenue, Suite 4800
Seattle, Washington 98101-3099
Phone: (206) 359-3237 |
___________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective and all other conditions to the merger of a subsidiary of the Registrant with and into ProCyte Corporation pursuant to the Agreement and Plan of Merger, dated as of December 1, 2004, described in the enclosed joint proxy statement/prospectus, have been satisfied or waived.
___________
If the securities being registered on this form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.
[PHOTOMEDEX, INC. LOGO]
[PROCYTE CORPORATION LOGO]
MERGER PROPOSED - YOUR VOTE IS VERY IMPORTANT
PhotoMedex, Inc. and ProCyte Corporation have agreed to the terms of the acquisition of ProCyte by PhotoMedex. In the proposed merger, each share of ProCyte common stock outstanding immediately prior to the effective time of the merger will be converted into 0.6622 shares of PhotoMedex common stock. We estimate that PhotoMedex will issue approximately 10,477,670 shares of common stock in the merger and that immediately after the merger, ProCyte shareholders will hold approximately 20.73% of the then-outstanding shares of PhotoMedex common stock, based on the number of shares of PhotoMedex and ProCyte common stock outstanding on January 14, 2005. PhotoMedex common stock is traded on The Nasdaq National Market under the symbol "PHMD," and it is a condition to
closing the merger that the PhotoMedex common stock to be issued to ProCyte shareholders in connection with the merger be listed at closing on The Nasdaq National Market. On January 20, 2005, PhotoMedex common stock closed at $2.25 per share, as reported on The Nasdaq National Market. We also expect that the reorganization generally will be tax free to you, except that ProCyte shareholders will recognize gain or loss with respect to cash received in lieu of a fractional share of ProCyte common stock pursuant to the merger agreement or any cash received as a result of exercising dissenters' rights.
Before the merger can be consummated, the stockholders of PhotoMedex must approve the issuance of the shares of PhotoMedex common stock pursuant to the merger agreement and the shareholders of ProCyte must approve the merger agreement. Each of the PhotoMedex and ProCyte board of directors has determined that the merger and the transactions associated with it are fair to and in the best interests of its respective stockholders and has unanimously approved or adopted the merger agreement, as required under applicable law. The ProCyte board of directors recommends that the ProCyte shareholders vote FOR the approval of the merger agreement. The PhotoMedex board of directors recommends that the PhotoMedex stockholders vote FOR the approval of the issuance of the PhotoMedex common stock pursuant to the merger
agreement, including the shares which may be issued upon the exercise of ProCyte stock options to be assumed by PhotoMedex pursuant to the merger agreement. In addition to voting on the merger proposals, PhotoMedex stockholders and ProCyte shareholders will be asked to approve the adjournment of their respective meetings, if necessary, to solicit additional proxies in favor of the merger proposals, and PhotoMedex stockholders will be asked to vote upon a proposal unrelated to the merger with respect to an increase in the number of shares of PhotoMedex common stock reserved for issuance under the PhotoMedex Amended and Restated 2000 Stock Option Plan. We strongly urge you to read and consider carefully this joint proxy statement/prospectus in its entirety, including the matters discussed under the section entitled "Risk Factors" beginning on page I-20.
The proposals are being presented to the stockholders of PhotoMedex at a special meeting of its stockholders and to the shareholders of ProCyte at a special meeting of its shareholders. The dates, times and places of the meetings are set forth below:
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For PhotoMedex Stockholders:
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For ProCyte Shareholders:
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Thursday, March 3, 2005 |
Thursday, March 3, 2005 |
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at 9:00 a.m., Eastern time |
at 9:00 a.m., Pacific time |
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147 Keystone Drive |
Hyatt Regency Bellevue |
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Montgomeryville, Pennsylvania 18936 |
900 Bellevue Way NE |
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tel. no. (215) 619-3600 |
Bellevue, Washington 98004 |
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tel. no. (425) 462-1234 |
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is accurate, adequate or complete. Any representation to the contrary is a criminal offense.
This joint proxy statement/prospectus is dated January 21, 2005, and is first being mailed to the PhotoMedex stockholders and the ProCyte shareholders on or about January 25, 2005.
Your vote is important. Whether or not you plan to attend your respective company's meeting in person, please take the time to vote your shares. You may vote your shares by completing, signing and dating the enclosed proxy card and promptly returning it in the accompanying prepaid envelope. If you attend your meeting, you may vote in person, if you wish, even though you have previously returned your proxy.
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Very truly yours, |
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/s/ John F. Clifford |
/s/ Jeffrey F. O'Donnell |
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John F. Clifford |
Jeffrey F. O'Donnell |
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President and Chief Executive Officer |
President and Chief Executive Officer |
|
ProCyte Corporation |
PhotoMedex, Inc. |
[PROCYTE CORPORATION LOGO]
ProCyte Corporation
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 3, 2005
We will hold a special meeting of shareholders of ProCyte Corporation, a Washington corporation, or ProCyte, at the Hyatt Regency Bellevue, 900 Bellevue Way NE, Bellevue, Washington 98004, on March 3, 2005, at 9:00 a.m., Pacific time, for the following purposes:
1. To consider and vote on a proposal to approve the Agreement and Plan of Merger, dated as of December 1, 2004, by and among PhotoMedex, Inc., a Delaware corporation, Gold Acquisition Corp., a Washington corporation and a wholly-owned subsidiary of PhotoMedex, and ProCyte;
2. To consider and vote on any proposal to adjourn the ProCyte special meeting to another time or place, if necessary in the judgment of the proxy holders, for the purpose of soliciting additional proxies in favor of the foregoing proposal; and
3. To transact such other business that may properly come before the ProCyte special meeting or any adjournment or postponement of the ProCyte special meeting.
The accompanying joint proxy statement/prospectus describes the merger agreement and proposed merger in more detail. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A. You are encouraged to read the entire joint proxy statement/prospectus carefully. In particular, you should carefully consider the discussion entitled "Risk Factors," beginning on page I-20.
The board of directors of ProCyte has fixed the close of business on January 14, 2005 as the record date for the determination of the shareholders entitled to notice of, and to vote at, the ProCyte special meeting. Each share of ProCyte common stock is entitled to one vote on all matters presented at the ProCyte special meeting or any adjournment or postponement of the ProCyte special meeting. We cannot complete the merger unless holders of at least two-thirds of the shares of ProCyte common stock outstanding on the record date vote to approve the merger agreement.
Holders of ProCyte common stock are entitled to dissenters' rights with respect to the merger under Chapter 23B.13 of the Washington Business Corporation Act, a copy of which is attached as Annex D to this joint proxy statement/prospectus.
YOUR VOTE IS IMPORTANT. Whether or not you expect to attend the ProCyte special meeting in person, PLEASE VOTE BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT PROMPTLY IN THE POSTAGE PREPAID REPLY ENVELOPE PROVIDED. The proxy is revocable by you at any time prior to its use at the ProCyte special meeting. If you are a holder of record, you may also cast your vote in person at the ProCyte special meeting. If you receive more than one proxy card because your shares are registered in different names or addresses, each proxy card should be signed and returned to ensure that all your shares will be voted at the ProCyte special meeting. If your shares are held at a brokerage firm
or a bank, you must provide them with instructions on how to vote your shares. If you do not vote at all, it will, in effect, count as a vote against the merger.
Our board of directors has carefully considered the terms and conditions of the merger and has determined that the terms are fair to, and in the best interests of, ProCyte and its shareholders. The board of directors has adopted the merger agreement and approved the merger and unanimously recommends that you vote FOR the approval of the merger agreement and FOR the proposal regarding adjournment, if necessary, of the ProCyte special meeting. We are not aware of any other business to come before the ProCyte special meeting.
Please note that you should not send stock certificates with your proxies. If the merger is completed, the exchange agent will send you a transmittal letter and instructions for exchange of your stock certificates.
By Order of the Board of Directors,
/s/ John F. Clifford
John F. Clifford
President and Chief Executive Officer
January 21, 2005
Redmond, Washington
[PHOTOMEDEX, INC. LOGO]
PhotoMedex, Inc.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 3, 2005
We will hold a special meeting of stockholders of PhotoMedex, Inc, a Delaware corporation, or PhotoMedex, at PhotoMedex's corporate offices at 147 Keystone Drive, Montgomeryville, Pennsylvania 18936, on March 3, 2005, at 9:00 a.m., Eastern time, for the following purposes:
1. To consider and vote on a proposal to approve the issuance of shares of PhotoMedex common stock pursuant to the Agreement and Plan of Merger, dated as of December 1, 2004, by and among PhotoMedex, Gold Acquisition Corp., a Washington corporation and a wholly-owned subsidiary of PhotoMedex, and ProCyte Corporation, a Washington corporation;
2. To consider and vote on any proposal to adjourn the PhotoMedex special meeting to another time or place, if necessary in the judgment of the proxy holders, for the purpose of soliciting additional proxies in favor of the foregoing proposal;
3. To approve an amendment to PhotoMedex's Amended and Restated 2000 Stock Option Plan, or the PhotoMedex 2000 Stock Option Plan, to increase the number of shares of PhotoMedex common stock reserved for issuance thereunder from 3,350,000 to 4,350,000 shares; and
4. To transact such other business that may properly come before the PhotoMedex special meeting or any adjournment or postponement thereof.
The accompanying joint proxy statement/prospectus describes the merger agreement and proposed merger in more detail. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A. You are encouraged to read the entire joint proxy statement/prospectus carefully. In particular, you should carefully consider the discussion entitled "Risk Factors," beginning on page I-20.
The board of directors of PhotoMedex has fixed the close of business on January 14, 2005 as the record date for the determination of the stockholders entitled to notice of, and to vote at, the PhotoMedex special meeting. Each share of PhotoMedex common stock is entitled to one vote on all matters presented at the PhotoMedex special meeting or any adjournment or postponement of the PhotoMedex special meeting. We cannot complete the merger unless a quorum is present at the PhotoMedex special meeting and the proposed issuance of shares of PhotoMedex common stock pursuant to the merger agreement is approved by at least a majority of the shares present or represented by proxy and entitled to vote at the PhotoMedex special meeting.
YOUR VOTE IS IMPORTANT. Whether or not you expect to attend the PhotoMedex special meeting in person, PLEASE VOTE BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT PROMPTLY IN THE POSTAGE PREPAID REPLY ENVELOPE PROVIDED. The proxy is revocable by you at any time prior to its use at the PhotoMedex special meeting. If you are a holder of record, you may also cast your vote in person at the PhotoMedex special meeting. If you receive more than one proxy card because your shares are registered in different names or addresses, each proxy card should be signed and returned to ensure that all your shares will be voted at the PhotoMedex special meeting. If your shares are held at a
brokerage firm or a bank, you must provide them with instructions on how to vote your shares.
Our board of directors has carefully considered the terms and conditions of the merger and has determined that the terms are fair to, and in the best interests of, our stockholders. The board of directors unanimously has voted to approve the merger agreement and recommends that you vote FOR the approval of the issuance of the shares of PhotoMedex common stock pursuant to the merger agreement and FOR the proposal regarding adjournment, if necessary, of the PhotoMedex special meeting. The board of directors also has approved and recommends that you vote FOR the approval of the increase of the
number of shares of PhotoMedex common stock reserved under the PhotoMedex 2000 Stock Option Plan. We are not aware of any other business to come before the PhotoMedex special meeting.
By Order of the Board of Directors,
/s/ Jeffrey F. O'Donnell
Jeffrey F. O'Donnell
President and Chief Executive Officer
January 21, 2005
Montgomeryville, Pennsylvania
ADDITIONAL INFORMATION
This joint proxy statement/prospectus incorporates important business and financial information about PhotoMedex and ProCyte from documents that PhotoMedex and ProCyte have filed with the Securities and Exchange Commission and that have not been included in or delivered with this joint proxy statement/prospectus. For a more detailed discussion of information about PhotoMedex and ProCyte which is incorporated by reference into, and in the case of ProCyte, delivered with this joint proxy statement/prospectus, please see "Where You Can Find More Information," beginning on page V-2 of this joint proxy statement/prospectus. Copies of ProCyte's Form 10-K for the year ended December 31, 2003 and its Quarterly Report on Form 10-Q for the period ended September 30, 2004, both of which contain important
business and financial information about ProCyte and should be read carefully, are delivered with this joint proxy statement/prospectus.
PhotoMedex, Inc.
PhotoMedex, Inc., which we refer to with its subsidiaries as PhotoMedex, will provide you with copies of documents relating to PhotoMedex that are incorporated by reference in this joint proxy statement/prospectus, without charge, upon written or oral request to:
PhotoMedex, Inc.
147 Keystone Drive
Montgomeryville, Pennsylvania 18936
Attn: Davis Woodward, Corporate Counsel
(215) 619-3600
ProCyte Corporation
ProCyte Corporation, which we refer to with its subsidiaries as ProCyte, will provide you with copies of documents relating to ProCyte that are incorporated by reference in this joint proxy statement/prospectus, without charge, upon written or oral request to:
ProCyte Corporation
8511 154th Avenue NE
Redmond, Washington 98052
Attn: Robert W. Benson, Corporate Secretary
(425) 869-1239, ext. 399
In order for you to receive timely delivery of the documents in advance of the PhotoMedex special meeting and the ProCyte special meeting, we must receive your request for additional information no later than February 24, 2005.
PhotoMedex and XTRAC are registered trademarks of PhotoMedex, Inc. ProCyte is a registered trademark of ProCyte Corporation. Cutanix and Quadrinone are registered trademarks of Cutanix Corporation. Other trademarks in this joint proxy statement/prospectus are the property of their respective holders.
TABLE OF CONTENTS
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CHAPTER I - THE MERGER |
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I-1 |
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Questions and Answers about the Merger |
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I-1 |
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Summary of the Joint Proxy Statement/Prospectus |
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I-5 |
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The Companies |
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I-5 |
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The Merger |
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I-6 |
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What You Will Receive in the Merger |
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I-6 |
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Tax Free Transaction |
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I-6 |
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Differences in Rights of Stockholders |
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I-6 |
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Reasons for the Merger |
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I-7 |
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Recommendation of the ProCyte Board |
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I-7 |
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Recommendation of the PhotoMedex Board |
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I-7 |
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Quotation on The Nasdaq National Market |
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I-7 |
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Ownership of PhotoMedex After the Merger |
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I-7 |
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Dissenters' or Appraisal Rights |
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I-7 |
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The Special Meetings |
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I-8 |
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Record Dates for Voting; Required Votes for the Merger Proposal |
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I-8 |
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Conditions to the Consummation of the Merger |
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I-9 |
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No Solicitation by ProCyte |
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I-9 |
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Termination of the Merger Agreement |
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I-10 |
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Termination Fees and Expenses |
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I-10 |
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Opinion of ProCyte's Financial Advisor |
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I-11 |
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Opinion of PhotoMedex's Financial Advisor |
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I-11 |
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Interests of ProCyte Directors and Executive Officers in the Merger |
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I-11 |
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Risks of the Merger |
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I-12 |
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Accounting Treatment |
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I-12 |
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PhotoMedex Selected Historical Consolidated Financial Data |
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I-12 |
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ProCyte Selected Historical Consolidated Financial Data |
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I-14 |
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Selected Unaudited Pro Forma Condensed Consolidated Financial Data |
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I-15 |
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Comparative Per Share Data |
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I-16 |
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Comparative Market Price and Dividend Information |
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I-17 |
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Cautionary Statement Regarding Forward-Looking Statements |
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I-18 |
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Risk Factors |
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I-20 |
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Risks Relating to the Proposed Merger |
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I-20 |
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Risks Relating to the Business and Operations of PhotoMedex Following the Merger |
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I-26 |
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Risks Relating to the Business and Operations of ProCyte |
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I-37 |
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The Merger |
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I-37 |
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General |
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I-37 |
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Background of the Merger |
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I-37 |
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ProCyte's Reasons for the Merger |
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I-43 |
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Recommendation of the ProCyte Board |
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I-46 |
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PhotoMedex's Reasons for the Merger |
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I-46 |
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Recommendation of the PhotoMedex Board |
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I-48 |
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Opinion of ProCyte's Financial Advisor - Wells Fargo Securities, LLC |
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I-49 |
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Opinion of PhotoMedex's Financial Advisor - CIBC World Markets Corp. |
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I-61 |
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Payment of Finder's Fee by PhotoMedex |
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I-67 |
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Material United States Federal Income Tax Consequences |
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I-67 |
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Accounting Treatment |
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I-69 |
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Interests of ProCyte Directors and Executive Officers in the Merger |
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I-70 |
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Dissenters' or Appraisal Rights |
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I-71 |
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Quotation on The Nasdaq National Market |
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I-74 |
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Delisting and Deregistration of ProCyte Common Stock |
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I-74 |
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Federal Securities Laws Consequences |
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I-75 |
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The Merger Agreement |
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I-75 |
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The Merger |
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I-75 |
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The Exchange Ratio and Treatment of Securities |
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I-75 |
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Exchange of Certificates |
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I-76 |
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Transfer of Shares |
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I-77 |
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Representations and Warranties of ProCyte and PhotoMedex |
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I-77 |
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Conduct of PhotoMedex's and ProCyte's Business Prior to the Merger |
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I-78 |
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Stockholder Meetings |
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I-79 |
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Access to Information |
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I-80 |
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Commercially Reasonable Efforts |
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I-80 |
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No Solicitation |
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I-80 |
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Fees and Expenses |
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I-82 |
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Directors and Officers Indemnification and Insurance |
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I-83 |
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Nasdaq National Market Listing |
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I-83 |
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Affiliates |
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I-83 |
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Conditions to the Consummation of the Merger |
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I-83 |
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Termination |
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I-84 |
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Termination Fees and Expenses |
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I-86 |
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Amendment; Extension and Waiver |
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I-87 |
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Related Agreements |
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I-87 |
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Information about PhotoMedex |
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I-90 |
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Security Ownership of Certain Beneficial Owners and Management of PhotoMedex |
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I-90 |
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Description of PhotoMedex Common Stock |
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I-93 |
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Information about ProCyte |
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I-93 |
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Security Ownership of Certain Beneficial Owners and Management of ProCyte |
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I-93 |
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Description of ProCyte Common Stock |
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I-94 |
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Unaudited Pro Forma Condensed Consolidated Financial Statements |
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I-95 |
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Comparison of Rights of Holders of PhotoMedex Common Stock and ProCyte |
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Common Stock |
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I-102 |
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CHAPTER II - THE PHOTOMEDEX SPECIAL MEETING |
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II-1 |
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Time and Place of the PhotoMedex Special Meeting |
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II-1 |
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Purpose of the PhotoMedex Special Meeting |
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II-1 |
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Record Date; Stock Entitled to Vote; Quorum |
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II-1 |
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Required Vote |
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II-2 |
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Proxies; Voting and Revocation |
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II-2 |
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Solicitation of Proxies |
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II-3 |
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PhotoMedex Board of Directors Recommendation |
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II-3 |
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CHAPTER III - THE PROCYTE SPECIAL MEETING |
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III-1 |
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Time and Place of the ProCyte Special Meeting |
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III-1 |
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Purpose of the ProCyte Special Meeting |
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III-1 |
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Record Date; Stock Entitled to Vote; Quorum |
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III-1 |
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Required Vote |
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III-2 |
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Proxies; Voting and Revocation |
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III-2 |
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Solicitation of Proxies |
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III-3 |
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ProCyte Board of Directors Recommendation |
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III-3 |
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CHAPTER IV - OTHER PHOTOMEDEX SPECIAL MEETING PROPOSAL |
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IV-1 |
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Proposal 3 - Amendment of Amended And Restated 2000 Stock Option Plan |
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IV-1 |
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CHAPTER V - OTHER INFORMATION |
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V-1 |
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Legal Matters |
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V-1 |
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Experts |
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V-1 |
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About PhotoMedex |
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V-1 |
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About ProCyte |
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V-2 |
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Where You Can Find More Information |
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V-2 |
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ANNEXES
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ANNEX A
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Agreement and Plan of Merger
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ANNEX B
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Opinion of ProCyte's Financial Advisor
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ANNEX C
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Opinion of PhotoMedex's Financial Advisor
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ANNEX D
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Dissenters' Rights Under Chapter 23B.13 of the Washington Business Corporation Law
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ANNEX E
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Form of Stockholder Agreement
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ANNEX F
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Form of Affiliate Agreement
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ANNEX G
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Form of Employment Agreement with John F. Clifford
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ANNEX H
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Form of Employment Agreement with Robin L. Carmichael
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CHAPTER I - THE MERGER
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: Why am I receiving this joint proxy statement/prospectus?
A: PhotoMedex and ProCyte have agreed to the terms of the acquisition by PhotoMedex of ProCyte under a merger agreement that is described in this joint proxy statement/prospectus. The merger agreement, which governs the merger, is attached to this joint proxy statement/prospectus as Annex A. In order to complete the merger, PhotoMedex stockholders must vote to approve the issuance of the shares of PhotoMedex common stock pursuant to the merger agreement and ProCyte shareholders must vote to approve the
merger agreement.
PhotoMedex and ProCyte will each hold separate meetings of their respective stockholders to obtain these approvals. This joint proxy statement/prospectus contains important information about the merger and the meetings of the respective stockholders of PhotoMedex and ProCyte, and you should read it carefully.
Q: What do I need to do now?
A: After carefully reading and considering the information contained in this joint proxy statement/prospectus, you should complete and sign your proxy card and return it in the enclosed return envelope as soon as possible so that your shares are represented at your special meeting. Even if you submit your proxy, you may also attend your meeting and vote your shares in person.
Q: Why is my vote important?
A: The merger agreement must be approved by the affirmative vote of two-thirds of the shares of ProCyte common stock outstanding as of the record date. If you are a ProCyte shareholder and you do not vote, it will have the same effect as a vote against the merger agreement. ProCyte's board of directors unanimously recommends voting FOR approval of the merger agreement and the proposal relating to the adjournment, if necessary, of the ProCyte special meeting. In addition, PhotoMedex stockholders must, by the affirmative vote of at least a majority of the shares present or represented by proxy and entitled to vote at the PhotoMedex special meeting, at which a quorum is present, approve the
issuance of the shares of PhotoMedex common stock pursuant to the merger agreement. PhotoMedex's board of directors unanimously has voted to approve the merger agreement and recommends voting FOR the issuance of the shares of PhotoMedex common stock in connection with the merger agreement, the proposal relating to the adjournment, if necessary, of the PhotoMedex special meeting, and the proposal to increase the number of shares of PhotoMedex common stock reserved for issuance under the PhotoMedex 2000 Stock Option Plan.
Q: How can I vote my shares in person at my meeting?
A: Shares held in your name as the ProCyte shareholder or PhotoMedex stockholder of record may be voted in person at your meeting. Shares held beneficially through a broker or nominee (i.e., in street name) may be voted in person only if you obtain a legal proxy from the broker, trustee or nominee that holds your shares giving you the right to vote the shares. You should be prepared to present photo identification for admittance. In addition, if you are a ProCyte shareholder or PhotoMedex stockholder of record, your name will be verified against the list of ProCyte shareholders or PhotoMedex stockholders, as the case may be, of record prior to your being admitted to your special meeting. If
you are not a ProCyte shareholder or PhotoMedex stockholder of record but hold shares in street name, you should provide proof of beneficial ownership on the record date, such as your most recent account statement prior to the record date for your meeting, a copy of the voting instruction card provided by your broker, trustee or nominee, or other similar evidence of ownership. If you do not provide photo identification or comply with the other procedures outlined above upon request, you may not be admitted to your special meeting. Even if you plan to attend your special meeting, we recommend that you also submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend your special meeting.
Q: How can I vote my shares without attending my special meeting?
A: Whether you hold shares directly as the ProCyte shareholder or PhotoMedex stockholder of record or beneficially in street name, you may direct how your shares are voted without attending your special meeting. If you are a ProCyte shareholder or PhotoMedex stockholder of record, you may vote by submitting a proxy. If you hold shares beneficially in street name, you may vote by submitting voting instructions to your broker, trustee or nominee. For directions on how to vote, please refer to the instructions included on your proxy card or, for shares held beneficially in street name, the voting instruction card provided by your broker, trustee or nominee. If you hold your shares in
street name and do not provide voting instructions to your broker or bank, your shares will not be voted on any proposal on which your broker or bank does not have discretionary authority to vote. Your broker cannot vote without instructions from you. You should instruct your broker as to how to vote your shares, following the directions your broker provides to you. Please check the voting form used by your broker.
Q: What if I either abstain from voting or fail to instruct my broker how to vote or respond without voting instructions?
A: If you respond and indicate that you are abstaining from voting or fail to instruct your broker to vote your shares and the broker submits a non-voted proxy, the resulting abstention or broker non-vote will be counted toward the quorum at your special meeting.
In the case of the ProCyte special meeting only, abstentions and broker non-votes will have the same effect as a vote against the merger agreement. Abstentions and broker non-votes will have no effect on the vote on the ProCyte adjournment proposal. If you respond but do not indicate in your response how you want to vote on the proposal to approve the merger agreement or on the adjournment proposal, your proxy will be voted FOR such proposal(s).
In the case of the PhotoMedex special meeting only, abstentions from voting on the PhotoMedex share issuance and adjournment proposals and the proposal to increase the number of shares of PhotoMedex common stock reserved for issuance under the PhotoMedex 2000 Stock Option Plan will have the effect of a vote against each such proposal. Broker non-votes will have no effect on the vote on such proposals. If you respond but do not indicate in your response how you want to vote on the proposal to approve the issuance of the shares of PhotoMedex common stock, the adjournment proposal or on the proposal to increase the number of shares of PhotoMedex common stock reserved for issuance under the PhotoMedex 2000 Stock Option Plan, your proxy will be voted FOR such proposal(s).
In addition, if other matters are properly presented for voting at either of the special meetings, the persons named as proxies will vote on such matters in their discretion. Neither PhotoMedex nor ProCyte has received notice of other matters that may properly be presented for voting at either of the special meetings.
Q: Can I change my vote?
A: Yes. You may change your vote at any time prior to the vote at your special meeting. If you are the shareholder of record of ProCyte or a stockholder of record of PhotoMedex, you may change your vote by:
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delivering to the Secretary of PhotoMedex or to the Secretary of ProCyte, as appropriate, or to MacKenzie Partners, Inc., or MacKenzie Partners, the joint proxy solicitor of PhotoMedex and ProCyte, a new proxy bearing a later date (which automatically revokes the earlier proxy); |
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delivering a signed notice of revocation to the Secretary of PhotoMedex or to the Secretary of ProCyte, as appropriate, or to MacKenzie Partners, the joint proxy solicitor of PhotoMedex and ProCyte; or |
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attending your special meeting and voting in person. However, your attendance alone will not revoke your proxy. |
For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, trustee or nominee, or, if you have obtained a legal proxy from your broker or nominee giving you the right to vote your shares, by attending your special meeting and voting in person.
Q: Should I send in my ProCyte stock certificates now?
A: No. After the merger is completed, you will receive written instructions for exchanging your ProCyte stock certificates. Please do not send in your ProCyte stock certificates with your proxy.
Q: When do you expect to complete the merger?
A: We expect to complete the merger promptly after we receive the approvals of the stockholders of PhotoMedex and the shareholders of ProCyte at the special meetings. We are working to complete the merger during the first quarter of 2005. However, the exact timing cannot be predicted.
Q: When and where are the special meetings?
A: The ProCyte special meeting will be held at 9:00 a.m., Pacific time, on March 3, 2005, at the Hyatt Regency Bellevue, 900 Bellevue Way NE, Bellevue, Washington 98004.
The PhotoMedex special meeting will be held at 9:00 a.m., Eastern time, on March 3, 2005, at PhotoMedex's corporate offices at 147 Keystone Drive, Montgomeryville, Pennsylvania 18936.
Q: Which stockholders are entitled to vote?
A: Each ProCyte shareholder that owned shares of ProCyte common stock as of the close of business on January 14, 2005, the ProCyte record date, is entitled to vote, in person or by proxy, at the ProCyte special meeting.
Each PhotoMedex stockholder that owned shares of PhotoMedex common stock as of the close of business on January 14, 2005, the PhotoMedex record date, is entitled to vote, in person or by proxy, at the PhotoMedex special meeting.
Q: What will ProCyte shareholders receive in the merger?
A: If the merger is completed, ProCyte shareholders will receive, in exchange for each ProCyte share, 0.6622 shares of PhotoMedex common stock. For example, if you owned 1,000 shares of ProCyte common stock, you would receive 662 shares of PhotoMedex common stock in the merger. The PhotoMedex common stock is listed on The Nasdaq National Market under the symbol "PHMD." You will be able to trade the PhotoMedex common stock you receive in the merger. However, your ability to trade the PhotoMedex common stock you receive in the merger may be restricted under the Securities Act of 1933, as amended, or the Securities Act, if you are a director or executive officer or otherwise deemed to be an
affiliate of ProCyte or PhotoMedex. Shares of PhotoMedex common stock received by ProCyte affiliates may only be sold pursuant to Rule 145 of the Securities Act or pursuant to a registration statement or an exemption from the registration requirements of the Securities Act.
In addition, instead of fractional shares of PhotoMedex common stock, ProCyte shareholders will receive cash based on the market price of PhotoMedex common stock. Because the exchange ratio is fixed at 0.6622, but the market price of PhotoMedex common stock is subject to fluctuation, the market value of the shares of PhotoMedex common stock that you will receive in the merger may increase or decrease prior to and following the merger. We urge you to obtain current market quotations for PhotoMedex common stock and ProCyte common stock.
Q: What will happen if the merger is not completed?
A: If the merger is not completed, ProCyte will remain an independent company and, under certain circumstances described in the merger agreement, may be required to pay PhotoMedex a termination fee of
$730,000. In addition, each of PhotoMedex and ProCyte would have to absorb significant merger-related costs, such as legal, accounting and financial advisory fees. In addition, under the terms of the merger agreement, PhotoMedex or ProCyte may be required, under certain circumstances, to reimburse the other party for up to $500,000 of its merger-related expenses. Also, the price of PhotoMedex and ProCyte common stock may decline to the extent that the current market price reflects a market assumption that the merger will be completed.
Q: Whom should I call with questions?
A: If you have any questions about the proposed merger, including how to complete and return your proxy card, or if you need additional copies of the joint proxy statement/prospectus or the enclosed proxy, please call or write:
If you are a PhotoMedex stockholder:
Davis Woodward
Corporate Counsel
PhotoMedex, Inc.
147 Keystone Drive
Montgomeryville, Pennsylvania 18936
Telephone: (215) 619-3278
or
MacKenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
Telephone: (800) 322-2885 or (212) 929-5500
If you are a ProCyte shareholder:
Robert W. Benson
Corporate Secretary
ProCyte Corporation
8511 154th Avenue NE
Redmond, Washington 98052
Telephone: (425) 869-1239, ext. 399
or
MacKenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
Telephone: (800) 322-2885 or (212) 929-5500
SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS
This summary highlights selected information from this joint proxy statement/prospectus. It does not contain all of the information that is important to you. PhotoMedex and ProCyte urge you to read carefully the entire joint proxy statement/prospectus and the other documents referred to in this joint proxy statement/prospectus to fully understand the merger. In addition, we encourage you to read the information incorporated by reference into, and, in the case of ProCyte, delivered with this joint proxy statement/prospectus, which includes important business and financial information about PhotoMedex and ProCyte which we have filed with the Securities and Exchange Commission, or the SEC. In particular, you should read the documents attached to this joint proxy statement/prospectus, including the
merger agreement, which is attached as Annex A. For a guide as to where you can obtain more information on PhotoMedex and ProCyte, including the information incorporated by reference into or delivered with this joint proxy statement/prospectus, see the section entitled "Where You Can Find More Information" beginning on page V-2. We have included page references parenthetically to direct you to a more complete description of the topics presented in this summary of the joint proxy statement/prospectus.
The Companies (Pages I-90-94)
PhotoMedex, Inc.
147 Keystone Drive
Montgomeryville, Pennsylvania 18936
Telephone: (215) 619-3600
PhotoMedex is a medical device company focused on facilitating the cost-effective use of technologies for doctors, hospitals and surgery centers. PhotoMedex engages in the development and marketing, domestically and internationally, of proprietary excimer laser and fiber optic systems, known as the XTRAC® laser system, or the XTRAC, a 308 nanometer (nm) excimer laser for the treatment of psoriasis, vitiligo, atopic dermatitis and leukoderma. PhotoMedex also engages in the development, manufacture and sale of surgical products, including proprietary contact and free-beam laser systems for surgery in such venues as hospitals, surgi-centers and doctors offices. PhotoMedex offers a wide range of surgical laser services on a turn-key procedural basis, including urology, gynecology, orthopedics and general
surgery.
Gold Acquisition Corp. is a wholly-owned subsidiary of PhotoMedex that was formed solely for the purpose of effecting the merger. Gold Acquisition Corp. has not conducted and will not conduct any business during the period of its existence.
For additional information about PhotoMedex and its business, see the sections entitled "Information About PhotoMedex" beginning on page I-90 and "Where You Can Find More Information" beginning on page V-2.
ProCyte Corporation
8511 154th Avenue NE
Redmond, Washington 98052
Telephone: (425) 869-1239
ProCyte is a medical skin care company that develops, manufactures and markets products for skin health and hair care. Many of ProCyte's products incorporate its patented copper peptide technologies. ProCyte currently sells its products directly to the dermatology, plastic and cosmetic surgery and spa markets. ProCyte also has expanded the use of its novel copper peptide technologies into the mass retail market for skin and hair care through specifically targeted technology licensing and supply agreements. To augment its technology portfolio, ProCyte obtained the rights to market and sell current and future products containing the patent-pending Quadrinone® technology from Cutanix Corporation in June 2003.
For additional information about ProCyte and its business, see the sections entitled "Information About ProCyte" beginning on page I-93 and "Where You Can Find More Information" beginning on page V-2.
The Merger (Pages I-37-75)
In the proposed merger, Gold Acquisition Corp. (referred to in this joint proxy statement/prospectus as the "merger subsidiary") will merge into ProCyte, with ProCyte as the surviving corporation. As a result, ProCyte will become a wholly-owned subsidiary of PhotoMedex. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A. You are encouraged to read it carefully.
What You Will Receive in the Merger (Pages I-75-77)
In the merger, each share of ProCyte common stock will be converted into the right to receive 0.6622 shares of PhotoMedex common stock. In addition, ProCyte shareholders will receive cash instead of any fractional shares of PhotoMedex common stock to which they are otherwise entitled.
PhotoMedex has agreed to assume certain common stock options to purchase shares of ProCyte common stock which have an exercise price of $2.00 per share or less. Each assumed option to purchase shares of ProCyte common stock outstanding immediately before the completion of the merger will automatically become a stock option to purchase shares of PhotoMedex common stock. The number of shares of PhotoMedex common stock into which a stock option is exercisable and the related exercise price will be adjusted for the exchange ratio in the merger. In addition, some assumed stock options will become fully vested and exercisable at the effective time of the merger. PhotoMedex has agreed to assume the ProCyte stock option plans at the effective time of the merger.
Tax Free Transaction (Pages I-67-69)
Subject to the limitations, qualifications and assumptions described in "The Merger - Material United States Federal Income Tax Consequences," beginning on page I-67, you will not recognize gain or loss for U.S. federal income tax purposes on the exchange of your ProCyte common stock for PhotoMedex common stock in the merger, except to the extent that you receive cash in lieu of fractional shares in the merger or as a result of exercising dissenters' rights. To review the tax consequences to ProCyte shareholders in greater detail, see" The Merger - Material United States Federal Income Tax Consequences," beginning on page I-67.
You are urged to consult your own tax advisor concerning the federal, state, local and foreign income and other tax consequences of the merger to you.
Differences in Rights of Stockholders (Pages I-102-113)
ProCyte is a corporation organized under the laws of the State of Washington and the rights of ProCyte shareholders are governed by Washington corporate law. If the proposed merger is consummated, ProCyte's shareholders will become stockholders of PhotoMedex, a Delaware corporation. The rights of stockholders of PhotoMedex are governed by Delaware corporate law, and the certificate of incorporation and bylaws of PhotoMedex. Delaware law and PhotoMedex's certificate of incorporation and bylaws contain the following provisions, among others, which may discourage unilateral tender offers or other attempts to take over and acquire the business of PhotoMedex:
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Section 203 of the Delaware General Corporation Law prohibits a business combination between a corporation and an interested stockholder within three years of the stockholder becoming an interested stockholder, except in limited circumstances; |
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the bylaws of PhotoMedex provide that a special meeting may be convened at any time by the chairman of the board, the president of PhotoMedex or by resolution adopted by holders of at least 2/3 of the voting power of all outstanding shares of voting stock; |
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PhotoMedex's bylaws may be repealed, altered or amended or new bylaws adopted by (i) the affirmative vote of not less than two-thirds of the outstanding shares of stock entitled to vote upon the election of directors or (ii) the board of directors; provided, however, that any bylaws made by the directors may be amended, altered or repealed by the stockholders; and |
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the PhotoMedex bylaws provide that any action which is required by statute to be taken or may be taken at a meeting must be effected at such a meeting. |
ProCyte shareholders should consider fully the discussion under the section entitled "Comparison of Rights of Holders of PhotoMedex Common Stock and ProCyte Common Stock" in evaluating whether to approve the merger agreement.
Reasons for the Merger (Pages I-43-48)
For a description of the reasons considered by the PhotoMedex board of directors, please see the section entitled "The Merger - PhotoMedex's Reasons for the Merger" beginning on page I-46.
For a description of the reasons considered by the ProCyte board of directors, please see the section entitled "The Merger - ProCyte's Reasons for the Merger" beginning on page I-43.
Recommendation of the ProCyte Board (Page I-46) and (Page III-3)
The ProCyte board of directors believes that the merger is fair to and in the best interests of ProCyte and the ProCyte shareholders and recommends that you vote FOR approval of the merger agreement.
Recommendation of the PhotoMedex Board (Pages I-48) and (Pages II-3)
The PhotoMedex board of directors believes that the merger is fair to and in the best interests of PhotoMedex and the PhotoMedex stockholders and recommends that you vote FOR approval of the issuance of the shares of PhotoMedex common stock pursuant to the merger agreement.
Quotation on The Nasdaq National Market (Page I-74)
The common stock of PhotoMedex is currently traded on The Nasdaq National Market under the symbol "PHMD." It is a condition to the merger that the shares of PhotoMedex common stock to be issued and issuable pursuant to the merger agreement be approved for trading on The Nasdaq National Market, subject to official notice of issuance. PhotoMedex has agreed to take all necessary action to cause the PhotoMedex common stock issued pursuant to the merger agreement, including the shares of PhotoMedex common stock reserved for issuance upon exercise of the ProCyte stock options assumed by PhotoMedex, to be approved for listing on The Nasdaq National Market.
Ownership of PhotoMedex After the Merger (Pages I-75-76)
Assuming the exercise of all assumed ProCyte stock options, PhotoMedex expects to issue approximately 12,090,127 shares of PhotoMedex common stock in connection with the merger. Based on the number of shares of PhotoMedex and ProCyte common stock outstanding on the applicable record dates, former ProCyte shareholders will own approximately 20.73% of the outstanding common stock of the combined company immediately following the completion of the merger.
Dissenters' or Appraisal Rights (Pages I-71-74)
Under applicable Washington law, ProCyte shareholders have the right to dissent from the merger and to receive payment in cash for the appraised value of their shares of ProCyte common stock. The appraised value of the shares of ProCyte common stock may be more than, less than or equal to the value of the merger consideration. Each ProCyte shareholder seeking to preserve statutory dissenters' rights must:
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deliver to ProCyte before the vote is taken at the ProCyte special meeting written notice of such shareholder's intent to demand payment for such shareholder's ProCyte common stock if the merger becomes effective; |
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not vote such shareholder's shares of ProCyte common stock in person or by proxy in favor of the proposal to approve the merger agreement; and |
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follow the statutory procedures for perfecting dissenters' rights under Washington law, which are described in the section of this joint proxy statement/prospectus entitled "Dissenters' or Appraisal Rights." |
Chapter 23B.13 of the Washington Business Corporation Act is reprinted in its entirely and attached as Annex D to this joint proxy statement/prospectus. Failure by a ProCyte shareholder to comply precisely with all procedures required by Washington law may result in the loss of dissenters' rights for that shareholder.
Under the merger agreement, if the number of dissenting shares exceeds 2% of the number of shares of outstanding ProCyte common stock, PhotoMedex is not obligated to effect the merger.
Under applicable Delaware law, PhotoMedex stockholders will not have dissenters' rights of appraisal in connection with the issuance of PhotoMedex common stock pursuant to the merger agreement.
The Special Meetings (Pages II-1-3), (Pages III-1-3) and (Pages IV-1-6)
The special meeting of ProCyte shareholders is scheduled to be held at 9:00 a.m., Pacific time, on March 3, 2005 at the Hyatt Regency Bellevue, 900 Bellevue Way NE, Bellevue, Washington 98004. The purpose of the ProCyte special meeting is to vote on the proposal to approve the merger agreement and the proposal to approve an adjournment of the ProCyte special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the merger agreement.
The special meeting of PhotoMedex stockholders is scheduled to be held at 9:00 a.m., Eastern time, on March 3, 2005 at PhotoMedex's corporate offices at 147 Keystone Drive, Montgomeryville, Pennsylvania 18936. The purpose of the PhotoMedex special meeting is to vote on the proposal to approve the issuance of the PhotoMedex common stock pursuant to the merger agreement, the proposal to approve an adjournment of the PhotoMedex special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the issuance of PhotoMedex common stock pursuant to the merger agreement, and the proposal to increase the number of shares of PhotoMedex common stock reserved for issuance under the PhotoMedex 2000 Stock Option
Plan.
Record Dates for Voting; Required Votes for the Merger Proposal (Pages II-1-2) and (Pages III-1-2)
Each holder of record, as of January 14, 2005, of ProCyte common stock is entitled to cast one vote per share at the ProCyte special meeting. The affirmative vote, in person or by proxy, of at least two-thirds of the shares of ProCyte common stock outstanding on the record date is required to approve the merger agreement. In order to approve the adjournment proposal, the votes cast for the proposal must exceed the votes cast against the proposal at the ProCyte special meeting, at which a quorum is present. As of January 14, 2005, ProCyte's directors and executive officers beneficially owned approximately 3.9% of the outstanding shares of ProCyte common stock. These directors and officers have entered into stockholder agreements with PhotoMedex, pursuant to which
they have agreed to vote in favor of the approval of the merger agreement and any matter that could reasonably be expected to facilitate the merger. The form of stockholder agreement is attached as Annex F to this joint proxy statement/ prospectus. You should read it in its entirety.
Each holder of record, as of January 14, 2005, of PhotoMedex common stock is entitled to cast one vote per share at the PhotoMedex special meeting. The affirmative vote, in person or by proxy, of at least a majority of the shares present or represented by proxy and entitled to vote at the PhotoMedex special meeting, where a quorum is present, is required to approve the issuance of the PhotoMedex common stock pursuant to the merger agreement, the adjournment proposal and the proposal to increase the number of shares of PhotoMedex common stock reserved for issuance under the PhotoMedex 2000 Stock Option Plan.
As of January 14, 2005 PhotoMedex's directors and executive officers beneficially owned approximately 1.57% of the outstanding shares of PhotoMedex common stock. It is anticipated that all of the directors and executive officers of PhotoMedex will vote in favor of the issuance of the PhotoMedex common stock pursuant to the merger agreement. However, they have not entered into any agreements to do so.
Conditions to the Consummation of the Merger (Pages I-83-84)
The completion of the merger depends on the satisfaction or waiver of a number of conditions set forth in the merger agreement, including the following:
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the approval of the merger agreement by the shareholders of ProCyte; |
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the approval of the issuance of the shares of PhotoMedex common stock pursuant to the merger agreement by the stockholders of PhotoMedex; |
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the absence of any law, temporary restraining order, injunction or other order issued by a court that has the effect of making the merger illegal or otherwise prohibiting the merger; |
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the approval of the shares of PhotoMedex common stock to be issued pursuant to the merger agreement for trading on The Nasdaq National Market; |
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the registration statement relating to the shares of PhotoMedex common stock to be issued pursuant to the merger agreement (of which this joint proxy statement/prospectus is a part) being declared effective by the SEC and the absence of any stop order suspending the effectiveness of the registration statement; |
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the accuracy of all representations and warranties as of the date of the merger agreement and the closing date, as qualified in the merger agreement; |
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the performance or compliance in all material respects with all agreements and covenants set forth in the merger agreement; |
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the receipt of all consents and approvals of third parties as set forth in the merger agreement; and |
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the receipt by ProCyte of a legal opinion from Perkins Coie LLP and the receipt by PhotoMedex of a legal opinion from Jenkens & Gilchrist, LLP that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. |
At any time prior to the effective time of the merger, either PhotoMedex or ProCyte may, to the extent legally allowed, waive a condition to its obligation to complete the merger, although that condition has not been satisfied.
PhotoMedex and ProCyte cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.
No Solicitation by ProCyte (Pages I-80-82)
The merger agreement contains restrictions on the ability of ProCyte to solicit or engage in discussions or negotiations with a third party with respect to a proposal to acquire a significant interest in ProCyte. Notwithstanding these restrictions, the merger agreement provides that under specified circumstances, if ProCyte receives an acquisition proposal from a third party that is superior to the terms of the merger agreement, ProCyte may furnish nonpublic information to that third party and engage in discussions and negotiations regarding an acquisition proposal with that third party. Even if ProCyte receives a proposal from a third party that is superior to the terms of the merger agreement, it is obligated to hold a shareholders' meeting to consider the merger agreement.
Termination of the Merger Agreement (Pages I-84-86)
PhotoMedex and ProCyte may terminate the merger agreement by mutual written consent. In addition, either PhotoMedex or ProCyte may terminate the merger agreement if:
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the merger is not completed by June 30, 2005, unless the parties extend the time for closing the merger; or |
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a governmental authority issues or fails to issue a final order and such action or inaction prohibits the completion of the merger, except that the party that is the cause of such action or inaction may not terminate the merger agreement on this basis. |
PhotoMedex may terminate the merger agreement if:
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ProCyte's board of directors fails to reaffirm, withdraws or adversely modifies its recommendation to its shareholders that they approve the merger agreement; |
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ProCyte's shareholders do not approve the merger agreement; |
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the holders of more than 2% of the outstanding shares of ProCyte common stock perfect available dissenters' rights, and such rights have not been lost or withdrawn; |
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ProCyte 's board of directors approves or enters into an acquisition proposal by a third party; |
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a third party commences a tender or exchange offer, and ProCyte's board of directors does not recommend that the ProCyte shareholders reject such tender or exchange offer; |
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ProCyte materially fails to comply with the provisions under the merger agreement restricting ProCyte from soliciting an alternative merger transaction; or |
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ProCyte materially breaches one or more of its representations or warranties or fails to perform in any material respect one or more of its covenants or other agreements contained in the merger agreement, and does not timely cure such breach or failure. |
ProCyte may terminate the merger agreement if:
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PhotoMedex's board of directors withdraws or adversely modifies its recommendation to its stockholders that they approve the issuance of the shares of PhotoMedex common stock pursuant to the merger agreement; |
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PhotoMedex's stockholders do not approve the issuance of the shares of PhotoMedex common stock pursuant to the merger agreement; |
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PhotoMedex materially breaches one or more of its representations or warranties or fails to perform in any material respect one or more of its covenants or other agreements contained in the merger agreement, and does not timely cure such breach or failure; or |
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ProCyte accepts a superior proposal from a third party. |
Termination Fees and Expenses (Pages I-86-87)
If PhotoMedex or ProCyte terminates the merger agreement, ProCyte, in specified circumstances, will be obligated to pay PhotoMedex a termination fee of $730,000 (which represents approximately 3% of the transaction value) or reimburse up to $500,000 of PhotoMedex's expenses incurred in connection with the merger.
If ProCyte terminates the merger agreement, PhotoMedex, in specified circumstances, will be obligated to reimburse up to $500,000 of ProCyte's expenses incurred in connection with the merger.
Opinion of ProCyte's Financial Advisor (Pages I-49-61)
In connection with the proposed merger, ProCyte's financial advisor, Wells Fargo Securities, LLC, or Wells Fargo, delivered an opinion, dated November 30, 2004, that, as of that date and based on the assumptions made, matters considered and the limitations on the review undertaken described in the written opinion, the exchange ratio of 0.6622 of a share of PhotoMedex common stock for each share of ProCyte common stock was fair, from a financial point of view, to the holders of ProCyte common stock other than PhotoMedex, Gold Acquisition Corp., any affiliates of PhotoMedex or Gold Acquisition Corp. or any ProCyte shareholders who properly exercise dissenters' rights. See Annex B for a copy of the full opinion. We encourage you to read this opinion and the section of this joint proxy statement/prospectus entitled "The Merger—Opinion of ProCyte's Financial Advisor" in their entirety for a description of the assumptions made, matters considered and limitations on the review undertaken. WELLS FARGO'S OPINION WAS DIRECTED TO PROCYTE'S BOARD OF DIRECTORS AND DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION AS TO HOW ANY SHAREHOLDER SHOULD VOTE OR ACT WITH RESPECT TO ANY MATTERS RELATING TO THE PROPOSED MERGER.
Opinion of PhotoMedex's Financial Advisor (Pages I-61-67)
In connection with the merger, the PhotoMedex board of directors received a written opinion of PhotoMedex's financial advisor, CIBC World Markets Corp., referred to in this joint proxy statement/prospectus as CIBC World Markets, as to the fairness, from a financial point of view, to PhotoMedex of the exchange ratio provided for in the merger. The full text of CIBC World Markets' written opinion, dated November 30, 2004, is attached to this joint proxy statement/prospectus as Annex C. We encourage you to read this opinion carefully in its entirety for a description of the assumptions made, procedures followed, matters
considered and limitations on the review undertaken. CIBC WORLD MARKETS' OPINION WAS PROVIDED TO THE PHOTOMEDEX BOARD OF DIRECTORS IN CONNECTION WITH ITS EVALUATION OF THE EXCHANGE RATIO AND RELATES ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, TO PHOTOMEDEX OF THE EXCHANGE RATIO. CIBC WORLD MARKETS' OPINION DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION AS TO HOW ANY STOCKHOLDER SHOULD VOTE OR ACT WITH RESPECT TO ANY MATTERS RELATING TO THE PROPOSED MERGER.
Interests of ProCyte Directors and Executive Officers in the Merger (Pages I-70-71)
ProCyte's directors and executive officers have interests in the merger that are different from, or are in addition to, those of other shareholders that may make them more likely to vote to approve the merger agreement. The ProCyte non-employee directors hold stock options that will become fully vested following consummation of the merger and will remain outstanding for an extended period following their termination of each such director's board service. In addition, several executive officers of ProCyte have agreements that entitle them to severance payments, the accelerated vesting of outstanding stock options and other benefits upon the officer's termination under certain circumstances following the completion of the merger. In addition, the merger agreement provides that:
| · |
PhotoMedex will maintain the existing rights to indemnification benefiting ProCyte's directors, officers and employees found in ProCyte's articles of incorporation or bylaws, applicable law or other sources for a period of six years after the merger. Tail coverage for ProCyte's directors' and officers' insurance policy will be obtained on terms and in amounts no less favorable than those of ProCyte's policies in effect on the date of the merger agreement, provided the total cost of the coverage will not exceed $275,000; and |
| · |
John F. Clifford, the President and Chief Executive Officer and a director of ProCyte, and Robin L. Carmichael, the Vice President of Marketing of ProCyte, will enter into employment agreements with |
| |
PhotoMedex in connection with closing of the merger. These agreements, the forms of which are attached to this joint proxy statement/prospectus as Annex G and Annex H, respectively, will include severance arrangements and stock option grants. |
The members of ProCyte's board of directors were aware of these interests, and considered them, among other things, when they approved the merger and adopted the merger agreement.
Risks of the Merger (Pages I-20-37)
In considering whether to approve the merger agreement and the transactions it contemplates, you should carefully consider the factors described in the section of this joint proxy statement/prospectus entitled "Risk Factors" beginning on page I-20. These risks should be considered along with any additional risk factors in documents delivered with or incorporated by reference in this joint proxy statement/prospectus.
Accounting Treatment (Pages I-69-70)
The merger will be accounted for as a purchase of ProCyte by PhotoMedex under generally accepted accounting principles. PhotoMedex will allocate the purchase price based on the fair value of ProCyte's acquired assets and assumed liabilities. PhotoMedex will consolidate the operating results of ProCyte with its own, beginning as of the date the parties complete the merger.
PhotoMedex Selected Historical Consolidated Financial Data
You should read the following selected historical consolidated financial data in conjunction with the consolidated financial statements of PhotoMedex, Inc. and subsidiaries included in the annual reports and other information that PhotoMedex has filed with the SEC and which are incorporated by reference in this joint proxy statement/prospectus. You should read the section of this joint proxy statement/prospectus entitled "Where You Can Find More Information," beginning on page V-2. The selected historical consolidated statement of operations data for the five-year period ended December 31, 2003 and the selected historical consolidated balance sheet data as of December 31, 1999, 2000, 2001, 2002 and 2003 have been derived from the consolidated financial statements of PhotoMedex. The consolidated
financial statements of PhotoMedex as of December 31, 2003 and 2002 and for each of the years in the three-year period ended December 31, 2003 are included in the Annual Report on Form 10-K of PhotoMedex for the year ended December 31, 2003 and are incorporated by reference in this joint proxy statement/prospectus. The selected historical consolidated statement of operations data for the years ended December 31, 2003 and 2002 and the selected historical consolidated balance sheet data as of December 31, 2003 and 2002 were audited by KPMG LLP, an independent registered public accounting firm. The selected historical consolidated statement of operations data for the year ended December 31, 2001 and the selected historical consolidated balance sheet data as of December 31, 2001 were audited by Arthur Andersen LLP, independent public accountants. The selected historical consolidated statement of operations data for the nine months ended September 30, 2004 and 2003 and the selected historical consolidated
balance sheet data as of September 30, 2004 and 2003 have been derived from the unaudited condensed consolidated financial statements of PhotoMedex. The unaudited condensed consolidated financial statements of PhotoMedex as of September 30, 2004 and for the nine months ended September 30, 2004 and 2003 are included in the Quarterly Report on Form 10-Q, as amended, of PhotoMedex for the quarterly period ended September 30, 2004 and are incorporated by reference in this joint proxy statement/prospectus. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, which PhotoMedex considers necessary for a fair presentation of the information set forth therein. Operating results for the nine months ended September 30, 2004 are not necessarily indicative of the results that may be expected for the entire year ended December 31,
2004.
You should read the section of this joint proxy statement/prospectus entitled "Experts" for additional information regarding Arthur Andersen LLP.
| |
|
(In thousands, except per share data) |
|
| |
|
Year ended December 31, |
|
Nine months ended September 30,
(unaudited) |
|
|
|
|
1999 |
|
2000 |
|
2001 |
|
2002 |
|
2003 |
|
2003 |
|
2004 |
|
|
STATEMENT OF OPERATIONS DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
99 |
|
$ |
969 |
|
$ |
4,730 |
|
$ |
3,274 |
|
$ |
14,319 |
|
$ |
10,615 |
|
$ |
12,803 |
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues |
|
|
4 |
|
|
543 |
|
|
4,952 |
|
|
4,425 |
|
|
10,488 |
|
|
7,564 |
|
|
7,627 |
|
|
Selling, general and administrative |
|
|
4,342 |
|
|
10,365 |
|
|
10,519 |
|
|
6,191 |
|
|
9,451 |
|
|
6,985 |
|
|
7,511 |
|
|
Research and development |
|
|
2,061 |
|
|
3,015 |
|
|
3,329 |
|
|
1,757 |
|
|
1,776 |
|
|
1,295 |
|
|
1,325 |
|
|
Depreciation and amortization |
|
|
1,017 |
|
|
721 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
Asset impairment charge |
|
|
- |
|
|
- |
|
|
1,958 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
Loss from continuing operations before interest and other income, net and income taxes |
|
|
(7,325 |
) |
|
(13,675 |
) |
|
(16,028 |
) |
|
(9,099 |
) |
|
(7,397 |
) |
|
(5,229 |
) |
|
(3,660 |
) |
|
Interest income |
|
|
- |
|
|
580 |
|
|
238 |
|
|
42 |
|
|
50 |
|
|
50 |
|
|
33 |
|
|
Interest expense |
|
|
(1,849 |
) |
|
(13 |
) |
|
(25 |
) |
|
(16 |
) |
|
(96 |
) |
|
(94 |
) |
|
(99 |
) |
|
Other income (expense), net |
|
|
111 |
|
|
362 |
|
|
77 |
|
|
1 |
|
|
- |
|
|
- |
|
|
- |
|
|
Loss from continuing operations before income taxes |
|
|
(9,063 |
) |
|
(12,746 |
) |
|
(15,738 |
) |
|
(9,072 |
) |
|
(7,443 |
) |
|
(5,273 |
) |
|
(3,726 |
) |
|
Income taxes |
|
|
5 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
Loss from continuing operations |
|
|
(9,068 |
) |
|
(12,746 |
) |
|
(15,738 |
) |
|
(9,072 |
) |
|
(7,443 |
) |
|
(5,273 |
) |
|
(3,726 |
) |
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations(including loss on disposal of $277 realized in 2001) |
|
|
(852 |
) |
|
(646 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
Net loss |
|
|
($9,920 |
) |
|
($13,392 |
) |
|
($15,738 |
) |
|
($9,072 |
) |
|
($7,443 |
) |
|
($5,273 |
) |
|
($3,726 |
) |
|
Basic and diluted net loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
($0.81 |
) |
|
($0.81 |
) |
|
($0.80 |
) |
|
($0.34 |
) |
|
($0.21 |
) |
|
($0.15 |
) |
|
($0.10 |
) |
|
Discontinued operations |
|
|
(0.08 |
) |
|
(0.04 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
Basic and diluted net loss per share |
|
|
($0.89 |
) |
|
($0.85 |
) |
|
($0.80 |
) |
|
($0.34 |
) |
|
($0.21 |
) |
|
($0.15 |
) |
|
($0.10 |
) |
|
Shares used in computing basic and diluted net loss per share (1) |
|
|
11,208 |
|
|
15,755 |
|
|
19,771 |
|
|
26,566 |
|
|
35,134 |
|
|
34,258 |
|
|
38,429 |
|
|
BALANCE SHEET DATA (AT PERIOD END): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and short-term investments |
|
$ |
4,536 |
|
$ |
9,561 |
|
$ |
4,067 |
|
$ |
4,008 |
|
$ |
6,633 |
|
$ |
6,633 |
|
$ |
5,212 |
|
|
Working capital |
|
|
1,529 |
|
|
9,273 |
|
|
5,546 |
|
|
6,578 |
|
|
8,678 |
|
|
8,656 |
|
|
8,022 |
|
|
Total assets |
|
|
9,706 |
|
|
19,871 |
|
|
15,585 |
|
|
21,513 |
|
|
22,753 |
|
|
22,753 |
|
|
23,413 |
|
|
Long-term debt (net of current portion) . |
|
|
44 |
|
|
20 |
|
|
_ |
|
|
900 |
|
|
480 |
|
|
406 |
|
|
1,436 |
|
|
Stockholders' equity |
|
$ |
5,274 |
|
$ |
17,768 |
|
$ |
12,710 |
|
$ |
13,309 |
|
$ |
15,978 |
|
$ |
15,978 |
|
$ |
15,803 |
|
___________
| (1) |
Common stock equivalents and convertible issues are antidilutive and, therefore, are not included in the weighted shares outstanding during the years in which PhotoMedex incurred net losses. |
ProCyte Selected Historical Consolidated Financial Data
The following selected historical financial data for each of the five years in the period ended December 31, 2003, have been derived from ProCyte's audited consolidated financial statements. The financial data as of September 30, 2004, and September 30, 2003, and for each of the nine-month periods then ended, have been derived from ProCyte's unaudited condensed consolidated financial statements that include, in management's opinion, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the results of operations and financial position of ProCyte for the periods and dates presented. We are providing the following ProCyte selected historical consolidated financial information to aid you in your analysis of the financial aspects of the merger. The following information is only
a summary and should be read together with ProCyte's audited and unaudited consolidated financial statements, the related notes and the discussion contained in ProCyte's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and Quarterly Report on Form 10-Q for the period ended September 30, 2004, both of which have been delivered to you along with this joint proxy statement/prospectus, and with the "Management's Discussion and Analysis of Financial Condition and Results of Operations of ProCyte" contained in or incorporated in these reports and other information that ProCyte has furnished with this joint proxy statement/prospectus or filed with the SEC. See "Where You Can Find More Information," beginning on page V-2.
|
|
(In thousands, except per share data) |
|
| |
|
Year ended December 31, |
|
Nine months ended September 30,
(unaudited) |
|
|
|
|
1999 |
|
2000 |
|
2001 |
|
2002 |
|
2003 |
|
2003 |
|
2004 |
|
|
STATEMENT OF OPERATIONS DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
4,695 |
|
$ |
6,615 |
|
$ |
9,712 |
|
$ |
12,737 |
|
$ |
11,538 |
|
$ |
8,701 |
|
$ |
10,140 |
|
|
Gross profit |
|
|
3,319 |
|
|
5,116 |
|
|
6,128 |
|
|
8,031 |
|
|
8,337 |
|
|
6,224 |
|
|
7,366 |
|
|
Percentage of sales |
|
|
70.7 |
% |
|
77.3 |
% |
|
63.1 |
% |
|
63.1 |
% |
|
72.2 |
% |
|
71.5 |
% |
|
72.6 |
% |
|
Selling, general and administrative expenses |
|
$ |
5,239 |
|
$ |
6,206 |
|
$ |
6,249 |
|
$ |
6,435 |
|
$ |
7,444 |
|
$ |
5,862 |
|
$ |
6,653 |
|
|
Product development expenses |
|
|
1,744 |
|
|
1,275 |
|
|
745 |
|
|
126 |
|
|
191 |
|
|
106 |
|
|
99 |
|
|
Non-recurring charges (income) (1) |
|
|
1,900 |
|
|
- |
|
|
194 |
|
|
- |
|
|
637 |
|
|
- |
|
|
319 |
|
|
Operating income (loss) |
|
|
(5,564 |
) |
|
(2,365 |
) |
|
(1,060 |
) |
|
1,470 |
|
|
65 |
|
|
256 |
|
|
295 |
|
|
Net income (loss) (2)
|
|
|
(5,315 |
) |
|
(2,143 |
) |
|
(907 |
) |
|
1,669 |
|
|
7,341 |
|
|
397 |
|
|
222 |
|
|
Basic earnings (loss) per share |
|
|
(0.35 |
) |
|
(0.14 |
) |
|
(0.06 |
) |
|
0.11 |
|
|
0.47 |
|
|
0.03 |
|
|
0.01 |
|
|
Diluted earnings (loss) per share |
|
|
(0.35 |
) |
|
(0.14 |
) |
|
(0.06 |
) |
|
0.10 |
|
|
0.46 |
|
|
0.02 |
|
|
0.01 |
|
|
Shares used in calculation of basic earnings (loss) per share |
|
|
14,999 |
|
|
15,481 |
|
|
15,610 |
|
|
15,710 |
|
|
15,767 |
|
|
15,761 |
|
|
15,799 |
|
|
Shares used in calculation of diluted earnings (loss) per
share |
|
|
14,999 |
|
|
15,481 |
|
|
15,610 |
|
|
16,179 |
|
|
15,997 |
|
|
15,973 |
|
|
16,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET DATA (AT PERIOD END): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and short-term investments |
|
$ |
3,883 |
|
$ |
2,773 |
|
$ |
3,003 |
|
$ |
4,556 |
|
$ |
3,796 |
|
$ |
4,556 |
|
$ |
5,321 |
|
|
Current assets |
|
|
5,454 |
|
|
6,451 |
|
|
6,506 |
|
|
7,931 |
|
|
8,363 |
|
|
8,479 |
|
|
10,724 |
|
|
Total assets |
|
|
13,447 |
|
|
12,185 |
|
|
12,811 |
|
|
14,089 |
|
|
20,003 |
|
|
14,365 |
|
|
20,972 |
|
|
Current liabilities |
|
|
416 |
|
|
1,179 |
|
|
1,147 |
|
|
963 |
|
|
692 |
|
|
991 |
|
|
1,416 |
|
|
Long-term liabilities |
|
|
142 |
|
|
145 |
|
|
1,596 |
|
|
1,308 |
|
|
93 |
|
|
1,109 |
|
|
75 |
< |