8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 11, 2017

PhotoMedex, Inc.

(Exact Name of Registrant Specified in Charter)

Nevada	0-11635	59-2058100
(State or Other	(Commission File	(I.R.S. Employer
Jurisdiction of	Number)	Identification No.)
Incorporation)

2300 Computer Drive, Building G, Willow Grove, PA	19090
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: 215-619-3600

100 Lakeside Drive, Suite 100, Horsham, PA 19044

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging Growth Company [ x ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

[   ]

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Amendment to Contribution Agreement

On October 11, 2017, PhotoMedex, Inc. (NASDAQCM and TASE “PHMD”, hereinafter referred to as the “Company”) and its subsidiary FC Global Realty Operating Partnership, LLC entered into an Amendment No. 2 (the “Amendment”) to the Interest Contribution Agreement (the “Contribution Agreement”) dated March 31, 2017, with First Capital Real Estate Operating Partnership, L.P. and First Capital Real Estate Trust Incorporated, a copy of which is attached to this Current Report as Exhibit 10.1.

Pursuant to the Contribution Agreement, the parties had agreed that all outstanding compensation liabilities owed by the Company to Dolev Rafaeli, the Company’s former Chief Executive Officer; Dennis M. McGrath, the Company’s former President and Chief Financial Officer; and Yoav Ben-Dror, the former director of the Company’s foreign subsidiaries, would be converted into secured convertible promissory notes (the “Payout Notes”), the form of which was agreed to at the time of signing of the Contribution Agreement and was attached as an exhibit thereto. In connection with the Payout Notes, the parties also agreed to a form of security agreement (the “Security Agreement”), which was also attached as an exhibit to the Contribution Agreement. Pursuant to the Contribution Agreement, the Payout Notes were to be issued, and the Security Agreement to be signed, upon approval by the Company’s stockholders of, among other things, the issuance of the Payout Notes. That approval was obtained at the Company’s reconvened Annual Meeting of Stockholders on October 12, 2017, as further described below.

Prior to issuance of the Payout Notes, Messrs. Rafaeli, McGrath and Ben-Dror requested certain changes to the forms of Payout Note and Security Agreement, including the removal of certain subordination provisions and the addition of a provision regarding acceleration of payment, which required the parties to enter into the Amendment. The form of the Payout Note attached as Exhibit H to the Contribution Agreement and the form of the Security Agreement attached as Exhibit I to the Contribution Agreement were amended by the Amendment and were replaced in their entirety as exhibits to the Contribution Agreement.

The foregoing summary of the terms and conditions of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment filed as an exhibit to this report.

Issuance of Payout Notes

On October 12, 2017, the Company issued the Payout Notes to Dolev Rafaeli, Dennis M. McGrath and Yoav Ben-Dror in the principal amounts of $3,133,934, $977,666 and $1,515,000, respectively. The Payout Notes are due on October 12, 2018 and carry a ten percent (10%) interest rate, payable monthly in arrears commencing on December 1, 2017 (each such payment, a “Monthly Interest Payment” and each date of such payment, an “Interest Payment Date”).

The Payout Notes may not be prepaid by the Company without the written consent of the holder. Notwithstanding the foregoing, if the Company sells any of its securities, whether equity, equity-linked or debt securities (a “Capital Raising Transaction”), prior to the maturity date, then forty percent (40%) of the funds raised in such Capital Raising Transaction shall be used to pay down the Payout Notes on a pro rata basis based upon the relative principal amounts; provided, however, that if the investors in such Capital Raising Transaction stipulate that the proceeds cannot be used to pay down indebtedness, then none of the proceeds of such Capital Raising Transaction shall be used to pay down the Payout Notes on an accelerated basis; provided further, however, that a committee consisting of board members Michael R. Stewart and Dennis M. McGrath unanimously consent to the use of proceeds from such Capital Raising Transaction.

The principal will convert to shares of the Company’s common stock at maturity at the lower of (i) $2.5183 or (ii) the volume-weighted average price (“VWAP”) with respect to on-exchange transactions in the Company’s common stock executed on the Nasdaq Stock Market (or such other market as the Company’s stock may then trade on) during the thirty (30) trading days prior to the maturity date, as reported by Bloomberg L.P.; provided, however, that the value of the Company’s common stock shall in no event be less than $1.75 per share. In addition, each holder of a Payout Note may elect to have a Monthly Interest Payment paid in shares of common stock, at the VWAP with respect to on-exchange transactions in the Company’s common stock executed on the Nasdaq Stock Market (or such other market as the Company’s stock may then trade on) during the thirty (30) trading days ending five (5) trading days prior to the applicable Interest Payment Date, as reported by Bloomberg L.P.

The holders of the Payout Notes have demand registration rights which require the filing of a re-sale registration statement on appropriate form that registers for re-sale the shares of common stock underlying the Payout Notes within thirty (30) days of issuance with best efforts to cause the same to become effective within one-hundred twenty (120) days of issuance.

The Payout Notes contain standard events of default, including: (i) if the Company shall default in the payment of the principal amount or any interest as and when the same shall become due and payable; or (ii) if the Company shall violate or breach to a material extent any of the representations, warranties and covenants contained in the Payout Notes or the Security Agreement and such violation or breach shall continue for thirty (30) days after written notice of such breach shall been received by the Company from the holder; or (iii) in the event of any voluntary or involuntary bankruptcy, liquidation or winding up of the Company, as more particularly described in the Payout Notes.

The foregoing summary of the terms and conditions of the Payout Notes does not purport to be complete and is qualified in its entirety by reference to the full text of those documents filed as exhibits to this report.

Security Agreement

On October 12, 2017, the Company entered into the Security Agreement with Dolev Rafaeli, Dennis M. McGrath and Yoav Ben-Dror to secure the prompt payment of the principal and all accrued interest due under the Payout Notes. Pursuant to the Security Agreement, the Company granted a security interest in all of the properties, assets and personal property of the Company, whether now owned or hereafter acquired, to Messrs. Rafaeli, McGrath and Ben-Dror, which shall terminate following payment in full of the Payout Notes.

The foregoing summary of the terms and conditions of the Security Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Security Amendment filed as an exhibit to this report.

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION OF AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT

The information set forth under Item 1.01 regarding the issuance of the Payout Notes is incorporated by reference into this Item 2.03.

ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES

The information set forth under Item 1.01 regarding the issuance of the Payout Notes is incorporated by reference into this Item 3.02. The issuance of these securities is being made in reliance upon an exemption from registration provided under Section 4(a)(2) of the Securities Act of 1933, as amended.

ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

On October 11, 2017, the Company entered into an amended and restated employment agreement (the “Restated Employment Agreement,”) with Suneet Singal, its Chief Executive Officer, to reflect his base salary, as previously approved by the Board of Directors and reported by the Company on a Form 8-K filed on August 3, 2017, and set forth the accrual of his salary.

Under the Restated Employment Agreement, Mr. Singal shall be entitled to a base salary of $250,000 per annum (the “Base Salary”), payable in accordance with the Company’s normal payroll practices, provided however, that the Base Salary will accrue, and not be paid, until (i) the 20% Unsecured Convertible Promissory Note issued by First Capital Real Estate Operating Partnership, L.P. to the Company on July 25, 2017 has been repaid in full and (ii) Mr. Singal begins working for the Company on a full time basis. Increases in the Base Salary will be determined from time to time in the sole discretion of the Board. Mr. Singal will also be entitled to a bonus subject to achieving certain milestones to be set by the Company’s compensation committee within thirty (30) days after the committee receives a business plan for the Company from Mr. Singal and Mr. Stephen Johnson, the Company’s Chief Financial Officer. In addition, Mr. Singal will be entitled to receive equity compensation in an amount and with a vesting schedule to be determined by the Company’s compensation committee within thirty (30) days after receipt of the business plan.

Mr. Singal and his family will be eligible to participate in the Company’s healthcare, welfare benefit, life insurance, fringe benefit and any qualified or non-qualified retirement plans in effect at the Company (collectively, the “Employee Benefits”) on the same basis as those benefits are made available to the other senior executives of the Company. If the Company does provide a health insurance plan for which Mr. Singal is eligible, he will be reimbursed by the Company for the cost of the health insurance paid by him for himself and his family. If the Company does not provide a health insurance plan for which he is eligible, Mr. Singal will be reimbursed by the Company for the cost of health insurance paid by him for himself and his family, grossed-up to cover any taxes Mr. Singal would be required to pay for that reimbursement. Additionally, Mr. Singal will receive such perquisites as are or have previously been made available to other senior executives of the Company, as well as four (4) weeks paid vacation per year, and will be paid annually in cash for vacation days not taken by him so long as no more than four (4) weeks of vacation are accrued each year for purposes of cash payments.

The Restated Employment Agreement is for a term of three years, commencing on May 17, 2017, and will be renewed automatically for additional one year periods unless terminated by either the Company or Mr. Singal ninety (90) days prior to the expiration of the then applicable term.

Mr. Singal’s employment may be terminated by the Company for Cause, as defined in the Restated Employment Agreement. His employment will terminate automatically upon his resignation (other than for Good Reason (as defined in the Restated Employment Agreement) or due to his death or disability). If Mr. Singal’s employment is terminated by the Company for Cause, or if he resigns other than for Good Reason, he is entitled to receive (a) any earned but unpaid Base Salary and/or accrued but unused vacation days, all vested equity, and any earned but unpaid bonus awards through the date of termination, (b) reimbursement for any unreimbursed business expenses incurred by him in accordance with the Company’s policy prior to the date of termination, and (c) such Employee Benefits, if any, to which he may be entitled upon termination of employment under the terms of the plan documents and applicable law (including under the applicable provisions of Consolidated Omnibus Budget Reconciliation Act of 1985, as amended).

If Mr. Singal’s employment is terminated by the Company other than for Cause or if it terminates automatically and immediately upon his resignation for Good Reason, then Mr. Singal will receive (a) any earned but unpaid Base Salary and/or accrued but unused vacation, all vested equity, and any earned but unpaid bonus awards through the date of termination, plus an additional twelve (12) months of compensation, together in a lump sum payment; (b) acceleration of any then-unvested stock options, restricted stock grants or other equity awards; (c) payment or reimbursement, as applicable, of the full health insurance costs for Mr. Singal and his family under a Company-provided group health plan or otherwise for twenty-four (24) months, in compliance with the provisions regarding deferred compensation under Section 409A of the Internal Revenue Code of 1986, as amended, if applicable; (d) if any bonus or other form of additional compensation was paid to any other executive(s) of the Company for the fiscal year during which Mr. Singal’s employment ceased, a cash amount equal to the largest bonus or other form of additional compensation payment made by the Company to any other executive of the Company during that fiscal year; (e) reimbursement for any accrued but unused vacation days and/or unreimbursed business expenses incurred by Mr. Singal in accordance with the Company’s policy prior to the date of termination; and (f) other Employee Benefits, if any, as to which he may be entitled upon termination of employment.

Moreover, If Mr. Singal resigns for Good Reason due to a Change of Control (as defined in the Restated Employment Agreement), then he will be entitled to payment of an additional eighteen (18) months of compensation, not twelve (12) months as provided in the previous paragraph, along with payment of the other amounts and benefits as provided in that paragraph.

Finally, Mr. Singal’s employment terminates upon his death and may be terminated by the Company in the event of his disability. In such instances, Mr. Singal will receive the same payments and other items as he would be entitled to receive if his employment was terminated for other than Cause, or if he resigned for Good Reason, except that he (in case of disability) or his estate (in the event of death) will have the right to exercise any unexercised and vested options for a period of 90 days, and, in addition, to receive payment for accrued but unpaid vacation time, if any.

ITEM 5.07 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On October 12, 2017, the Company reconvened its Annual Meeting of Stockholders, which had been adjourned on September 14, 2017. At that meeting, six proposals were put to the stockholders, all of which were then approved by the stockholders. The results of the voting were as follows:

1. To approve an amendment and restatement of the Amended and Restated Articles of Incorporation of the Company to, among other things, change the name of the Company to “FC Global Realty Incorporated,” increase the number of authorized shares of common stock, $.01 par value per share, of the Company from fifty million (50,000,00) shares to five hundred million (500,000,000) shares, and increase the number of authorized shares of preferred stock, $.01 par value per share, of the Company from five million (5,000,000) shares to fifty million (50,000,000) shares.

FOR	AGAINST	ABSTAINED
2,974,546	70,734	27,175

2. To approve the issuance of securities of the Company pursuant to that certain Interest Contribution Agreement, dated March 31, 2017, by and among First Capital Real Estate Operating Partnership, L.P., a Delaware limited partnership (the “Contributor”), First Capital Real Estate Trust Incorporated, a Maryland corporation (the “Contributor Parent”), FC Global Realty Operating Partnership, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (the “Acquiror”), and the Company (the “Contribution Agreement”), under which the Contributor has agreed to contribute certain real estate assets to the Acquiror, and in exchange, the Company has agreed to issue to the Contributor or its designees shares of the Company’s common stock and Series A Convertible Preferred Stock and, if certain additional real estate assets are contributed to the Acquiror, a warrant for the purchase of shares of common stock (the “Contribution Transaction”). Also under the Contribution Agreement, all outstanding compensation liabilities owed by the Company to Dr. Dolev Rafaeli, Dennis M. McGrath and Yoav Ben-Dror will be converted into secured convertible promissory notes. The Company’s common stock is listed on the NASDAQ Capital Market and, as a result, the Company is subject to NASDAQ’s Listing Rules. The potential consummation of the Contribution Transaction implicates certain of NASDAQ’s Listing Rules requiring prior stockholder approval in order to maintain the Company’s listing on the NASDAQ Capital Market, including (i) NASDAQ Listing Rule 5635(a), which requires stockholder approval prior to the issuance of securities in connection with the acquisition of the stock or assets of another company if the common stock has or will have upon issuance voting power equal to or in excess of 20% of the voting power outstanding before the issuance of stock or securities convertible into or exercisable for common stock, or if the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities, and (ii) NASDAQ Listing Rule 5635(b), which requires stockholder approval when any issuance or potential issuance will result in a “change of control” of the issuer. In order to comply with these NASDAQ Listing Rules, the Company would need to obtain the approval of its stockholders prior to the issuance of all securities as contemplated by the Contribution Transaction, including the secured convertible promissory notes. Accordingly, prior to stockholder approval at the annual meeting, the Contributor has received a number of shares of common stock equal to up to 19.9% of the issued and outstanding common stock of the Company immediately prior to the initial closing of the Contribution Transaction and the balance of the shares shall be paid in the Company’s Series A Convertible Preferred Stock. At the annual meeting, stockholders will be asked to approve the issuance of shares of common stock upon conversion of the Series A Convertible Preferred Stock, the issuance of the warrant, the issuance of shares of common stock upon exercise of the warrant, the issuance of the secured convertible promissory notes, and the issuance of shares of common stock upon conversion of the secured convertible promissory notes, all as more particularly described in the accompanying proxy statement.

FOR	AGAINST	ABSTAINED
2,097,868	66,251	29,102

3. To approve a reverse stock split of the shares of the Company’s common stock at an exchange ratio of not less than 1-for-2 and not more than 1-for-7 and to authorize the Company’s Board of Directors, in its discretion, to implement such reverse stock split at an exchange ratio within this range and to do so at any time prior to the Company’s 2018 annual meeting of stockholders by filing an amendment to the Company’s Amended and Restated Articles of Incorporation.

FOR	AGAINST	ABSTAINED
3,721,759	237,394	36,864

4. To elect seven (7) director nominees to the Company’s Board of Directors to serve until the next annual meeting of the Company’s stockholders or until their successors are elected and qualify, subject to their prior death, resignation or removal.

Candidate	Votes For	Votes Withheld
Dr. Robert
Froehlich	3,024,101	48,354
Richard Leider	3,018,206	54,249
Darryl Menthe	3,012,033	60,422
Dennis M.
McGrath	3,016,406	56,049
Dolev Rafaeli	3,010,232	62,323
Suneet Singal	3,021,408	51,047
Michael R. Stewart	3,017,659	54,798

5. To ratify the appointment of Fahn Kanne & Co. Grant Thornton Israel to serve as the Company’s independent registered public accounting firm for the year ending December 31, 2017.

FOR	AGAINST	ABSTAINED
3,888,520	69,435	38,062

6. To approve the adjournment of the annual meeting for any purpose, including to solicit additional proxies if there are insufficient votes at the time of the annual meeting to approve the proposals described above.

FOR	AGAINST	ABSTAINED
3,859,894	96,058	40,065

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

The following exhibits are filed herewith:

Exhibit No.	Description of Exhibit
10.1	Interest Contribution Agreement, dated March 31, 2017, by and among First Capital Real Estate Operating Partnership, L.P., First Capital Real Estate Trust Incorporated, FC Global Realty Operating Partnership, LLC and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 3, 2017)
10.2	Amendment No. 1 to Interest Contribution Agreement, dated August 3, 2017, among First Capital Real Estate Operating Partnership, L.P., First Capital Real Estate Trust Incorporated, FC Global Realty Operating Partnership, LLC and the Company (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 3, 2017)
10.3	Amendment No. 2 to Interest Contribution Agreement, dated October 11, 2017, among First Capital Real Estate Operating Partnership, L.P., First Capital Real Estate Trust Incorporated, FC Global Realty Operating Partnership, LLC and the Company
10.4	Secured Convertible Payout Note Due October 12, 2018 issued by the Company to Dolev Rafaeli on October 12, 2017
10.5	Secured Convertible Payout Note Due October 12, 2018 issued by the Company to Dennis M. McGrath on October 12, 2017
10.6	Secured Convertible Payout Note Due October 12, 2018 issued by the Company to Yoav Ben-Dror on October 12, 2017
10.7	Security Agreement, dated October 12, 2017, by and between the Company and Dolev Rafaeli, Dennis M. McGrath and Yoav Ben-Dror
10.8	Amended and restated Employment Agreement, dated October 11, 2017, by and between the Company and Suneet Singal

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this current report to be signed on its behalf by the undersigned hereunto duly authorized.

	PHOTOMEDEX, INC.
Date: October 18, 2017	By:	/s/ Suneet Singal
		Suneet Singal
		Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
10.1	Interest Contribution Agreement, dated March 31, 2017, by and among First Capital Real Estate Operating Partnership, L.P., First Capital Real Estate Trust Incorporated, FC Global Realty Operating Partnership, LLC and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 3, 2017)
10.2	Amendment No. 1 to Interest Contribution Agreement, dated August 3, 2017, among First Capital Real Estate Operating Partnership, L.P., First Capital Real Estate Trust Incorporated, FC Global Realty Operating Partnership, LLC and the Company (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 3, 2017)
10.3	Amendment No. 2 to Interest Contribution Agreement, dated October 11, 2017, among First Capital Real Estate Operating Partnership, L.P., First Capital Real Estate Trust Incorporated, FC Global Realty Operating Partnership, LLC and the Company
10.4	Secured Convertible Payout Note Due October 12, 2018 issued by the Company to Dolev Rafaeli on October 12, 2017
10.5	Secured Convertible Payout Note Due October 12, 2018 issued by the Company to Dennis M. McGrath on October 12, 2017
10.6	Secured Convertible Payout Note Due October 12, 2018 issued by the Company to Yoav Ben-Dror on October 12, 2017
10.7	Security Agreement, dated October 12, 2017, by and between the Company and Dolev Rafaeli, Dennis M. McGrath and Yoav Ben-Dror
10.8	Amended and restated Employment Agreement, dated October 11, 2017, by and between the Company and Suneet Singal

EX-10.3

Exhibit 10.3

PHOTOMEDEX, INC.
2300 Computer Drive, Building G
Willow Grove, Pennsylvania 19090

October 11, 2017

Mr. Suneet Singal

Authorized Representative

First Capital Real Estate Operating Partnership, L.P.

First Capital Real Estate Trust Incorporated

60 Broad Street, 34^th Floor

New York, NY 10004

Re: Amendment No. 2 to Interest Contribution Agreement Dear

Dear Suneet,

We refer to that certain Interest Contribution Agreement, dated March 31, 2017, among First Capital Real Estate Operating Partnership, L.P., First Capital Real Estate Trust Incorporated, FC Global Realty Operating Partnership, LLC and PhotoMedex, Inc., as amended by Amendment No. 1 dated August 3, 2017 (collectively, the “Contribution Agreement”). Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Contribution Agreement.

As you know, in connection with the Contribution Agreement, the parties agreed to a form of Payout Note attached as Exhibit H to the Contribution Agreement and a form of Payout Notes Security Agreement attached as Exhibit I to the Contribution Agreement. The Executives have since requested certain changes to the forms of Payout Note and Payout Notes Security Agreement, including the removal of certain subordination provisions and the addition of a provision regarding acceleration of payment. The parties have agreed to make these changes and amend the Contribution Agreement as follows:

1. The form of Payout Note attached as Exhibit H to the Contribution Agreement is hereby amended in its entirety and replaced with the form of Payout Note attached as Exhibit H hereto.

2. The form of Payout Notes Security Agreement attached as Exhibit I to the Contribution Agreement is hereby amended in its entirety and replaced with the form of Payout Notes Security Agreement attached as Exhibit I hereto.

Except as aforesaid, the Contribution Agreement remains unmodified and in full force and effect.

Very truly yours,
Photomedex, Inc.		Fc Global Realty Operating Partnership, LLC
By:	/s/ Stephen Johnson	By:	/s/ Stephen Jhonson
Stephen Johnson, CFO		Stephen Johnson, CFO
ACCEPTED AND AGREED TO:
First Capital Real Estate Operating Partnership, L.P.		First Capital Real Estate Trust Incorporated
By:	/s/ Suneet Signal	By:	/s/ Suneet Signal
Suneet Singal, CEO		Suneet Singal, CEO

Exhibit H

Form of Payout Notes

NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR STATE LAW OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

$[                 ].00 [                 ], 201_

PHOTOMEDEX, INC.

SECURED CONVERTIBLE PAYOUT NOTE DUE [                   ], 201_

FOR VALUE RECEIVED, PhotoMedex, Inc., a Nevada corporation (the “Company”), hereby promises to pay to the order of [                 ] (the “Holder”), the principal amount of [                 ] ($[ ]) (the “Principal Amount”), together with interest as hereinafter provided, on [                 ], 201_¹ (the “Maturity Date”).

This Secured Convertible Payout Note (this “Note”) is being issued in connection with the closing of the transactions contemplated by that certain Interest Contribution Agreement, dated March 31, 2017 (the “Contribution Agreement”), by and among First Capital Real Estate Operating Partnership, L.P., a Delaware limited partnership, First Capital Real Estate Trust Incorporated, a Maryland corporation, FC Global Realty Operating Partnership, LLC, a Delaware limited liability company, and the Company. All capitalized terms used but not otherwise defined in this Note shall have the same meanings ascribed to them in the Contribution Agreement.

By his receipt hereof, the Holder acknowledges and agrees that: (i) the Principal Amount represents, as of the date hereof, the full and complete amount of all compensation liabilities owed by the Company and its Subsidiaries and affiliates to the Holder (“Compensation Liabilities”); (ii) all such Compensation Liabilities are being memorialized in this Note and no other oral or written agreement, document or instrument; and (iii) upon payment in full of all obligations hereunder, the Company shall have repaid all Compensation Liabilities to the Holder.

Any payments on account of the Note shall be applied first to interest and then to principal.

Interest on the outstanding Principal Amount shall be paid in: (i) cash or (ii) at the election of the Holder, in restricted shares of the Company’s common stock, par value $.01 per share (“Common Stock”) as provided in Article 1(a). Interest shall be paid at the rate of ten percent (10%) per annum and shall be payable monthly in arrears commencing on [  ], 2017 (each such payment, a “Monthly Interest Payment” and each date of such payment, an “Interest Payment Date”). Interest shall be computed on the basis of a 360-day year, and any partial periods (other than monthly) shall be computed using the number of days actually elapsed.

The Principal Amount shall be mandatorily convertible into shares of Common Stock as provided in Article 1(b).

The Company’s obligations under this Note are subject to a security interest in all of the Company’s assets, which security interest shall be memorialized in a Security Agreement entered into between the Holder and the Company as of the date hereof (the “Security Agreement”).

¹ One year anniversary of Approval Date.

Article 1.
CONVERSION

(a)            Interest. Should the Holder elect to have a Monthly Interest Payment paid in shares of Common Stock (such shares, the “Interest Shares”), the Holder shall make such election by written notice delivered to the Company not less than three (3) NASDAQ Trading Days prior to the applicable Interest Payment Date. The number of Interest Shares to be issued to the Holder shall be determined by dividing: (i) the applicable interest payment owed by (ii) the VWAP with respect to on-exchange transactions in Common Stock executed on the NASDAQ during the thirty (30) NASDAQ Trading Days ending five (5) NASDAQ trading days prior to the applicable Interest Payment Date as reported by Bloomberg L.P. Any Interest Shares shall be delivered to the Holder with five (5) Business Days of the applicable Interest Payment Date.

(b)           Principal. The Principal Amount shall be mandatorily convertible on the Maturity Date into restricted shares of Common Stock (such shares, the “Principal Shares”) which shall be delivered within three (3) Business Days of the Maturity Date. The Number of Principal Shares to be issued to the Holder shall be determined by dividing: (i) the Principal Amount by (ii) a price (the “Note Conversion Price”) equal to the lower of (A) the Per Share Value or (B) the VWAP with respect to on-exchange transactions in Common Stock executed on the NASDAQ during the thirty (30) NASDAQ Trading Days prior to the Maturity Date as reported by Bloomberg L.P; provided, however, that the Note Conversion Price shall (except as adjusted pursuant to Article 1(f)) in no event be less than $1.75 per share (the “Floor Price”). In the event that the Note Conversion Price on the Maturity Date is lower than the Floor Price, then the Company may, in its discretion undertaken by a vote of a majority of the disinterested members of the Company’s board of directors, elect to either: (i) pay the Principal Amount in cash to the Holder or (ii) extend the Maturity Date for a period of sixty (60) days, at the conclusion of which the foregoing mechanism for determining the Note Conversion Price and repayment of the Principal Amount shall be determined with finality; provided, however, that at the conclusion of such sixty (60) day period, no Floor Price shall apply in the determining the Note Conversion Price and the Principal Shares shall be issued within three (3) Business Days of the extended Maturity Date.

(c)           Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than such number of shares of the Common Stock as shall be issuable upon the conversion of this Note. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid, non-assessable.

(d)           Fractional Shares. Upon a conversion hereunder, the Company shall not be required to issue stock certificates representing fractions of shares of the Common Stock. All fractional shares shall be rounded up to the nearest whole number of shares.

(e)           Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder, and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance of such shares upon transfer shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

2

(f)           Adjustments for Stock Dividends, Splits and Other Capital Transactions. If the Company, at any time from and after the date of this Note and as long as this Note is outstanding: (i) shall pay a stock dividend, effect a stock split or otherwise make a distribution or distributions on shares of its Common Stock payable in shares of any class of capital stock, (ii) subdivide outstanding shares of Common Stock into a larger number of shares, (iii) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Note Conversion Price shall be computed on the applicable measuring date to reflect such occurrences. Any adjustment made pursuant to this Article 1(f) shall become effective on the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(g)          Subsequent Rights Offerings. In addition to any adjustments pursuant to Article 1(f) above, if at any time the Company grants, issues or sells any Common Stock Equivalents (as defined below) or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder of will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

(h)           Pro Rata Distributions. During such time as this Note is outstanding, if the Company declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete Conversion of this Note immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.

3

(i)           Fundamental Transaction. If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other person or other persons making or party to, or associated or affiliated with the other persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Principal Share or Interest Share, as the case may be, that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction. For purposes of any such conversion, the determination of the Note Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Note Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new Note with the same terms and conditions as this Note that is otherwise consistent with the foregoing provisions and evidencing the Holders’ right to convert this Note into Alternate Consideration. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of Company under this Note and the other Transaction Documents in accordance with the provisions of this Article 1(i) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

(j)          Calculations. All calculations under this Article 1 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Article 1, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.

(k)          Notice to the Holders.

(i)           Adjustment to Note Conversion Price. Whenever the Note Conversion Price is adjusted pursuant to any provision of this Article 1, the Company shall promptly deliver to Holder a notice setting forth the Note Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

4

(ii)          Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to Holder at its last address as it shall appear upon the stock books of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert the Principal Amount and accrued, but unpaid interest thereon (or any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Article 2.
EVENTS OF DEFAULT

(a)         Events of Default Defined. The entire unpaid Principal Amount of this Note, together with interest thereon shall, on written notice to the Company given by the Holder of this Note, forthwith become and be due and payable without presentment, demand, protest or any other action nor obligation of the Holder of any kind, all of which are hereby expressly waived, if any one or more the following events (“Events of Default”) shall have occurred and be continuing; provided, however, that no notice shall be required and this Note shall automatically become due and payable if any of the events described in Article 2(a)(iii) through (vi) occurs. An Event of Default shall occur:

(i)           if failure shall be made in the payment of the Principal Amount or any interest under or on this Note when, as and in the manner (i.e., cash or Common Stock) as the same shall become due pursuant to the terms hereof; or

(ii)          if the Company shall violate or breach to a material extent any of the representations, warranties and covenants contained in this Note or the Security Agreement and such violation or breach shall continue for thirty (30) days after written notice of such breach shall been received by the Company from the Holder; or

5

(iii)         if the Company shall consent to the appointment of a receiver, trustee or liquidator of itself or of a substantial part of its property, or shall admit in writing its inability to pay its debts generally as they become due, or shall make a general assignment for the benefit of creditors, or shall file a voluntary petition in bankruptcy, or an answer seeking reorganization in a proceeding under any bankruptcy law (as now or hereafter in effect) or an answer admitting the material allegations of a petition filed against the Company in any such proceeding, or shall by voluntary petition, answer or consent, seek relief under the provisions of any other now existing or future bankruptcy or other similar law providing for the reorganization or winding up of corporations, or an arrangement, composition, extension or adjustment with its or their creditors, or shall, in a petition in bankruptcy filed against it or them be adjudicated a bankrupt, or the Company or its board of directors or a majority of its stockholders shall vote to dissolve or liquidate the Company; or

(iv)         if an involuntary petition shall be filed against the Company seeking relief against the Company under any now existing or future bankruptcy, insolvency or other similar law providing for the reorganization or winding up of corporations, or an arrangement, composition, extension or adjustment with its or their creditors, and such petition shall not be vacated or set aside within ninety (90) days from the filing thereof; or

(v)          if a court of competent jurisdiction shall enter an order, judgment or decree (not subject to appeal) appointing, without consent of the Company, a receiver, trustee or liquidator of the Company, or of all or any substantial part of the property of the Company, or approving a petition filed against the Company seeking a reorganization or arrangement of the Company under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any State thereof, or any substantial part of the property of the Company shall be sequestered; and such order, judgment or decree shall not be vacated or set aside within ninety (90) days from the date of the entry thereof; or

(vi)         if, under the provisions of any law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Company or of all or any substantial part of the property of the Company and such custody or control shall not be terminated within ninety (90) days from the date of assumption of such custody or control.

Article 3.
REGISTRATION RIGHTS

The Company hereby grants the following registration rights to the Holder.

(a)         Registration Statement. The Company shall file with the Securities and Exchange Commission (the “SEC”) not later than thirty (30) days after the date of this Note a registration statement on an appropriate form (the “Registration Statement”) covering the resale of the Principal Shares and the Interest Shares (collectively, the “Shares”) issuable upon conversion of this Note and shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective within one hundred twenty (120) days following the date hereof. Notwithstanding anything to the contrary herein, at any time, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company, in the best interest of the Company and otherwise required (a “Grace Period”); provided, that the Company shall promptly: (i) notify the Holder in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public information to the Holder) and the date on which the Grace Period will begin, and (ii) use commercially reasonable efforts to resolve any issue that makes disclosure of the material, non-public information not in the best interests of the Company.

6

(b)         Registration Procedures. In connection with the Registration Statement, the Company will:

(i)           Prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective with respect to the Holder until all the Shares owned by such Holder may be resold without restriction under the Securities Act; and

(ii)          Immediately notify the Holders when the prospectus included in the Registration Statement is required to be delivered under the Securities Act of 1933, as amended (the “Securities Act”), of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. If the Company notifies the Holders to suspend the use of any prospectus until the requisite changes to such prospectus have been made, then the Holders shall suspend use of such prospectus. In such event, the Company will use its commercially reasonable efforts to update such prospectus as promptly as is practicable.

(c)           Provision of Documents etc. In connection with the Registration Statement, the Holder will furnish to the Company in writing such information and representation letters with respect to itself and the proposed distribution by it as reasonably shall be necessary in order to assure compliance with federal and applicable state securities laws. The Company may require the Holder, upon five business days’ notice, to furnish to the Company a certified statement as to, among other things, the number of Shares and the number of other shares of the Company’s Common Stock beneficially owned by such Holder and the person that has voting and dispositive control over such shares. The Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act, if applicable, in connection with sales of Shares pursuant to the Registration Statement.

(d)          Expenses. All expenses incurred by the Company in complying with this article, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees of transfer agents and registrars are called “Registration Expenses.” All underwriting discounts and selling commissions applicable to the sale of the Shares, including any fees and disbursements of any counsel to the Holder, are called “Selling Expenses.” The Company will pay all Registration Expenses in connection with the Registration Statement. Selling Expenses in connection with the Registration Statement shall be borne by the applicable Holder.

(e)          Indemnification and Contribution.

(i)           The Company will, to the extent permitted by law, indemnify and hold harmless the Holder, and, as applicable, each officer of Holder, each director of Holder, and each other person, if any, who controls Holder within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Holder or such other person (a “controlling person”) may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (“Claims”) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement at the time of its effectiveness, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances when made, and will, subject to the limitations herein, reimburse such Holder and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the Company shall not be liable to Holder to the extent that any Claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in conformity with information furnished by such Holder or any such controlling person in writing specifically for use in the Registration Statement or related prospectus, as amended or supplemented.

7

(ii)           The Holder will, to the extent permitted by law, indemnify and hold harmless the Company, and each person, if any, who controls the Company within the meaning of the Securities Act, each underwriter, each officer of the Company who signs the Registration Statement and each director of the Company against all Claims to which the Company or such officer, director, underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such Claims arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such officer, director, underwriter and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that such Holder will be liable hereunder in any such case if and only to the extent that any such Claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such Holder, as such, furnished in writing to the Company by such Holder specifically for use in the Registration Statement or related prospectus, as amended or supplemented.

(iii)           Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this section and shall only relieve it from any liability which it may have to such indemnified party under this section except and only if and to the extent the indemnifying party is materially prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this section for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified parties, as a group, shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. The indemnifying party shall not be liable for any settlement of any such proceeding affected without its written consent, which consent shall not be unreasonably withheld.

(iv)           In order to provide for just and equitable contribution in the event of joint liability under the Securities Act in any case in which either (i) the Holder, or any controlling person of the Holder, makes a claim for indemnification pursuant to this section but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this section provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of the Holder or controlling person of the Holder in circumstances for which indemnification is not provided under this section, then, and in each such case, the Company and the Holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in a manner that reflects, as near as practicable, the economic effect of the foregoing provisions of this section. Notwithstanding the foregoing, no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

8 

(f)           Delivery of Unlegended Shares.

(i)          Within three business days (such business day, the “Unlegended Shares Delivery Date”) after the business day on which the Company has received (i) a notice that Shares have been sold either pursuant to, and in compliance with, the Registration Statement or Rule 144 under the Securities Act (“Rule 144”) and (ii) in the case of sales under Rule 144, customary representation letters of the Holder and Holder’s broker regarding compliance with the requirements of Rule 144, the Company at its expense, (A) shall deliver the Shares so sold without any restrictive legends relating to the Securities Act (the “Unlegended Shares”); and (B) shall cause the transmission of the certificates representing the Unlegended Shares together with a legended certificate representing the balance of the unsold Shares, if any, to the Holder at the address specified in the notice of sale, via express courier, by electronic transfer or otherwise on or before the Unlegended Shares Delivery Date. Transfer fees shall be the responsibility of the Holder.

(ii)           In lieu of delivering physical certificates representing the Unlegended Shares, if the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, upon request of Holder, so long as the certificates therefor do not bear a legend and the Holder is not obligated to return such certificate for the placement of a legend thereon, the Company shall use its best efforts to cause its transfer agent to electronically transmit the Unlegended Shares by crediting the account of Holder’s broker with DTC through its Deposit/Withdrawal at Custodian system. Such delivery must be made on or before the Unlegended Shares Delivery Date but is subject to the cooperation of the Holder’s broker (the so-called DTC participant).

(iii)           The Holder agrees that the removal of the restrictive legend from certificates representing the Shares as set forth in this section is predicated upon the Company’s reliance that the Holder will sell any Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.

(g)           Rule 144. The Company agrees that until all the Shares have been sold under a Registration Statement or pursuant to Rule 144 or other available exemption from Securities Act registration requirements, it shall use its reasonable commercial efforts to keep current in filing all reports, statements and other materials required to be filed with the SEC to permit the Investors to sell the Shares under Rule 144. The Company shall use commercially reasonable efforts to facilitate sales of the Shares under Rule 144, including the delivery of customary transfer agent instructions to the Company’s transfer agent and causing its counsel to deliver any required opinion to the Company’s transfer agent if resales under Rule 144 are permissible under the Securities Act.

Article 4.

MISCELLANEOUS

(a)           Security. The obligations of the Company under this Note are secured by a lien on all of the assets of the Company as more fully described in the Security Agreement.

9 

(b)          Taxes, Charges, and Expenses. The Company, at its own cost, shall report interest income, if any, to the IRS and/or other applicable tax authorities and to the Holder on a Form 1099-INT or other appropriate form in accordance with applicable law. The Company shall bear sole responsibility for any costs or fees in connection with the payment of Interest with respect to this Note, including, but not limited to, wire transfer fees, bank check fees and escrow agent fees.

(c)          Transferability. The Company may not assign this Note. This Note will be binding upon the Company and its successors and will inure to the benefit of the Holder and its successors and assigns and may be assigned by the Holder to anyone of its choosing without the Company’s approval, but subject to transfer restrictions under applicable law.

(d)          Prepayment. This Note may not be prepaid by the Company without the written consent of the Holder. Notwithstanding the foregoing, if the Company sells any of its securities, whether equity, equity-linked or debt securities (a “Capital Raising Transaction”), prior to the Maturity Date, then forty percent (40%) of the funds raised in such Capital Raising Transaction shall be used to pay down this Note and the other Payout Notes issued pursuant to the Contribution Agreement on a pro rata basis based upon the relative principal amounts of this Payout Note and the other Payout Notes; provided, however, that if the investors in such Capital Raising Transaction stipulate that the proceeds cannot be used to pay down indebtedness, then none of the proceeds of such Capital Raising Transaction shall be used to pay down the Payout Notes on an accelerated basis; provided further, however, that a committee consisting of board members Michael R. Stewart and Dennis M. McGrath unanimously consent to the use of proceeds from such Capital Raising Transaction.

(e)          WAIVER OF TRIAL BY JURY. COMPANY AND HOLDER HEREBY KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT OR OTHERWISE, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS NOTE.

(f)           Mutilated, Destroyed, Lost or Stolen Notes. If this Note shall become mutilated or defaced, or be destroyed, lost or stolen, the Company shall execute and deliver a new note of like principal amount in exchange and substitution for the mutilated or defaced Note, or in lieu of and in substitution for the destroyed, lost or stolen Note certificate. In the case of a mutilated or defaced Note certificate, the Holder shall surrender such Note certificate to the Company. In the case of any destroyed, lost or stolen Note certificate, the Holder shall furnish to the Company: (i) evidence to its satisfaction of the destruction, loss or theft of such Note certificate and (ii) such security or indemnity (which shall not include the posting of any bond) as may be reasonably required by the Company to hold the Company harmless.

(g)           Waiver of Demand, Presentment, etc. The Company hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, bringing of suit and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereunder, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder. The Company agrees that, in the event of an Event of Default, to reimburse the Holder for all reasonable costs and expenses (including reasonable legal fees of one counsel) incurred in connection with the enforcement and collection of this Note.

(h)           Payment. All payments with respect to this Note shall be made in lawful money of the United States of America, at the address of the Holder as of the date hereof or as designated in writing by the Holder from time to time. The receipt by the Holder of immediately available funds shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Note to the extent of the sum represented by such payment. Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal.

10 

(i)           Waiver and Amendment. Any provision of this Note, including, without limitation, the due date hereof, and the observance of any term hereof, may be amended, waived or modified (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.

(j)           Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provisions shall be excluded from this Note, and the balance of this Note shall be interpreted as if such provisions were so excluded and shall be enforceable in accordance with its terms.

(k)           Notices. All notices that are required or may be given pursuant to this Agreement shall be sufficient in all respects if given in writing, in English and by personal delivery (if signed for receipt), by certified or registered United States mail (postage prepaid, return receipt requested), by a nationally recognized overnight delivery service for next day delivery, or transmitted via electronic mail (following appropriate confirmation of receipt by return email, including an automated confirmation of receipt) and shall be deemed to have been made and the receiving Party charged with notice, when received except that if received after 5:00 p.m. (in the recipient’s time zone) on a Business Day or if received on a day that is not a Business Day, such notice, request or communication will not be effective until the next succeeding Business Day. All notices shall be addressed as follows:

If to the Company:

PhotoMedex, Inc. 

2300 Computer Drive, Building G
Willow Grove, PA 19090

Attention: Stephen Johnson 

Email: sjohnson@photomedex.com

If to the Holder: 

[Holder]

[address] 

Email: [                      ]

(l)           Governing Law; Venue. This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements executed and to be performed wholly within such State, without regard to any principles of conflicts of law. Each of the parties hereby (i) irrevocably consents and agrees that any legal or equitable action or proceeding arising under or in connection with this Agreement may be brought in the federal or state courts located in the County of New York in the State of New York, (ii) by execution and delivery, or receipt, of this Note , irrevocably submits to and accepts the jurisdiction of said courts, (iii) waives any defense that such court is not a convenient forum, and (iv) consent that any service of process may be made (x) in the manner set forth in Article 4(k) of this Note, or (y) by any other method of service permitted by law.

[remainder of page intentionally left blank]

11 

IN WITNESS WHEREOF, the Company has executed this Note as of the date and year first aforesaid.

PHOTOMEDEX, INC.

By:

Name:

Title:

Exhibit I

Payout Notes Security Agreement

SECURITY AGREEMENT

This SECURITY AGREEMENT (“Agreement”) is made as of __________, 2017, by and between PhotoMedex, Inc., a Nevada corporation (to be renamed ____________) (the “Debtor”), and Dolev Rafaeli (“Rafaeli”), Dennis M. McGrath (“McGrath”) and Yoav Ben-Dror (“Ben-Dror”) (each, a “Secured Party” and together, the “Secured Parties”).

WHEREAS, each Secured Party is the holder of a Secured Payout Note Due ___________, 2018 made by the Debtor in favor of such Secured Party as of the date hereof in the principal amount of $________ with respect to Rafaeli, $__________ with respect to McGrath, and $__________ with respect to Ben-Dror (each, a “Note” and together, the “Notes”); and

WHEREAS, in connection with the Notes, Secured Parties desire to obtain from Debtor, and Debtor desires to grant to Secured Parties, a security interest in the collateral more particularly described below.

NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.           Grant of Security Interest. Debtor hereby grants to Secured Parties a security interest in all of the properties, assets and personal property of Debtor, whether now owned or hereafter acquired (collectively, the “Collateral”) including, without limitation, the following:

(a)           presently existing and hereafter arising accounts, contract rights, and all other forms of obligations owing to Debtor arising out of the sale or lease of goods or the rendition of services by Debtor, whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Debtor and Debtor’s Books relating to any of the foregoing (collectively, “Accounts”);

(b)           present and future general intangibles and other personal property (including payment intangibles, choses or things in action, goodwill, intellectual property, patents, trade names, trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, monies due under any royalty or licensing agreements, infringement claims, software, computer programs, computer discs, computer tapes, literature, reports, catalogs deposit accounts, insurance premium rebates, tax refunds, and tax refund claims) (collectively, “General Intangibles”);

(c)           present and future letters of credit, letter-of-credit rights (whether or not evidenced by a writing) and other supporting obligations, notes, drafts, instruments (including promissory notes), certificated and uncertificated securities, documents, leases, and chattel paper (whether tangible or electronic), and Debtor’s Books relating to any of the foregoing (collectively, “Negotiable Collateral”);

(d)           present and future inventory in which Debtor has any interest, including goods held for sale or lease or to be furnished under a contract of service and all of Debtor’s present and future raw materials, work in process, finished goods, and packing and shipping materials, wherever located, and any documents of title representing any of the above, and Debtor’s Books relating to any of the foregoing (collectively, “Inventory”);

(e)           present and hereafter acquired machinery, machine tools, motors, equipment, furniture, furnishings, fixtures, vehicles (including motor vehicles and trailers), tools, parts, dies, jigs, goods (other than consumer goods or farm products), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located (collectively, “Equipment”);

(f)           present and hereafter acquired books and records including: ledgers; records indicating, summarizing, or evidencing Debtor’s assets or liabilities, or the collateral; all information relating to Debtor’s business operations or financial condition; and all computer programs, disc or tape files, printouts, funds or other computer prepared information, and the equipment containing such information (collectively, “Debtor’s Books”);

(g)          “Investment Property,” as that term is defined in Section 9 of the UCC (defined below).

(h)           substitutions, replacements, additions, accessions, proceeds, products to or of any of the foregoing, including, but not limited to, proceeds of insurance covering any of the foregoing, or any portion thereof, and any and all Accounts, General Intangibles, Inventory, Equipment, Investment Property, money, deposits, accounts, or other tangible or intangible property resulting from the sale or other disposition of the Accounts, General Intangibles, Inventory, Equipment, Investment Property or any portion thereof or interest therein and the proceeds thereof.

The security interests granted hereby shall secure the prompt payment of the principal and all accrued interest due under and pursuant to the terms of the Notes (the “Obligations”).

2.           Perfection by Filing. Debtor hereby specifically authorizes Secured Parties at any time and from time to time to file financing statements, continuation statements and amendments thereto that describe the Collateral and contain any other information required by Article 9 of the Uniform Commercial Code, as enacted in New York (the “UCC”) for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including whether Debtor is an organization, the type of organization and any organization identification number issued to Debtor. Debtor agrees to furnish any such information to the Secured Parties promptly upon request. Any such financing statements, continuation statements or amendments may be signed by an agent of Secured Parties on behalf of Debtor and may be filed at any time in any jurisdiction. Debtor hereby irrevocably constitutes and appoints Secured Parties and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in- fact with full irrevocable power and authority in the place and stead of Debtor and in the name of Debtor or in its own name, from time to time in such Secured Parties’ discretion, for the limited purpose of carrying out the terms of this subsection regarding perfection by filing. Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this subsection are coupled with an interest and are irrevocable until all of the Obligations (as defined in the Loan Documents) have been paid and satisfied in full.

3.           Perfection Other Than by Filing, etc. At any time and from time to time, Debtor shall take such steps as Secured Parties may reasonably request for Debtor (a) to obtain an acknowledgment, in form and substance reasonably satisfactory to Secured Parties, of any bailee having possession of any of the Collateral, that such bailee holds such Collateral for the Secured Parties, (b) to obtain control of any investment property, deposit accounts, letter-of-credit rights or electronic chattel paper (as such terms are defined in Article 9 of the UCC) as set forth in Article 9 of the UCC, and, where control is established by written agreement, such agreement shall be in form and substance reasonably satisfactory to Secured Parties, and (c) otherwise to insure the continued perfection and priority of Secured Parties’ security interest in any of the Collateral and of the preservation of its rights therein.

2 

4.            Agreements With Respect to the Collateral. Debtor covenants and agrees with Secured Parties as follows:

(a)          Debtor shall notify Secured Parties in writing of any change in the location of Debtor’s principal place of business or the location of any material tangible Collateral or the place(s) where the records concerning all intangible Collateral are kept or maintained.

(b)          Debtor will keep the Collateral in good condition and repair, ordinary wear and tear excepted, and will pay and discharge all taxes, levies and other impositions levied thereon as well as the cost of repairs to or maintenance of same, and will not permit anything to be done that may materially impair the value of any of the Collateral. If Debtor fails to pay such sums, Secured Parties may do so for Debtor’s account and add the amount thereof to the Obligations.

(c)           Until the occurrence of an Event of Default (as defined in the Note), Debtor shall be entitled to exercise the remedies set forth herein.

(d)          So long as an Event of Default has not occurred, Debtor shall have the right to process and sell the Collateral in the regular course of business. Secured Parties’ security interest hereunder shall attach to all proceeds of all sales of the Collateral. If at any time any such proceeds shall be represented by any instruments, chattel paper or documents of title, then such instruments, chattel paper or documents of title shall be subject to the security interest granted hereby.

5.             Remedies Upon Default. Upon the occurrence of an Event of Default under and as defined in the Notes, including without limitation, a payment default under the Notes, Secured Parties may (subject in all instances to Article 3 of the Notes) pursue any or all of the following remedies:

(a)           Secured Parties shall give written notice of default to Debtor, following which Debtor shall not dispose of, conceal, transfer, sell or encumber any of the Collateral (including, but not limited to, cash proceeds) without Secured Parties prior written consent, except in the ordinary course of business.

(b)           Secured Parties may dispose of the Collateral at private or public sale in accordance with the applicable provisions of the UCC. Any required notice of sale shall be deemed commercially reasonable if given at least twenty (20) days prior to sale.

(c)           Secured Parties may exercise their lien upon and right of setoff against any monies, items, credits, deposits or instruments that Secured Parties may have in their possession and that belong to Debtor or to any other person or entity liable for the payment of any or all of the Obligations.

(d)           Secured Parties may exercise any right that they may have under any other document evidencing or securing the Obligations or otherwise available to Secured Party at law or equity.

(e)           Notwithstanding anything herein to the contrary, Secured Parties shall not be entitled to exercise any rights with respect to the Collateral to the extent that the reasonable value of the Collateral exceeds the amount then due and owing to the Secured Parties.

(f)           The Secured Party acknowledges and agrees that Collateral is subject to security interests granted to other secured parties by the Debtor. In exercising any of Secured Parties’ rights hereunder, the Secured Parties shall undertake to (i) coordinate its efforts with such other secured parties to minimize any inconvenience to the Secured Parties or disruption to its business activities, and (ii) effect the exercise of their rights hereunder so as to not adversely affect in any manner the value of the Collateral or to impose costs or obligations on Secured Parties in excess of what Secured Parties would reasonably be expected to bear were the Debtor the sole party with rights to the Collateral.

3 

6.           Termination Statement. Upon receipt of proper written demand following the payment in full of the Obligations, Secured Parties shall promptly file a termination statement with respect to any financing statement filed to perfect Secured Party’s security interests in any of the Collateral to Debtor or cause such termination statement to be filed with the appropriate filing officer(s). If the Secured Parties shall fail to file any such termination statement within ten (10) days of the payment in full of all Obligations, Debtor shall have the right to file such termination statements.

7.            Binding Effect. This Agreement shall inure to the benefit of Secured Parties’ successors and assigns and shall bind Debtor’s successors and assigns.

8.            Severability. If any provision of this Agreement is held invalid, such invalidity shall not affect the validity or enforceability of the remaining provisions of this Agreement.

9.            Governing Law and Amendments. This Agreement shall be construed and enforced under the laws of the State of New York applicable to contracts to be wholly performed in such State. No amendment or modification hereof shall be effective except in a writing executed by each of the parties hereto.

10.           Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original instrument, but all such counterparts together shall constitute but one agreement. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (.pdf) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.

11.           Construction and Interpretation. Should any provision of this Agreement require judicial interpretation, the parties hereto agree that the court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against one party by reason of the rule of construction that a document is to be more strictly construed against the party that itself or through its agent prepared the same, it being agreed that Debtor, Secured Parties and their respective agents have participated in the preparation hereof.

12.           Exclusive Venue. Each of the parties hereby (i) irrevocably consents and agrees that any legal or equitable action or proceeding arising under or in connection with this Agreement may be brought in the federal or state courts located in the County of New York in the State of New York, (ii) by execution and delivery, or receipt, of this Note , irrevocably submits to and accepts the jurisdiction of said courts, (iii) waives any defense that such court is not a convenient forum, and (iv) consent that any service of process may be made (x) in the manner set forth in Article 4(e) of this Note, or (y) by any other method of service permitted by law.

13.           Waiver of Trial by Jury. SECURED PARTIES AND DEBTOR HEREBY KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT OR OTHERWISE, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT OR THE LOAN DOCUMENTS.

14.          Notice. Any notice under this Agreement shall be made in accordance with the terms of the Notes.

4 

IN WITNESS WHEREOF, Debtor and Secured Party have executed this Agreement, or have caused this Agreement to be executed as of the date first above written.

DEBTOR:
PHOTOMEDEX, INC.
By:
	Name:
	Title:
SECURED PARTY:
Dr. Dolev Rafaeli
Dennis M. McGrath
Yoav Ben-Dror

EX-10.4

Exhibit 10.4

NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR STATE LAW OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

$3,133,934 October 12, 2017

PHOTOMEDEX, INC.

SECURED CONVERTIBLE PAYOUT NOTE DUE OCTOBER 12, 2018

FOR VALUE RECEIVED, PhotoMedex, Inc., a Nevada corporation (the “Company”), hereby promises to pay to the order of Dolev Rafaeli (the “Holder”), the principal amount of Three Million One Hundred Thirty-Three Thousand Nine Hundred Thirty-Four Dollars ($3,133,934) (the “Principal Amount”), together with interest as hereinafter provided, on October 12, 2018 (the “Maturity Date”).

This Secured Convertible Payout Note (this “Note”) is being issued in connection with the closing of the transactions contemplated by that certain Interest Contribution Agreement, dated March 31, 2017 (the “Contribution Agreement”), by and among First Capital Real Estate Operating Partnership, L.P., a Delaware limited partnership, First Capital Real Estate Trust Incorporated, a Maryland corporation, FC Global Realty Operating Partnership, LLC, a Delaware limited liability company, and the Company. All capitalized terms used but not otherwise defined in this Note shall have the same meanings ascribed to them in the Contribution Agreement.

By his receipt hereof, the Holder acknowledges and agrees that: (i) the Principal Amount represents, as of the date hereof, the full and complete amount of all compensation liabilities owed by the Company and its Subsidiaries and affiliates to the Holder (“Compensation Liabilities”); (ii) all such Compensation Liabilities are being memorialized in this Note and no other oral or written agreement, document or instrument; and (iii) upon payment in full of all obligations hereunder, the Company shall have repaid all Compensation Liabilities to the Holder.

Any payments on account of the Note shall be applied first to interest and then to principal.

Interest on the outstanding Principal Amount shall be paid in: (i) cash or (ii) at the election of the Holder, in restricted shares of the Company’s common stock, par value $.01 per share (“Common Stock”) as provided in Article 1(a). Interest shall be paid at the rate of ten percent (10%) per annum and shall be payable monthly in arrears commencing on December 1, 2017 (each such payment, a “Monthly Interest Payment” and each date of such payment, an “Interest Payment Date”). Interest shall be computed on the basis of a 360-day year, and any partial periods (other than monthly) shall be computed using the number of days actually elapsed.

The Principal Amount shall be mandatorily convertible into shares of Common Stock as provided in Article 1(b).

The Company’s obligations under this Note are subject to a security interest in all of the Company’s assets, which security interest shall be memorialized in a Security Agreement entered into between the Holder and the Company as of the date hereof (the “Security Agreement”).

Article 1.
CONVERSION

(a)           Interest. Should the Holder elect to have a Monthly Interest Payment paid in shares of Common Stock (such shares, the “Interest Shares”), the Holder shall make such election by written notice delivered to the Company not less than three (3) NASDAQ Trading Days prior to the applicable Interest Payment Date. The number of Interest Shares to be issued to the Holder shall be determined by dividing: (i) the applicable interest payment owed by (ii) the VWAP with respect to on-exchange transactions in Common Stock executed on the NASDAQ during the thirty (30) NASDAQ Trading Days ending five (5) NASDAQ trading days prior to the applicable Interest Payment Date as reported by Bloomberg L.P. Any Interest Shares shall be delivered to the Holder with five (5) Business Days of the applicable Interest Payment Date.

(b)          Principal. The Principal Amount shall be mandatorily convertible on the Maturity Date into restricted shares of Common Stock (such shares, the “Principal Shares”) which shall be delivered within three (3) Business Days of the Maturity Date. The Number of Principal Shares to be issued to the Holder shall be determined by dividing: (i) the Principal Amount by (ii) a price (the “Note Conversion Price”) equal to the lower of (A) the Per Share Value or (B) the VWAP with respect to on-exchange transactions in Common Stock executed on the NASDAQ during the thirty (30) NASDAQ Trading Days prior to the Maturity Date as reported by Bloomberg L.P; provided, however, that the Note Conversion Price shall (except as adjusted pursuant to Article 1(f)) in no event be less than $1.75 per share (the “Floor Price”). In the event that the Note Conversion Price on the Maturity Date is lower than the Floor Price, then the Company may, in its discretion undertaken by a vote of a majority of the disinterested members of the Company’s board of directors, elect to either: (i) pay the Principal Amount in cash to the Holder or (ii) extend the Maturity Date for a period of sixty (60) days, at the conclusion of which the foregoing mechanism for determining the Note Conversion Price and repayment of the Principal Amount shall be determined with finality; provided, however, that at the conclusion of such sixty (60) day period, no Floor Price shall apply in the determining the Note Conversion Price and the Principal Shares shall be issued within three (3) Business Days of the extended Maturity Date.

(c)           Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than such number of shares of the Common Stock as shall be issuable upon the conversion of this Note. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid, non-assessable.

(d)           Fractional Shares. Upon a conversion hereunder, the Company shall not be required to issue stock certificates representing fractions of shares of the Common Stock. All fractional shares shall be rounded up to the nearest whole number of shares.

(e)           Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder, and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance of such shares upon transfer shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

2

(f)           Adjustments for Stock Dividends, Splits and Other Capital Transactions. If the Company, at any time from and after the date of this Note and as long as this Note is outstanding: (i) shall pay a stock dividend, effect a stock split or otherwise make a distribution or distributions on shares of its Common Stock payable in shares of any class of capital stock, (ii) subdivide outstanding shares of Common Stock into a larger number of shares, (iii) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Note Conversion Price shall be computed on the applicable measuring date to reflect such occurrences. Any adjustment made pursuant to this Article 1(f) shall become effective on the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(g)           Subsequent Rights Offerings. In addition to any adjustments pursuant to Article 1(f) above, if at any time the Company grants, issues or sells any Common Stock Equivalents (as defined below) or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder of will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

(h)           Pro Rata Distributions. During such time as this Note is outstanding, if the Company declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete Conversion of this Note immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.

3

(i)           Fundamental Transaction. If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other person or other persons making or party to, or associated or affiliated with the other persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Principal Share or Interest Share, as the case may be, that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction. For purposes of any such conversion, the determination of the Note Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Note Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new Note with the same terms and conditions as this Note that is otherwise consistent with the foregoing provisions and evidencing the Holders’ right to convert this Note into Alternate Consideration. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of Company under this Note and the other Transaction Documents in accordance with the provisions of this Article 1(i) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

(j)           Calculations. All calculations under this Article 1 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Article 1, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.

(k)          Notice to the Holders.

(i)           Adjustment to Note Conversion Price. Whenever the Note Conversion Price is adjusted pursuant to any provision of this Article 1, the Company shall promptly deliver to Holder a notice setting forth the Note Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

4

(ii)           Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to Holder at its last address as it shall appear upon the stock books of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert the Principal Amount and accrued, but unpaid interest thereon (or any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Article 2.
EVENTS OF DEFAULT

(a)           Events of Default Defined. The entire unpaid Principal Amount of this Note, together with interest thereon shall, on written notice to the Company given by the Holder of this Note, forthwith become and be due and payable without presentment, demand, protest or any other action nor obligation of the Holder of any kind, all of which are hereby expressly waived, if any one or more the following events (“Events of Default”) shall have occurred and be continuing; provided, however, that no notice shall be required and this Note shall automatically become due and payable if any of the events described in Article 2(a)(iii) through (vi) occurs. An Event of Default shall occur:

(i)            if failure shall be made in the payment of the Principal Amount or any interest under or on this Note when, as and in the manner (i.e., cash or Common Stock) as the same shall become due pursuant to the terms hereof; or

(ii)           if the Company shall violate or breach to a material extent any of the representations, warranties and covenants contained in this Note or the Security Agreement and such violation or breach shall continue for thirty (30) days after written notice of such breach shall been received by the Company from the Holder; or

5

(iii)          if the Company shall consent to the appointment of a receiver, trustee or liquidator of itself or of a substantial part of its property, or shall admit in writing its inability to pay its debts generally as they become due, or shall make a general assignment for the benefit of creditors, or shall file a voluntary petition in bankruptcy, or an answer seeking reorganization in a proceeding under any bankruptcy law (as now or hereafter in effect) or an answer admitting the material allegations of a petition filed against the Company in any such proceeding, or shall by voluntary petition, answer or consent, seek relief under the provisions of any other now existing or future bankruptcy or other similar law providing for the reorganization or winding up of corporations, or an arrangement, composition, extension or adjustment with its or their creditors, or shall, in a petition in bankruptcy filed against it or them be adjudicated a bankrupt, or the Company or its board of directors or a majority of its stockholders shall vote to dissolve or liquidate the Company; or

(iv)          if an involuntary petition shall be filed against the Company seeking relief against the Company under any now existing or future bankruptcy, insolvency or other similar law providing for the reorganization or winding up of corporations, or an arrangement, composition, extension or adjustment with its or their creditors, and such petition shall not be vacated or set aside within ninety (90) days from the filing thereof; or

(v)           if a court of competent jurisdiction shall enter an order, judgment or decree (not subject to appeal) appointing, without consent of the Company, a receiver, trustee or liquidator of the Company, or of all or any substantial part of the property of the Company, or approving a petition filed against the Company seeking a reorganization or arrangement of the Company under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any State thereof, or any substantial part of the property of the Company shall be sequestered; and such order, judgment or decree shall not be vacated or set aside within ninety (90) days from the date of the entry thereof; or

(vi)          if, under the provisions of any law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Company or of all or any substantial part of the property of the Company and such custody or control shall not be terminated within ninety (90) days from the date of assumption of such custody or control.

Article 3.
REGISTRATION RIGHTS

The Company hereby grants the following registration rights to the Holder.

(a)           Registration Statement. The Company shall file with the Securities and Exchange Commission (the “SEC”) not later than thirty (30) days after the date of this Note a registration statement on an appropriate form (the “Registration Statement”) covering the resale of the Principal Shares and the Interest Shares (collectively, the “Shares”) issuable upon conversion of this Note and shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective within one hundred twenty (120) days following the date hereof. Notwithstanding anything to the contrary herein, at any time, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company, in the best interest of the Company and otherwise required (a “Grace Period”); provided, that the Company shall promptly: (i) notify the Holder in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public information to the Holder) and the date on which the Grace Period will begin, and (ii) use commercially reasonable efforts to resolve any issue that makes disclosure of the material, non-public information not in the best interests of the Company.

6

(b)          Registration Procedures. In connection with the Registration Statement, the Company will:

(i)            Prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective with respect to the Holder until all the Shares owned by such Holder may be resold without restriction under the Securities Act; and

(ii)           Immediately notify the Holders when the prospectus included in the Registration Statement is required to be delivered under the Securities Act of 1933, as amended (the “Securities Act”), of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. If the Company notifies the Holders to suspend the use of any prospectus until the requisite changes to such prospectus have been made, then the Holders shall suspend use of such prospectus. In such event, the Company will use its commercially reasonable efforts to update such prospectus as promptly as is practicable.

(c)           Provision of Documents etc. In connection with the Registration Statement, the Holder will furnish to the Company in writing such information and representation letters with respect to itself and the proposed distribution by it as reasonably shall be necessary in order to assure compliance with federal and applicable state securities laws. The Company may require the Holder, upon five business days’ notice, to furnish to the Company a certified statement as to, among other things, the number of Shares and the number of other shares of the Company’s Common Stock beneficially owned by such Holder and the person that has voting and dispositive control over such shares. The Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act, if applicable, in connection with sales of Shares pursuant to the Registration Statement.

(d)           Expenses. All expenses incurred by the Company in complying with this article, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees of transfer agents and registrars are called “Registration Expenses.” All underwriting discounts and selling commissions applicable to the sale of the Shares, including any fees and disbursements of any counsel to the Holder, are called “Selling Expenses.” The Company will pay all Registration Expenses in connection with the Registration Statement. Selling Expenses in connection with the Registration Statement shall be borne by the applicable Holder.

(e)          Indemnification and Contribution.

(i)            The Company will, to the extent permitted by law, indemnify and hold harmless the Holder, and, as applicable, each officer of Holder, each director of Holder, and each other person, if any, who controls Holder within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Holder or such other person (a “controlling person”) may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (“Claims”) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement at the time of its effectiveness, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances when made, and will, subject to the limitations herein, reimburse such Holder and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the Company shall not be liable to Holder to the extent that any Claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in conformity with information furnished by such Holder or any such controlling person in writing specifically for use in the Registration Statement or related prospectus, as amended or supplemented.

7

(ii)           The Holder will, to the extent permitted by law, indemnify and hold harmless the Company, and each person, if any, who controls the Company within the meaning of the Securities Act, each underwriter, each officer of the Company who signs the Registration Statement and each director of the Company against all Claims to which the Company or such officer, director, underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such Claims arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such officer, director, underwriter and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that such Holder will be liable hereunder in any such case if and only to the extent that any such Claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such Holder, as such, furnished in writing to the Company by such Holder specifically for use in the Registration Statement or related prospectus, as amended or supplemented.

(iii)          Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this section and shall only relieve it from any liability which it may have to such indemnified party under this section except and only if and to the extent the indemnifying party is materially prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this section for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified parties, as a group, shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. The indemnifying party shall not be liable for any settlement of any such proceeding affected without its written consent, which consent shall not be unreasonably withheld.

(iv)          In order to provide for just and equitable contribution in the event of joint liability under the Securities Act in any case in which either (i) the Holder, or any controlling person of the Holder, makes a claim for indemnification pursuant to this section but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this section provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of the Holder or controlling person of the Holder in circumstances for which indemnification is not provided under this section, then, and in each such case, the Company and the Holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in a manner that reflects, as near as practicable, the economic effect of the foregoing provisions of this section. Notwithstanding the foregoing, no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

8

(f)           Delivery of Unlegended Shares.

(i)            Within three business days (such business day, the “Unlegended Shares Delivery Date”) after the business day on which the Company has received (i) a notice that Shares have been sold either pursuant to, and in compliance with, the Registration Statement or Rule 144 under the Securities Act (“Rule 144”) and (ii) in the case of sales under Rule 144, customary representation letters of the Holder and Holder’s broker regarding compliance with the requirements of Rule 144, the Company at its expense, (A) shall deliver the Shares so sold without any restrictive legends relating to the Securities Act (the “Unlegended Shares”); and (B) shall cause the transmission of the certificates representing the Unlegended Shares together with a legended certificate representing the balance of the unsold Shares, if any, to the Holder at the address specified in the notice of sale, via express courier, by electronic transfer or otherwise on or before the Unlegended Shares Delivery Date. Transfer fees shall be the responsibility of the Holder.

(ii)           In lieu of delivering physical certificates representing the Unlegended Shares, if the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, upon request of Holder, so long as the certificates therefor do not bear a legend and the Holder is not obligated to return such certificate for the placement of a legend thereon, the Company shall use its best efforts to cause its transfer agent to electronically transmit the Unlegended Shares by crediting the account of Holder’s broker with DTC through its Deposit/Withdrawal at Custodian system. Such delivery must be made on or before the Unlegended Shares Delivery Date but is subject to the cooperation of the Holder’s broker (the so-called DTC participant).

(iii)          The Holder agrees that the removal of the restrictive legend from certificates representing the Shares as set forth in this section is predicated upon the Company’s reliance that the Holder will sell any Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.

(g)          Rule 144. The Company agrees that until all the Shares have been sold under a Registration Statement or pursuant to Rule 144 or other available exemption from Securities Act registration requirements, it shall use its reasonable commercial efforts to keep current in filing all reports, statements and other materials required to be filed with the SEC to permit the Investors to sell the Shares under Rule 144. The Company shall use commercially reasonable efforts to facilitate sales of the Shares under Rule 144, including the delivery of customary transfer agent instructions to the Company’s transfer agent and causing its counsel to deliver any required opinion to the Company’s transfer agent if resales under Rule 144 are permissible under the Securities Act.

Article 4.
MISCELLANEOUS

(a)           Security. The obligations of the Company under this Note are secured by a lien on all of the assets of the Company as more fully described in the Security Agreement.

9

(b)           Taxes, Charges, and Expenses. The Company, at its own cost, shall report interest income, if any, to the IRS and/or other applicable tax authorities and to the Holder on a Form 1099-INT or other appropriate form in accordance with applicable law. The Company shall bear sole responsibility for any costs or fees in connection with the payment of Interest with respect to this Note, including, but not limited to, wire transfer fees, bank check fees and escrow agent fees.

(c)           Transferability. The Company may not assign this Note. This Note will be binding upon the Company and its successors and will inure to the benefit of the Holder and its successors and assigns and may be assigned by the Holder to anyone of its choosing without the Company’s approval, but subject to transfer restrictions under applicable law.

(d)           Prepayment. This Note may not be prepaid by the Company without the written consent of the Holder. Notwithstanding the foregoing, if the Company sells any of its securities, whether equity, equity-linked or debt securities (a “Capital Raising Transaction”), prior to the Maturity Date, then forty percent (40%) of the funds raised in such Capital Raising Transaction shall be used to pay down this Note and the other Payout Notes issued pursuant to the Contribution Agreement on a pro rata basis based upon the relative principal amounts of this Payout Note and the other Payout Notes; provided, however, that if the investors in such Capital Raising Transaction stipulate that the proceeds cannot be used to pay down indebtedness, then none of the proceeds of such Capital Raising Transaction shall be used to pay down the Payout Notes on an accelerated basis; provided further, however, that a committee consisting of board members Michael R. Stewart and Dennis M. McGrath unanimously consent to the use of proceeds from such Capital Raising Transaction.

(e)           WAIVER OF TRIAL BY JURY. COMPANY AND HOLDER HEREBY KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT OR OTHERWISE, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS NOTE.

(f)          Mutilated, Destroyed, Lost or Stolen Notes. If this Note shall become mutilated or defaced, or be destroyed, lost or stolen, the Company shall execute and deliver a new note of like principal amount in exchange and substitution for the mutilated or defaced Note, or in lieu of and in substitution for the destroyed, lost or stolen Note certificate. In the case of a mutilated or defaced Note certificate, the Holder shall surrender such Note certificate to the Company. In the case of any destroyed, lost or stolen Note certificate, the Holder shall furnish to the Company: (i) evidence to its satisfaction of the destruction, loss or theft of such Note certificate and (ii) such security or indemnity (which shall not include the posting of any bond) as may be reasonably required by the Company to hold the Company harmless.

(g)           Waiver of Demand, Presentment, etc. The Company hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, bringing of suit and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereunder, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder. The Company agrees that, in the event of an Event of Default, to reimburse the Holder for all reasonable costs and expenses (including reasonable legal fees of one counsel) incurred in connection with the enforcement and collection of this Note.

(h)           Payment. All payments with respect to this Note shall be made in lawful money of the United States of America, at the address of the Holder as of the date hereof or as designated in writing by the Holder from time to time. The receipt by the Holder of immediately available funds shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Note to the extent of the sum represented by such payment. Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal.

10

(i)           Waiver and Amendment. Any provision of this Note, including, without limitation, the due date hereof, and the observance of any term hereof, may be amended, waived or modified (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.

(j)           Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provisions shall be excluded from this Note, and the balance of this Note shall be interpreted as if such provisions were so excluded and shall be enforceable in accordance with its terms.

(k)           Notices. All notices that are required or may be given pursuant to this Agreement shall be sufficient in all respects if given in writing, in English and by personal delivery (if signed for receipt), by certified or registered United States mail (postage prepaid, return receipt requested), by a nationally recognized overnight delivery service for next day delivery, or transmitted via electronic mail (following appropriate confirmation of receipt by return email, including an automated confirmation of receipt) and shall be deemed to have been made and the receiving Party charged with notice, when received except that if received after 5:00 p.m. (in the recipient’s time zone) on a Business Day or if received on a day that is not a Business Day, such notice, request or communication will not be effective until the next succeeding Business Day. All notices shall be addressed as follows:

If to the Company:

PhotoMedex, Inc.

2300 Computer Drive, Building G Willow Grove, PA 19090

Attention: Stephen Johnson

Email: sjohnson@photomedex.com

If to the Holder:

Dolev Rafaeli

5 Lambs Lane

Cresskill, NJ 07626

Email: dolev@photomedex.com

(l)           Governing Law; Venue. This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements executed and to be performed wholly within such State, without regard to any principles of conflicts of law. Each of the parties hereby (i) irrevocably consents and agrees that any legal or equitable action or proceeding arising under or in connection with this Agreement may be brought in the federal or state courts located in the County of New York in the State of New York, (ii) by execution and delivery, or receipt, of this Note , irrevocably submits to and accepts the jurisdiction of said courts, (iii) waives any defense that such court is not a convenient forum, and (iv) consent that any service of process may be made (x) in the manner set forth in Article 4(k) of this Note, or (y) by any other method of service permitted by law.

[remainder of page intentionally left blank]

11

IN WITNESS WHEREOF, the Company has executed this Note as of the date and year first aforesaid.

PHOTOMEDEX, INC.
By:	/s/ Suneet Singal
Name: Suneet Singal
Title: Chief Executive Officer

EX-10.5

Exhibit 10.5 

NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR STATE LAW OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

$977,666 October 12, 2017

PHOTOMEDEX, INC.

SECURED CONVERTIBLE PAYOUT NOTE DUE OCTOBER 12, 2018

FOR VALUE RECEIVED, PhotoMedex, Inc., a Nevada corporation (the “Company”), hereby promises to pay to the order of Dennis M. McGrath (the “Holder”), the principal amount of Nine Hundred Seventy-Seven Thousand Six Hundred Sixty-Six Dollars ($977,666) (the “Principal Amount”), together with interest as hereinafter provided, on October 12, 2018 (the “Maturity Date”).

This Secured Convertible Payout Note (this “Note”) is being issued in connection with the closing of the transactions contemplated by that certain Interest Contribution Agreement, dated March 31, 2017 (the “Contribution Agreement”), by and among First Capital Real Estate Operating Partnership, L.P., a Delaware limited partnership, First Capital Real Estate Trust Incorporated, a Maryland corporation, FC Global Realty Operating Partnership, LLC, a Delaware limited liability company, and the Company. All capitalized terms used but not otherwise defined in this Note shall have the same meanings ascribed to them in the Contribution Agreement.

By his receipt hereof, the Holder acknowledges and agrees that: (i) the Principal Amount represents, as of the date hereof, the full and complete amount of all compensation liabilities owed by the Company and its Subsidiaries and affiliates to the Holder (“Compensation Liabilities”); (ii) all such Compensation Liabilities are being memorialized in this Note and no other oral or written agreement, document or instrument; and (iii) upon payment in full of all obligations hereunder, the Company shall have repaid all Compensation Liabilities to the Holder.

Any payments on account of the Note shall be applied first to interest and then to principal.

Interest on the outstanding Principal Amount shall be paid in: (i) cash or (ii) at the election of the Holder, in restricted shares of the Company’s common stock, par value $.01 per share (“Common Stock”) as provided in Article 1(a). Interest shall be paid at the rate of ten percent (10%) per annum and shall be payable monthly in arrears commencing on December 1, 2017 (each such payment, a “Monthly Interest Payment” and each date of such payment, an “Interest Payment Date”). Interest shall be computed on the basis of a 360-day year, and any partial periods (other than monthly) shall be computed using the number of days actually elapsed.

The Principal Amount shall be mandatorily convertible into shares of Common Stock as provided in Article 1(b).

The Company’s obligations under this Note are subject to a security interest in all of the Company’s assets, which security interest shall be memorialized in a Security Agreement entered into between the Holder and the Company as of the date hereof (the “Security Agreement”).

Article 1.

CONVERSION

(a)       Interest. Should the Holder elect to have a Monthly Interest Payment paid in shares of Common Stock (such shares, the “Interest Shares”), the Holder shall make such election by written notice delivered to the Company not less than three (3) NASDAQ Trading Days prior to the applicable Interest Payment Date. The number of Interest Shares to be issued to the Holder shall be determined by dividing: (i) the applicable interest payment owed by (ii) the VWAP with respect to on-exchange transactions in Common Stock executed on the NASDAQ during the thirty (30) NASDAQ Trading Days ending five (5) NASDAQ trading days prior to the applicable Interest Payment Date as reported by Bloomberg L.P. Any Interest Shares shall be delivered to the Holder with five (5) Business Days of the applicable Interest Payment Date.

(b)       Principal. The Principal Amount shall be mandatorily convertible on the Maturity Date into restricted shares of Common Stock (such shares, the “Principal Shares”) which shall be delivered within three (3) Business Days of the Maturity Date. The Number of Principal Shares to be issued to the Holder shall be determined by dividing: (i) the Principal Amount by (ii) a price (the “Note Conversion Price”) equal to the lower of (A) the Per Share Value or (B) the VWAP with respect to on-exchange transactions in Common Stock executed on the NASDAQ during the thirty (30) NASDAQ Trading Days prior to the Maturity Date as reported by Bloomberg L.P; provided, however, that the Note Conversion Price shall (except as adjusted pursuant to Article 1(f)) in no event be less than $1.75 per share (the “Floor Price”). In the event that the Note Conversion Price on the Maturity Date is lower than the Floor Price, then the Company may, in its discretion undertaken by a vote of a majority of the disinterested members of the Company’s board of directors, elect to either: (i) pay the Principal Amount in cash to the Holder or (ii) extend the Maturity Date for a period of sixty (60) days, at the conclusion of which the foregoing mechanism for determining the Note Conversion Price and repayment of the Principal Amount shall be determined with finality; provided, however, that at the conclusion of such sixty (60) day period, no Floor Price shall apply in the determining the Note Conversion Price and the Principal Shares shall be issued within three (3) Business Days of the extended Maturity Date.

(c)       Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than such number of shares of the Common Stock as shall be issuable upon the conversion of this Note. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid, non-assessable.

(d)       Fractional Shares. Upon a conversion hereunder, the Company shall not be required to issue stock certificates representing fractions of shares of the Common Stock. All fractional shares shall be rounded up to the nearest whole number of shares.

(e)       Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder, and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance of such shares upon transfer shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

2 

(f)       Adjustments for Stock Dividends, Splits and Other Capital Transactions. If the Company, at any time from and after the date of this Note and as long as this Note is outstanding: (i) shall pay a stock dividend, effect a stock split or otherwise make a distribution or distributions on shares of its Common Stock payable in shares of any class of capital stock, (ii) subdivide outstanding shares of Common Stock into a larger number of shares, (iii) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Note Conversion Price shall be computed on the applicable measuring date to reflect such occurrences. Any adjustment made pursuant to this Article 1(f) shall become effective on the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(g)       Subsequent Rights Offerings. In addition to any adjustments pursuant to Article 1(f) above, if at any time the Company grants, issues or sells any Common Stock Equivalents (as defined below) or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder of will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

(h)       Pro Rata Distributions. During such time as this Note is outstanding, if the Company declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete Conversion of this Note immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.

3 

(i)        Fundamental Transaction. If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other person or other persons making or party to, or associated or affiliated with the other persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Principal Share or Interest Share, as the case may be, that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction. For purposes of any such conversion, the determination of the Note Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Note Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new Note with the same terms and conditions as this Note that is otherwise consistent with the foregoing provisions and evidencing the Holders’ right to convert this Note into Alternate Consideration. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of Company under this Note and the other Transaction Documents in accordance with the provisions of this Article 1(i) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

(j)        Calculations. All calculations under this Article 1 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Article 1, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.

(k)       Notice to the Holders.

(i)       Adjustment to Note Conversion Price. Whenever the Note Conversion Price is adjusted pursuant to any provision of this Article 1, the Company shall promptly deliver to Holder a notice setting forth the Note Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

4 

(ii)       Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to Holder at its last address as it shall appear upon the stock books of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert the Principal Amount and accrued, but unpaid interest thereon (or any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Article 2.

EVENTS OF DEFAULT

(a)       Events of Default Defined. The entire unpaid Principal Amount of this Note, together with interest thereon shall, on written notice to the Company given by the Holder of this Note, forthwith become and be due and payable without presentment, demand, protest or any other action nor obligation of the Holder of any kind, all of which are hereby expressly waived, if any one or more the following events (“Events of Default”) shall have occurred and be continuing; provided, however, that no notice shall be required and this Note shall automatically become due and payable if any of the events described in Article 2(a)(iii) through (vi) occurs. An Event of Default shall occur:

(i)       if failure shall be made in the payment of the Principal Amount or any interest under or on this Note when, as and in the manner (i.e., cash or Common Stock) as the same shall become due pursuant to the terms hereof; or

(ii)      if the Company shall violate or breach to a material extent any of the representations, warranties and covenants contained in this Note or the Security Agreement and such violation or breach shall continue for thirty (30) days after written notice of such breach shall been received by the Company from the Holder; or

5 

(iii)       if the Company shall consent to the appointment of a receiver, trustee or liquidator of itself or of a substantial part of its property, or shall admit in writing its inability to pay its debts generally as they become due, or shall make a general assignment for the benefit of creditors, or shall file a voluntary petition in bankruptcy, or an answer seeking reorganization in a proceeding under any bankruptcy law (as now or hereafter in effect) or an answer admitting the material allegations of a petition filed against the Company in any such proceeding, or shall by voluntary petition, answer or consent, seek relief under the provisions of any other now existing or future bankruptcy or other similar law providing for the reorganization or winding up of corporations, or an arrangement, composition, extension or adjustment with its or their creditors, or shall, in a petition in bankruptcy filed against it or them be adjudicated a bankrupt, or the Company or its board of directors or a majority of its stockholders shall vote to dissolve or liquidate the Company; or

(iv)       if an involuntary petition shall be filed against the Company seeking relief against the Company under any now existing or future bankruptcy, insolvency or other similar law providing for the reorganization or winding up of corporations, or an arrangement, composition, extension or adjustment with its or their creditors, and such petition shall not be vacated or set aside within ninety (90) days from the filing thereof; or

(v)       if a court of competent jurisdiction shall enter an order, judgment or decree (not subject to appeal) appointing, without consent of the Company, a receiver, trustee or liquidator of the Company, or of all or any substantial part of the property of the Company, or approving a petition filed against the Company seeking a reorganization or arrangement of the Company under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any State thereof, or any substantial part of the property of the Company shall be sequestered; and such order, judgment or decree shall not be vacated or set aside within ninety (90) days from the date of the entry thereof; or

(vi)       if, under the provisions of any law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Company or of all or any substantial part of the property of the Company and such custody or control shall not be terminated within ninety (90) days from the date of assumption of such custody or control.

Article 3.

REGISTRATION RIGHTS

The Company hereby grants the following registration rights to the Holder.

(a)       Registration Statement. The Company shall file with the Securities and Exchange Commission (the “SEC”) not later than thirty (30) days after the date of this Note a registration statement on an appropriate form (the “Registration Statement”) covering the resale of the Principal Shares and the Interest Shares (collectively, the “Shares”) issuable upon conversion of this Note and shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective within one hundred twenty (120) days following the date hereof. Notwithstanding anything to the contrary herein, at any time, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company, in the best interest of the Company and otherwise required (a “Grace Period”); provided, that the Company shall promptly: (i) notify the Holder in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public information to the Holder) and the date on which the Grace Period will begin, and (ii) use commercially reasonable efforts to resolve any issue that makes disclosure of the material, non-public information not in the best interests of the Company.

6 

(b)       Registration Procedures. In connection with the Registration Statement, the Company will:

(i)       Prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective with respect to the Holder until all the Shares owned by such Holder may be resold without restriction under the Securities Act; and

(ii)       Immediately notify the Holders when the prospectus included in the Registration Statement is required to be delivered under the Securities Act of 1933, as amended (the “Securities Act”), of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. If the Company notifies the Holders to suspend the use of any prospectus until the requisite changes to such prospectus have been made, then the Holders shall suspend use of such prospectus. In such event, the Company will use its commercially reasonable efforts to update such prospectus as promptly as is practicable.

(c)       Provision of Documents etc. In connection with the Registration Statement, the Holder will furnish to the Company in writing such information and representation letters with respect to itself and the proposed distribution by it as reasonably shall be necessary in order to assure compliance with federal and applicable state securities laws. The Company may require the Holder, upon five business days’ notice, to furnish to the Company a certified statement as to, among other things, the number of Shares and the number of other shares of the Company’s Common Stock beneficially owned by such Holder and the person that has voting and dispositive control over such shares. The Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act, if applicable, in connection with sales of Shares pursuant to the Registration Statement.

(d)       Expenses. All expenses incurred by the Company in complying with this article, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees of transfer agents and registrars are called “Registration Expenses.” All underwriting discounts and selling commissions applicable to the sale of the Shares, including any fees and disbursements of any counsel to the Holder, are called “Selling Expenses.” The Company will pay all Registration Expenses in connection with the Registration Statement. Selling Expenses in connection with the Registration Statement shall be borne by the applicable Holder.

(e)       Indemnification and Contribution.

(i)       The Company will, to the extent permitted by law, indemnify and hold harmless the Holder, and, as applicable, each officer of Holder, each director of Holder, and each other person, if any, who controls Holder within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Holder or such other person (a “controlling person”) may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (“Claims”) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement at the time of its effectiveness, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances when made, and will, subject to the limitations herein, reimburse such Holder and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the Company shall not be liable to Holder to the extent that any Claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in conformity with information furnished by such Holder or any such controlling person in writing specifically for use in the Registration Statement or related prospectus, as amended or supplemented.

7 

(ii)       The Holder will, to the extent permitted by law, indemnify and hold harmless the Company, and each person, if any, who controls the Company within the meaning of the Securities Act, each underwriter, each officer of the Company who signs the Registration Statement and each director of the Company against all Claims to which the Company or such officer, director, underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such Claims arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such officer, director, underwriter and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that such Holder will be liable hereunder in any such case if and only to the extent that any such Claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such Holder, as such, furnished in writing to the Company by such Holder specifically for use in the Registration Statement or related prospectus, as amended or supplemented.

(iii)       Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this section and shall only relieve it from any liability which it may have to such indemnified party under this section except and only if and to the extent the indemnifying party is materially prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this section for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified parties, as a group, shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. The indemnifying party shall not be liable for any settlement of any such proceeding affected without its written consent, which consent shall not be unreasonably withheld.

(iv)       In order to provide for just and equitable contribution in the event of joint liability under the Securities Act in any case in which either (i) the Holder, or any controlling person of the Holder, makes a claim for indemnification pursuant to this section but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this section provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of the Holder or controlling person of the Holder in circumstances for which indemnification is not provided under this section, then, and in each such case, the Company and the Holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in a manner that reflects, as near as practicable, the economic effect of the foregoing provisions of this section. Notwithstanding the foregoing, no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

8 

(f)        Delivery of Unlegended Shares.

(i)        Within three business days (such business day, the “Unlegended Shares Delivery Date”) after the business day on which the Company has received (i) a notice that Shares have been sold either pursuant to, and in compliance with, the Registration Statement or Rule 144 under the Securities Act (“Rule 144”) and (ii) in the case of sales under Rule 144, customary representation letters of the Holder and Holder’s broker regarding compliance with the requirements of Rule 144, the Company at its expense, (A) shall deliver the Shares so sold without any restrictive legends relating to the Securities Act (the “Unlegended Shares”); and (B) shall cause the transmission of the certificates representing the Unlegended Shares together with a legended certificate representing the balance of the unsold Shares, if any, to the Holder at the address specified in the notice of sale, via express courier, by electronic transfer or otherwise on or before the Unlegended Shares Delivery Date. Transfer fees shall be the responsibility of the Holder.

(ii)        In lieu of delivering physical certificates representing the Unlegended Shares, if the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, upon request of Holder, so long as the certificates therefor do not bear a legend and the Holder is not obligated to return such certificate for the placement of a legend thereon, the Company shall use its best efforts to cause its transfer agent to electronically transmit the Unlegended Shares by crediting the account of Holder’s broker with DTC through its Deposit/Withdrawal at Custodian system. Such delivery must be made on or before the Unlegended Shares Delivery Date but is subject to the cooperation of the Holder’s broker (the so-called DTC participant).

(iii)        The Holder agrees that the removal of the restrictive legend from certificates representing the Shares as set forth in this section is predicated upon the Company’s reliance that the Holder will sell any Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.

(g)       Rule 144. The Company agrees that until all the Shares have been sold under a Registration Statement or pursuant to Rule 144 or other available exemption from Securities Act registration requirements, it shall use its reasonable commercial efforts to keep current in filing all reports, statements and other materials required to be filed with the SEC to permit the Investors to sell the Shares under Rule 144. The Company shall use commercially reasonable efforts to facilitate sales of the Shares under Rule 144, including the delivery of customary transfer agent instructions to the Company’s transfer agent and causing its counsel to deliver any required opinion to the Company’s transfer agent if resales under Rule 144 are permissible under the Securities Act.

Article 4.

MISCELLANEOUS

(a)       Security. The obligations of the Company under this Note are secured by a lien on all of the assets of the Company as more fully described in the Security Agreement.

9 

(b)       Taxes, Charges, and Expenses. The Company, at its own cost, shall report interest income, if any, to the IRS and/or other applicable tax authorities and to the Holder on a Form 1099-INT or other appropriate form in accordance with applicable law. The Company shall bear sole responsibility for any costs or fees in connection with the payment of Interest with respect to this Note, including, but not limited to, wire transfer fees, bank check fees and escrow agent fees.

(c)       Transferability. The Company may not assign this Note. This Note will be binding upon the Company and its successors and will inure to the benefit of the Holder and its successors and assigns and may be assigned by the Holder to anyone of its choosing without the Company’s approval, but subject to transfer restrictions under applicable law.

(d)       Prepayment. This Note may not be prepaid by the Company without the written consent of the Holder. Notwithstanding the foregoing, if the Company sells any of its securities, whether equity, equity-linked or debt securities (a “Capital Raising Transaction”), prior to the Maturity Date, then forty percent (40%) of the funds raised in such Capital Raising Transaction shall be used to pay down this Note and the other Payout Notes issued pursuant to the Contribution Agreement on a pro rata basis based upon the relative principal amounts of this Payout Note and the other Payout Notes; provided, however, that if the investors in such Capital Raising Transaction stipulate that the proceeds cannot be used to pay down indebtedness, then none of the proceeds of such Capital Raising Transaction shall be used to pay down the Payout Notes on an accelerated basis; provided further, however, that a committee consisting of board members Michael R. Stewart and Dennis M. McGrath unanimously consent to the use of proceeds from such Capital Raising Transaction.

(e)       WAIVER OF TRIAL BY JURY. COMPANY AND HOLDER HEREBY KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT OR OTHERWISE, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS NOTE.

(f)        Mutilated, Destroyed, Lost or Stolen Notes. If this Note shall become mutilated or defaced, or be destroyed, lost or stolen, the Company shall execute and deliver a new note of like principal amount in exchange and substitution for the mutilated or defaced Note, or in lieu of and in substitution for the destroyed, lost or stolen Note certificate. In the case of a mutilated or defaced Note certificate, the Holder shall surrender such Note certificate to the Company. In the case of any destroyed, lost or stolen Note certificate, the Holder shall furnish to the Company: (i) evidence to its satisfaction of the destruction, loss or theft of such Note certificate and (ii) such security or indemnity (which shall not include the posting of any bond) as may be reasonably required by the Company to hold the Company harmless.

(g)       Waiver of Demand, Presentment, etc. The Company hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, bringing of suit and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereunder, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder. The Company agrees that, in the event of an Event of Default, to reimburse the Holder for all reasonable costs and expenses (including reasonable legal fees of one counsel) incurred in connection with the enforcement and collection of this Note.

(h)       Payment. All payments with respect to this Note shall be made in lawful money of the United States of America, at the address of the Holder as of the date hereof or as designated in writing by the Holder from time to time. The receipt by the Holder of immediately available funds shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Note to the extent of the sum represented by such payment. Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal.

10 

(i)        Waiver and Amendment. Any provision of this Note, including, without limitation, the due date hereof, and the observance of any term hereof, may be amended, waived or modified (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.

(j)        Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provisions shall be excluded from this Note, and the balance of this Note shall be interpreted as if such provisions were so excluded and shall be enforceable in accordance with its terms.

(k)       Notices. All notices that are required or may be given pursuant to this Agreement shall be sufficient in all respects if given in writing, in English and by personal delivery (if signed for receipt), by certified or registered United States mail (postage prepaid, return receipt requested), by a nationally recognized overnight delivery service for next day delivery, or transmitted via electronic mail (following appropriate confirmation of receipt by return email, including an automated confirmation of receipt) and shall be deemed to have been made and the receiving Party charged with notice, when received except that if received after 5:00 p.m. (in the recipient’s time zone) on a Business Day or if received on a day that is not a Business Day, such notice, request or communication will not be effective until the next succeeding Business Day. All notices shall be addressed as follows:

If to the Company:

PhotoMedex, Inc.
2300 Computer Drive, Building G
Willow Grove, PA 19090
Attention: Stephen Johnson
Email: sjohnson@photomedex.com

If to the Holder:

Dennis M. McGrath
2 Colonial Court
Medford, NJ 08055
Email: dmcgrath@photomedex.com

(l)        Governing Law; Venue. This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements executed and to be performed wholly within such State, without regard to any principles of conflicts of law. Each of the parties hereby (i) irrevocably consents and agrees that any legal or equitable action or proceeding arising under or in connection with this Agreement may be brought in the federal or state courts located in the County of New York in the State of New York, (ii) by execution and delivery, or receipt, of this Note , irrevocably submits to and accepts the jurisdiction of said courts, (iii) waives any defense that such court is not a convenient forum, and (iv) consent that any service of process may be made (x) in the manner set forth in Article 4(k) of this Note, or (y) by any other method of service permitted by law.

[remainder of page intentionally left blank]

11 

IN WITNESS WHEREOF, the Company has executed this Note as of the date and year first aforesaid.

PHOTOMEDEX, INC.
By:	/s/Suneet Singal
	Name: Suneet Singal
	Title: Chief Executive Officer

EX-10.6

Exhibit 10.6

NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR STATE LAW OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

$1,515,000 October 12, 2017

PHOTOMEDEX, INC.

SECURED CONVERTIBLE PAYOUT NOTE DUE OCTOBER 12, 2018

FOR VALUE RECEIVED, PhotoMedex, Inc., a Nevada corporation (the “Company”), hereby promises to pay to the order of Yoav Ben-Dror (the “Holder”), the principal amount of One Million Five Hundred Fifteen Thousand Dollars ($1,515,000) (the “Principal Amount”), together with interest as hereinafter provided, on October 12, 2018 (the “Maturity Date”).

This Secured Convertible Payout Note (this “Note”) is being issued in connection with the closing of the transactions contemplated by that certain Interest Contribution Agreement, dated March 31, 2017 (the “Contribution Agreement”), by and among First Capital Real Estate Operating Partnership, L.P., a Delaware limited partnership, First Capital Real Estate Trust Incorporated, a Maryland corporation, FC Global Realty Operating Partnership, LLC, a Delaware limited liability company, and the Company. All capitalized terms used but not otherwise defined in this Note shall have the same meanings ascribed to them in the Contribution Agreement.

By his receipt hereof, the Holder acknowledges and agrees that: (i) the Principal Amount represents, as of the date hereof, the full and complete amount of all compensation liabilities owed by the Company and its Subsidiaries and affiliates to the Holder (“Compensation Liabilities”); (ii) all such Compensation Liabilities are being memorialized in this Note and no other oral or written agreement, document or instrument; and (iii) upon payment in full of all obligations hereunder, the Company shall have repaid all Compensation Liabilities to the Holder.

Any payments on account of the Note shall be applied first to interest and then to principal.

Interest on the outstanding Principal Amount shall be paid in: (i) cash or (ii) at the election of the Holder, in restricted shares of the Company’s common stock, par value $.01 per share (“Common Stock”) as provided in Article 1(a). Interest shall be paid at the rate of ten percent (10%) per annum and shall be payable monthly in arrears commencing on December 1, 2017 (each such payment, a “Monthly Interest Payment” and each date of such payment, an “Interest Payment Date”). Interest shall be computed on the basis of a 360-day year, and any partial periods (other than monthly) shall be computed using the number of days actually elapsed.

The Principal Amount shall be mandatorily convertible into shares of Common Stock as provided in Article 1(b).

The Company’s obligations under this Note are subject to a security interest in all of the Company’s assets, which security interest shall be memorialized in a Security Agreement entered into between the Holder and the Company as of the date hereof (the “Security Agreement”).

Article 1.
CONVERSION

(a)           Interest. Should the Holder elect to have a Monthly Interest Payment paid in shares of Common Stock (such shares, the “Interest Shares”), the Holder shall make such election by written notice delivered to the Company not less than three (3) NASDAQ Trading Days prior to the applicable Interest Payment Date. The number of Interest Shares to be issued to the Holder shall be determined by dividing: (i) the applicable interest payment owed by (ii) the VWAP with respect to on-exchange transactions in Common Stock executed on the NASDAQ during the thirty (30) NASDAQ Trading Days ending five (5) NASDAQ trading days prior to the applicable Interest Payment Date as reported by Bloomberg L.P. Any Interest Shares shall be delivered to the Holder with five (5) Business Days of the applicable Interest Payment Date.

(b)           Principal. The Principal Amount shall be mandatorily convertible on the Maturity Date into restricted shares of Common Stock (such shares, the “Principal Shares”) which shall be delivered within three (3) Business Days of the Maturity Date. The Number of Principal Shares to be issued to the Holder shall be determined by dividing: (i) the Principal Amount by (ii) a price (the “Note Conversion Price”) equal to the lower of (A) the Per Share Value or (B) the VWAP with respect to on-exchange transactions in Common Stock executed on the NASDAQ during the thirty (30) NASDAQ Trading Days prior to the Maturity Date as reported by Bloomberg L.P; provided, however, that the Note Conversion Price shall (except as adjusted pursuant to Article 1(f)) in no event be less than $1.75 per share (the “Floor Price”). In the event that the Note Conversion Price on the Maturity Date is lower than the Floor Price, then the Company may, in its discretion undertaken by a vote of a majority of the disinterested members of the Company’s board of directors, elect to either: (i) pay the Principal Amount in cash to the Holder or (ii) extend the Maturity Date for a period of sixty (60) days, at the conclusion of which the foregoing mechanism for determining the Note Conversion Price and repayment of the Principal Amount shall be determined with finality; provided, however, that at the conclusion of such sixty (60) day period, no Floor Price shall apply in the determining the Note Conversion Price and the Principal Shares shall be issued within three (3) Business Days of the extended Maturity Date.

(c)           Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than such number of shares of the Common Stock as shall be issuable upon the conversion of this Note. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid, non-assessable.

(d)           Fractional Shares. Upon a conversion hereunder, the Company shall not be required to issue stock certificates representing fractions of shares of the Common Stock. All fractional shares shall be rounded up to the nearest whole number of shares.

(e)           Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder, and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance of such shares upon transfer shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

2

(f)            Adjustments for Stock Dividends, Splits and Other Capital Transactions. If the Company, at any time from and after the date of this Note and as long as this Note is outstanding: (i) shall pay a stock dividend, effect a stock split or otherwise make a distribution or distributions on shares of its Common Stock payable in shares of any class of capital stock, (ii) subdivide outstanding shares of Common Stock into a larger number of shares, (iii) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Note Conversion Price shall be computed on the applicable measuring date to reflect such occurrences. Any adjustment made pursuant to this Article 1(f) shall become effective on the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(g)           Subsequent Rights Offerings. In addition to any adjustments pursuant to Article 1(f) above, if at any time the Company grants, issues or sells any Common Stock Equivalents (as defined below) or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder of will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

(h)           Pro Rata Distributions. During such time as this Note is outstanding, if the Company declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete Conversion of this Note immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.

3

(i)            Fundamental Transaction. If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other person or other persons making or party to, or associated or affiliated with the other persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Principal Share or Interest Share, as the case may be, that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction. For purposes of any such conversion, the determination of the Note Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Note Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new Note with the same terms and conditions as this Note that is otherwise consistent with the foregoing provisions and evidencing the Holders’ right to convert this Note into Alternate Consideration. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of Company under this Note and the other Transaction Documents in accordance with the provisions of this Article 1(i) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

(j)            Calculations. All calculations under this Article 1 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Article 1, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.

(k)           Notice to the Holders.

(i)            Adjustment to Note Conversion Price. Whenever the Note Conversion Price is adjusted pursuant to any provision of this Article 1, the Company shall promptly deliver to Holder a notice setting forth the Note Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

4

(ii)           Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to Holder at its last address as it shall appear upon the stock books of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert the Principal Amount and accrued, but unpaid interest thereon (or any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Article 2.
EVENTS OF DEFAULT 

(a)           Events of Default Defined. The entire unpaid Principal Amount of this Note, together with interest thereon shall, on written notice to the Company given by the Holder of this Note, forthwith become and be due and payable without presentment, demand, protest or any other action nor obligation of the Holder of any kind, all of which are hereby expressly waived, if any one or more the following events (“Events of Default”) shall have occurred and be continuing; provided, however, that no notice shall be required and this Note shall automatically become due and payable if any of the events described in Article 2(a)(iii) through (vi) occurs. An Event of Default shall occur:

(i)            if failure shall be made in the payment of the Principal Amount or any interest under or on this Note when, as and in the manner (i.e., cash or Common Stock) as the same shall become due pursuant to the terms hereof; or

(ii)            if the Company shall violate or breach to a material extent any of the representations, warranties and covenants contained in this Note or the Security Agreement and such violation or breach shall continue for thirty (30) days after written notice of such breach shall been received by the Company from the Holder; or

5

(iii)           if the Company shall consent to the appointment of a receiver, trustee or liquidator of itself or of a substantial part of its property, or shall admit in writing its inability to pay its debts generally as they become due, or shall make a general assignment for the benefit of creditors, or shall file a voluntary petition in bankruptcy, or an answer seeking reorganization in a proceeding under any bankruptcy law (as now or hereafter in effect) or an answer admitting the material allegations of a petition filed against the Company in any such proceeding, or shall by voluntary petition, answer or consent, seek relief under the provisions of any other now existing or future bankruptcy or other similar law providing for the reorganization or winding up of corporations, or an arrangement, composition, extension or adjustment with its or their creditors, or shall, in a petition in bankruptcy filed against it or them be adjudicated a bankrupt, or the Company or its board of directors or a majority of its stockholders shall vote to dissolve or liquidate the Company; or

(iv)          if an involuntary petition shall be filed against the Company seeking relief against the Company under any now existing or future bankruptcy, insolvency or other similar law providing for the reorganization or winding up of corporations, or an arrangement, composition, extension or adjustment with its or their creditors, and such petition shall not be vacated or set aside within ninety (90) days from the filing thereof; or

(v)           if a court of competent jurisdiction shall enter an order, judgment or decree (not subject to appeal) appointing, without consent of the Company, a receiver, trustee or liquidator of the Company, or of all or any substantial part of the property of the Company, or approving a petition filed against the Company seeking a reorganization or arrangement of the Company under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any State thereof, or any substantial part of the property of the Company shall be sequestered; and such order, judgment or decree shall not be vacated or set aside within ninety (90) days from the date of the entry thereof; or

(vi)          if, under the provisions of any law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Company or of all or any substantial part of the property of the Company and such custody or control shall not be terminated within ninety (90) days from the date of assumption of such custody or control.

Article 3.
REGISTRATION RIGHTS

The Company hereby grants the following registration rights to the Holder.

(a)           Registration Statement. The Company shall file with the Securities and Exchange Commission (the “SEC”) not later than thirty (30) days after the date of this Note a registration statement on an appropriate form (the “Registration Statement”) covering the resale of the Principal Shares and the Interest Shares (collectively, the “Shares”) issuable upon conversion of this Note and shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective within one hundred twenty (120) days following the date hereof. Notwithstanding anything to the contrary herein, at any time, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company, in the best interest of the Company and otherwise required (a “Grace Period”); provided, that the Company shall promptly: (i) notify the Holder in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public information to the Holder) and the date on which the Grace Period will begin, and (ii) use commercially reasonable efforts to resolve any issue that makes disclosure of the material, non-public information not in the best interests of the Company. 

6

(b)           Registration Procedures. In connection with the Registration Statement, the Company will:

(i)            Prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective with respect to the Holder until all the Shares owned by such Holder may be resold without restriction under the Securities Act; and

(ii)           Immediately notify the Holders when the prospectus included in the Registration Statement is required to be delivered under the Securities Act of 1933, as amended (the “Securities Act”), of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. If the Company notifies the Holders to suspend the use of any prospectus until the requisite changes to such prospectus have been made, then the Holders shall suspend use of such prospectus. In such event, the Company will use its commercially reasonable efforts to update such prospectus as promptly as is practicable.

(c)           Provision of Documents etc. In connection with the Registration Statement, the Holder will furnish to the Company in writing such information and representation letters with respect to itself and the proposed distribution by it as reasonably shall be necessary in order to assure compliance with federal and applicable state securities laws. The Company may require the Holder, upon five business days’ notice, to furnish to the Company a certified statement as to, among other things, the number of Shares and the number of other shares of the Company’s Common Stock beneficially owned by such Holder and the person that has voting and dispositive control over such shares. The Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act, if applicable, in connection with sales of Shares pursuant to the Registration Statement.

(d)           Expenses. All expenses incurred by the Company in complying with this article, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees of transfer agents and registrars are called “Registration Expenses.” All underwriting discounts and selling commissions applicable to the sale of the Shares, including any fees and disbursements of any counsel to the Holder, are called “Selling Expenses.” The Company will pay all Registration Expenses in connection with the Registration Statement. Selling Expenses in connection with the Registration Statement shall be borne by the applicable Holder.

(e)           Indemnification and Contribution.

(i)            The Company will, to the extent permitted by law, indemnify and hold harmless the Holder, and, as applicable, each officer of Holder, each director of Holder, and each other person, if any, who controls Holder within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Holder or such other person (a “controlling person”) may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (“Claims”) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement at the time of its effectiveness, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances when made, and will, subject to the limitations herein, reimburse such Holder and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the Company shall not be liable to Holder to the extent that any Claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in conformity with information furnished by such Holder or any such controlling person in writing specifically for use in the Registration Statement or related prospectus, as amended or supplemented.

7

(ii)           The Holder will, to the extent permitted by law, indemnify and hold harmless the Company, and each person, if any, who controls the Company within the meaning of the Securities Act, each underwriter, each officer of the Company who signs the Registration Statement and each director of the Company against all Claims to which the Company or such officer, director, underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such Claims arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such officer, director, underwriter and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that such Holder will be liable hereunder in any such case if and only to the extent that any such Claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such Holder, as such, furnished in writing to the Company by such Holder specifically for use in the Registration Statement or related prospectus, as amended or supplemented.

(iii)          Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this section and shall only relieve it from any liability which it may have to such indemnified party under this section except and only if and to the extent the indemnifying party is materially prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this section for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified parties, as a group, shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. The indemnifying party shall not be liable for any settlement of any such proceeding affected without its written consent, which consent shall not be unreasonably withheld.

(iv)          In order to provide for just and equitable contribution in the event of joint liability under the Securities Act in any case in which either (i) the Holder, or any controlling person of the Holder, makes a claim for indemnification pursuant to this section but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this section provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of the Holder or controlling person of the Holder in circumstances for which indemnification is not provided under this section, then, and in each such case, the Company and the Holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in a manner that reflects, as near as practicable, the economic effect of the foregoing provisions of this section. Notwithstanding the foregoing, no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

8

(f)            Delivery of Unlegended Shares.

(i)            Within three business days (such business day, the “Unlegended Shares Delivery Date”) after the business day on which the Company has received (i) a notice that Shares have been sold either pursuant to, and in compliance with, the Registration Statement or Rule 144 under the Securities Act (“Rule 144”) and (ii) in the case of sales under Rule 144, customary representation letters of the Holder and Holder’s broker regarding compliance with the requirements of Rule 144, the Company at its expense, (A) shall deliver the Shares so sold without any restrictive legends relating to the Securities Act (the “Unlegended Shares”); and (B) shall cause the transmission of the certificates representing the Unlegended Shares together with a legended certificate representing the balance of the unsold Shares, if any, to the Holder at the address specified in the notice of sale, via express courier, by electronic transfer or otherwise on or before the Unlegended Shares Delivery Date. Transfer fees shall be the responsibility of the Holder.

(ii)           In lieu of delivering physical certificates representing the Unlegended Shares, if the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, upon request of Holder, so long as the certificates therefor do not bear a legend and the Holder is not obligated to return such certificate for the placement of a legend thereon, the Company shall use its best efforts to cause its transfer agent to electronically transmit the Unlegended Shares by crediting the account of Holder’s broker with DTC through its Deposit/Withdrawal at Custodian system. Such delivery must be made on or before the Unlegended Shares Delivery Date but is subject to the cooperation of the Holder’s broker (the so-called DTC participant).

(iii)          The Holder agrees that the removal of the restrictive legend from certificates representing the Shares as set forth in this section is predicated upon the Company’s reliance that the Holder will sell any Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.

(g)           Rule 144. The Company agrees that until all the Shares have been sold under a Registration Statement or pursuant to Rule 144 or other available exemption from Securities Act registration requirements, it shall use its reasonable commercial efforts to keep current in filing all reports, statements and other materials required to be filed with the SEC to permit the Investors to sell the Shares under Rule 144. The Company shall use commercially reasonable efforts to facilitate sales of the Shares under Rule 144, including the delivery of customary transfer agent instructions to the Company’s transfer agent and causing its counsel to deliver any required opinion to the Company’s transfer agent if resales under Rule 144 are permissible under the Securities Act.

Article 4.
MISCELLANEOUS 

(a)           Security. The obligations of the Company under this Note are secured by a lien on all of the assets of the Company as more fully described in the Security Agreement.

9

(b)          Taxes, Charges, and Expenses. The Company, at its own cost, shall report interest income, if any, to the IRS and/or other applicable tax authorities and to the Holder on a Form 1099-INT or other appropriate form in accordance with applicable law. The Company shall bear sole responsibility for any costs or fees in connection with the payment of Interest with respect to this Note, including, but not limited to, wire transfer fees, bank check fees and escrow agent fees.

(c)           Transferability. The Company may not assign this Note. This Note will be binding upon the Company and its successors and will inure to the benefit of the Holder and its successors and assigns and may be assigned by the Holder to anyone of its choosing without the Company’s approval, but subject to transfer restrictions under applicable law.

(d)           Prepayment. This Note may not be prepaid by the Company without the written consent of the Holder. Notwithstanding the foregoing, if the Company sells any of its securities, whether equity, equity-linked or debt securities (a “Capital Raising Transaction”), prior to the Maturity Date, then forty percent (40%) of the funds raised in such Capital Raising Transaction shall be used to pay down this Note and the other Payout Notes issued pursuant to the Contribution Agreement on a pro rata basis based upon the relative principal amounts of this Payout Note and the other Payout Notes; provided, however, that if the investors in such Capital Raising Transaction stipulate that the proceeds cannot be used to pay down indebtedness, then none of the proceeds of such Capital Raising Transaction shall be used to pay down the Payout Notes on an accelerated basis; provided further, however, that a committee consisting of board members Michael R. Stewart and Dennis M. McGrath unanimously consent to the use of proceeds from such Capital Raising Transaction.

(e)           WAIVER OF TRIAL BY JURY. COMPANY AND HOLDER HEREBY KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT OR OTHERWISE, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS NOTE.

(f)            Mutilated, Destroyed, Lost or Stolen Notes. If this Note shall become mutilated or defaced, or be destroyed, lost or stolen, the Company shall execute and deliver a new note of like principal amount in exchange and substitution for the mutilated or defaced Note, or in lieu of and in substitution for the destroyed, lost or stolen Note certificate. In the case of a mutilated or defaced Note certificate, the Holder shall surrender such Note certificate to the Company. In the case of any destroyed, lost or stolen Note certificate, the Holder shall furnish to the Company: (i) evidence to its satisfaction of the destruction, loss or theft of such Note certificate and (ii) such security or indemnity (which shall not include the posting of any bond) as may be reasonably required by the Company to hold the Company harmless.

(g)           Waiver of Demand, Presentment, etc. The Company hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, bringing of suit and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereunder, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder. The Company agrees that, in the event of an Event of Default, to reimburse the Holder for all reasonable costs and expenses (including reasonable legal fees of one counsel) incurred in connection with the enforcement and collection of this Note.

(h)           Payment. All payments with respect to this Note shall be made in lawful money of the United States of America, at the address of the Holder as of the date hereof or as designated in writing by the Holder from time to time. The receipt by the Holder of immediately available funds shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Note to the extent of the sum represented by such payment. Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal.

10

(i)            Waiver and Amendment. Any provision of this Note, including, without limitation, the due date hereof, and the observance of any term hereof, may be amended, waived or modified (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.

(j)            Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provisions shall be excluded from this Note, and the balance of this Note shall be interpreted as if such provisions were so excluded and shall be enforceable in accordance with its terms.

(k)           Notices. All notices that are required or may be given pursuant to this Agreement shall be sufficient in all respects if given in writing, in English and by personal delivery (if signed for receipt), by certified or registered United States mail (postage prepaid, return receipt requested), by a nationally recognized overnight delivery service for next day delivery, or transmitted via electronic mail (following appropriate confirmation of receipt by return email, including an automated confirmation of receipt) and shall be deemed to have been made and the receiving Party charged with notice, when received except that if received after 5:00 p.m. (in the recipient’s time zone) on a Business Day or if received on a day that is not a Business Day, such notice, request or communication will not be effective until the next succeeding Business Day. All notices shall be addressed as follows:

If to the Company:

PhotoMedex, Inc. 

2300 Computer Drive, Building G
Willow Grove, PA 19090

Attention: Stephen Johnson

Email: sjohnson@photomedex.com

If to the Holder:

Yoav Ben-Dror 

66 Pinkas St. 

Tel Aviv, Israel 6215719 

Email: yoav@ben-dror.co.il

(l)            Governing Law; Venue. This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements executed and to be performed wholly within such State, without regard to any principles of conflicts of law. Each of the parties hereby (i) irrevocably consents and agrees that any legal or equitable action or proceeding arising under or in connection with this Agreement may be brought in the federal or state courts located in the County of New York in the State of New York, (ii) by execution and delivery, or receipt, of this Note , irrevocably submits to and accepts the jurisdiction of said courts, (iii) waives any defense that such court is not a convenient forum, and (iv) consent that any service of process may be made (x) in the manner set forth in Article 4(k) of this Note, or (y) by any other method of service permitted by law.

[remainder of page intentionally left blank]

11

IN WITNESS WHEREOF, the Company has executed this Note as of the date and year first aforesaid.

PHOTOMEDEX, INC.
By:	/s/ Suneet Singal
Name:	Suneet Singal
Title:	Chief Executive Officer

EX-10.7

Exhibit 10.7

SECURITY AGREEMENT

This SECURITY AGREEMENT (“Agreement”) is made as of October 12, 2017, by and between PhotoMedex, Inc., a Nevada corporation (to be renamed FC Global Realty Incorporated) (the “Debtor”), and Dolev Rafaeli (“Rafaeli”), Dennis M. McGrath (“McGrath”) and Yoav Ben-Dror (“Ben-Dror”) (each, a “Secured Party” and together, the “Secured Parties”).

WHEREAS, each Secured Party is the holder of a Secured Payout Note Due October 12, 2018 made by the Debtor in favor of such Secured Party as of the date hereof in the principal amount of $3,133,934 with respect to Rafaeli, $977,666 with respect to McGrath, and $1,515,000 with respect to Ben-Dror (each, a “Note” and together, the “Notes”); and

WHEREAS, in connection with the Notes, Secured Parties desire to obtain from Debtor, and Debtor desires to grant to Secured Parties, a security interest in the collateral more particularly described below.

NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.            Grant of Security Interest. Debtor hereby grants to Secured Parties a security interest in all of the properties, assets and personal property of Debtor, whether now owned or hereafter acquired (collectively, the “Collateral”) including, without limitation, the following:

(a)           presently existing and hereafter arising accounts, contract rights, and all other forms of obligations owing to Debtor arising out of the sale or lease of goods or the rendition of services by Debtor, whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Debtor and Debtor’s Books relating to any of the foregoing (collectively, “Accounts”);

(b)          present and future general intangibles and other personal property (including payment intangibles, choses or things in action, goodwill, intellectual property, patents, trade names, trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, monies due under any royalty or licensing agreements, infringement claims, software, computer programs, computer discs, computer tapes, literature, reports, catalogs deposit accounts, insurance premium rebates, tax refunds, and tax refund claims) (collectively, “General Intangibles”);

(c)           present and future letters of credit, letter-of-credit rights (whether or not evidenced by a writing) and other supporting obligations, notes, drafts, instruments (including promissory notes), certificated and uncertificated securities, documents, leases, and chattel paper (whether tangible or electronic), and Debtor’s Books relating to any of the foregoing (collectively, “Negotiable Collateral”);

(d)           present and future inventory in which Debtor has any interest, including goods held for sale or lease or to be furnished under a contract of service and all of Debtor’s present and future raw materials, work in process, finished goods, and packing and shipping materials, wherever located, and any documents of title representing any of the above, and Debtor’s Books relating to any of the foregoing (collectively, “Inventory”);

(e)           present and hereafter acquired machinery, machine tools, motors, equipment, furniture, furnishings, fixtures, vehicles (including motor vehicles and trailers), tools, parts, dies, jigs, goods (other than consumer goods or farm products), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located (collectively, “Equipment”);

(f)           present and hereafter acquired books and records including: ledgers; records indicating, summarizing, or evidencing Debtor’s assets or liabilities, or the collateral; all information relating to Debtor’s business operations or financial condition; and all computer programs, disc or tape files, printouts, funds or other computer prepared information, and the equipment containing such information (collectively, “Debtor’s Books”);

(g)           “Investment Property,” as that term is defined in Section 9 of the UCC (defined below).

(h)           substitutions, replacements, additions, accessions, proceeds, products to or of any of the foregoing, including, but not limited to, proceeds of insurance covering any of the foregoing, or any portion thereof, and any and all Accounts, General Intangibles, Inventory, Equipment, Investment Property, money, deposits, accounts, or other tangible or intangible property resulting from the sale or other disposition of the Accounts, General Intangibles, Inventory, Equipment, Investment Property or any portion thereof or interest therein and the proceeds thereof.

The security interests granted hereby shall secure the prompt payment of the principal and all accrued interest due under and pursuant to the terms of the Notes (the “Obligations”).

2.            Perfection by Filing. Debtor hereby specifically authorizes Secured Parties at any time and from time to time to file financing statements, continuation statements and amendments thereto that describe the Collateral and contain any other information required by Article 9 of the Uniform Commercial Code, as enacted in New York (the “UCC”) for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including whether Debtor is an organization, the type of organization and any organization identification number issued to Debtor. Debtor agrees to furnish any such information to the Secured Parties promptly upon request. Any such financing statements, continuation statements or amendments may be signed by an agent of Secured Parties on behalf of Debtor and may be filed at any time in any jurisdiction. Debtor hereby irrevocably constitutes and appoints Secured Parties and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Debtor and in the name of Debtor or in its own name, from time to time in such Secured Parties’ discretion, for the limited purpose of carrying out the terms of this subsection regarding perfection by filing. Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this subsection are coupled with an interest and are irrevocable until all of the Obligations (as defined in the Loan Documents) have been paid and satisfied in full.

3.            Perfection Other Than by Filing, etc. At any time and from time to time, Debtor shall take such steps as Secured Parties may reasonably request for Debtor (a) to obtain an acknowledgment, in form and substance reasonably satisfactory to Secured Parties, of any bailee having possession of any of the Collateral, that such bailee holds such Collateral for the Secured Parties, (b) to obtain control of any investment property, deposit accounts, letter-of-credit rights or electronic chattel paper (as such terms are defined in Article 9 of the UCC) as set forth in Article 9 of the UCC, and, where control is established by written agreement, such agreement shall be in form and substance reasonably satisfactory to Secured Parties, and (c) otherwise to insure the continued perfection and priority of Secured Parties’ security interest in any of the Collateral and of the preservation of its rights therein.

 2

4.            Agreements With Respect to the Collateral. Debtor covenants and agrees with Secured

Parties as follows:

(a)           Debtor shall notify Secured Parties in writing of any change in the location of Debtor’s principal place of business or the location of any material tangible Collateral or the place(s) where the records concerning all intangible Collateral are kept or maintained.

(b)           Debtor will keep the Collateral in good condition and repair, ordinary wear and tear excepted, and will pay and discharge all taxes, levies and other impositions levied thereon as well as the cost of repairs to or maintenance of same, and will not permit anything to be done that may materially impair the value of any of the Collateral. If Debtor fails to pay such sums, Secured Parties may do so for Debtor’s account and add the amount thereof to the Obligations.

(c)           Until the occurrence of an Event of Default (as defined in the Note), Debtor shall be entitled to exercise the remedies set forth herein.

(d)           So long as an Event of Default has not occurred, Debtor shall have the right to process and sell the Collateral in the regular course of business. Secured Parties’ security interest hereunder shall attach to all proceeds of all sales of the Collateral. If at any time any such proceeds shall be represented by any instruments, chattel paper or documents of title, then such instruments, chattel paper or documents of title shall be subject to the security interest granted hereby.

5.            Remedies Upon Default. Upon the occurrence of an Event of Default under and as defined in the Notes, including without limitation, a payment default under the Notes, Secured Parties may (subject in all instances to Article 3 of the Notes) pursue any or all of the following remedies:

(a)           Secured Parties shall give written notice of default to Debtor, following which Debtor shall not dispose of, conceal, transfer, sell or encumber any of the Collateral (including, but not limited to, cash proceeds) without Secured Parties prior written consent, except in the ordinary course of business.

(b)           Secured Parties may dispose of the Collateral at private or public sale in accordance with the applicable provisions of the UCC. Any required notice of sale shall be deemed commercially reasonable if given at least twenty (20) days prior to sale.

(c)           Secured Parties may exercise their lien upon and right of setoff against any monies, items, credits, deposits or instruments that Secured Parties may have in their possession and that belong to Debtor or to any other person or entity liable for the payment of any or all of the Obligations.

(d)           Secured Parties may exercise any right that they may have under any other document evidencing or securing the Obligations or otherwise available to Secured Party at law or equity.

(e)           Notwithstanding anything herein to the contrary, Secured Parties shall not be entitled to exercise any rights with respect to the Collateral to the extent that the reasonable value of the Collateral exceeds the amount then due and owing to the Secured Parties.

(f)           The Secured Party acknowledges and agrees that Collateral is subject to security interests granted to other secured parties by the Debtor. In exercising any of Secured Parties’ rights hereunder, the Secured Parties shall undertake to (i) coordinate its efforts with such other secured parties to minimize any inconvenience to the Secured Parties or disruption to its business activities, and (ii) effect the exercise of their rights hereunder so as to not adversely affect in any manner the value of the Collateral or to impose costs or obligations on Secured Parties in excess of what Secured Parties would reasonably be expected to bear were the Debtor the sole party with rights to the Collateral.

 3

6.            Termination Statement. Upon receipt of proper written demand following the payment in full of the Obligations, Secured Parties shall promptly file a termination statement with respect to any financing statement filed to perfect Secured Party’s security interests in any of the Collateral to Debtor or cause such termination statement to be filed with the appropriate filing officer(s). If the Secured Parties shall fail to file any such termination statement within ten (10) days of the payment in full of all Obligations, Debtor shall have the right to file such termination statements.

7.            Binding Effect. This Agreement shall inure to the benefit of Secured Parties’ successors and assigns and shall bind Debtor’s successors and assigns.

8.           Severability. If any provision of this Agreement is held invalid, such invalidity shall not affect the validity or enforceability of the remaining provisions of this Agreement.

9.           Governing Law and Amendments. This Agreement shall be construed and enforced under the laws of the State of New York applicable to contracts to be wholly performed in such State. No amendment or modification hereof shall be effective except in a writing executed by each of the parties hereto.

10.          Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original instrument, but all such counterparts together shall constitute but one agreement. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (.pdf) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.

11.          Construction and Interpretation. Should any provision of this Agreement require judicial interpretation, the parties hereto agree that the court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against one party by reason of the rule of construction that a document is to be more strictly construed against the party that itself or through its agent prepared the same, it being agreed that Debtor, Secured Parties and their respective agents have participated in the preparation hereof.

12.          Exclusive Venue. Each of the parties hereby (i) irrevocably consents and agrees that any legal or equitable action or proceeding arising under or in connection with this Agreement may be brought in the federal or state courts located in the County of New York in the State of New York, (ii) by execution and delivery, or receipt, of this Note , irrevocably submits to and accepts the jurisdiction of said courts, (iii) waives any defense that such court is not a convenient forum, and (iv) consent that any service of process may be made (x) in the manner set forth in Article 4(e) of this Note, or (y) by any other method of service permitted by law.

13.          Waiver of Trial by Jury. SECURED PARTIES AND DEBTOR HEREBY KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT OR OTHERWISE, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT OR THE LOAN DOCUMENTS.

14.          Notice. Any notice under this Agreement shall be made in accordance with the terms of the Notes.

 4

IN WITNESS WHEREOF, Debtor and Secured Party have executed this Agreement, or have caused this Agreement to be executed as of the date first above written.

DEBTOR:
PHOTOMEDEX, INC.
By:	/s/ Suneet Singal
	Name: Suneet Singal Title:   Chief Executive Officer
SECURED PARTY:
/s/ Dr. Dolev Rafaeli
Dr. Dolev Rafaeli
/s/ Dennis M. McGrath
Dennis M. McGrath
/s/ Yoav Ben-Dror
Yoav Ben-Dror

EX-10.8

Exhibit 10.8

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is dated and entered into as of October 11, 2017 by and between PhotoMedex, Inc., a corporation organized under the laws of the State of Nevada (the “Company”), and Suneet Singal (the “Executive”).

WHEREAS, on May 17, 2017, the Company and the Executive entered into an employment agreement to secure the services of the Executive as Chief Executive Officer of the Company, and the parties now desire to amend and restate such employment agreement as set forth herein.

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

1.             Term of Employment. Subject to the provisions of Section 5 of this Agreement, the Executive shall be employed by the Company for a period commencing on May 17, 2017 (the “Effective Date”) and ending on the third (3rd) anniversary of the Effective Date (the “Term”). The Term shall be renewed automatically for additional one (1) year period(s) unless terminated by either the Company or the Executive in writing by notice to Executive delivered no fewer than ninety (90) days prior to expiration of the then-applicable Term.

2.             Position.

(a)           Duties. The principal duty of the Executive shall be to serve in the position of Chief Executive Officer of the Company. In such capacity, the Executive shall be responsible for the operation and management of the business of the Company, subject to the direction and control of the Board of Directors of the Company (the “Board”). All references to the “Board” in this Agreement shall include any committee of the Board (including the Compensation Committee of the Board) that has been or is in the future delegated the power of the Board to oversee and manage the compensation of the Company’s officers and employees.

(b)           Devotion of Time to Company’s Business. The Executive shall use his best efforts, skills and abilities to promote and protect the interests of the Company and devote sufficient working time and energies to the business and affairs of the Company. The Company acknowledges and agrees that the Executive has and will continue to have executive and management responsibilities to First Capital Real Estate Trust Incorporated and its subsidiaries and affiliates (collectively, “First Capital”) and that nothing in this Agreement shall be construed to restrict or otherwise affect the obligations of the Executive to First Capital. Further, notwithstanding anything to the contrary contained herein, the Executive (i) may serve on the board(s) of additional companies or organizations and receive compensation for such services rendered (ii) may engage in charitable, civic, fraternal, professional, trade association or other activities on behalf of private companies and receive compensation for such services rendered, provided that in each such case the activities engaged in by the Executive do not materially interfere with his obligations to the Company, and do not compete with the Company.

(c)           Directors and Officers Liability Insurance. During the Term and for a period of six years thereafter, the Company, or any successor to the Company resulting from a change in control, shall maintain a directors and officers liability insurance policy (or policies) in a minimum amount of $5,000,000 which shall provide comprehensive coverage to Executive.

1

(d)           Best Efforts. The Executive shall use his best efforts to carry out and successfully complete the assignments, tasks and job activities required, from time to time, to be performed to carry out Executive’s duties and responsibilities during the Term. The Executive’s duties and assignments shall be undertaken at such location(s) as may be determined from time to time by the Company, but in no event shall Executive be required to perform his duties on a regular basis at any location more than 25 miles from the location where Executive regularly performs his duties for the Company immediately prior to the Effective Date.

(e)           Company Rules, Policies and Regulations. The Executive shall, at all times, conduct himself in a professional manner and adhere to the standards, ethical obligations, rules, policies, regulations and procedures of the Company which are presently in force or which may be established from time to time by the Company. Executive shall take no intentional action that violates any law, rule or regulation whatsoever while acting in his capacity as employee.

3.             Compensation and Benefits.

(a)           Base Salary. The Executive shall be paid a base salary in consideration for his services provided to the Company at the rate of $250,000 per annum (the “Base Salary”), payable in accordance with the Company’s normal payroll practices; provided, however, that such Base Salary shall accrue and shall not become payable until (i) the 20% Unsecured Convertible Promissory Note issued by First Capital Real Estate Operating Partnership, L.P. to the Company on July 25, 2017 has been repaid in full and (ii) the Executive begins working for the Company on a full time basis. Increases in Base Salary during the Term shall be determined from time to time in the sole discretion of the Board based upon such criteria as they deem relevant, or based on no particular criteria whatsoever.

(b)           Additional Compensation. The Executive shall be entitled to a bonus subject to achieving milestones that will be set by the Company’s compensation committee within thirty (30) days after the compensation committee receives a business plan for the Company from the Executive and the Chief Financial Officer of the Company. The Executive shall also be entitled to equity compensation in an amount and with a vesting schedule to be determined in good faith by the Company’s compensation committee within thirty (30) days after the compensation committee receives a business plan for the Company from the Executive and the Chief Financial Officer of the Company. This Agreement shall be promptly amended to reflect such compensation.

(c)           Withholding. All salaries, bonuses and other benefits payable to the Executive shall be subject to payroll, withholding and other taxes or deductions as may be required by law.

4.             Employee Benefits; Business Expenses.

(a)           Employee Benefits. During the Term, the Executive and his dependents shall be entitled to participate in the Company’s healthcare plans, welfare benefit plans, life insurance plans or policies, fringe benefit plans and any qualified or non-qualified retirement plans as in effect from time to time (collectively, the “Employee Benefits”), on the same basis as those benefits are made available to the other senior executives of the Company, in accordance with the Company policy as in effect from time to time and in accordance with the terms of the applicable plan documents (if any). If at any time the Company does provide a health insurance plan for which the Executive is eligible, the Executive shall be entitled to reimbursement by the Company of the cost of health insurance paid by the Executive for the Executive and his family. Any such reimbursement shall be paid to the Executive not later than March 15 of the year following the calendar year in which the Executive paid such cost. To the extent that the Company does not provide a health insurance plan for which the Executive is eligible, the Executive shall be entitled to reimbursement by the Company of the cost of health insurance paid by the Executive for the Executive and his family, which reimbursement shall be grossed-up to cover any taxes the Executive would be required to pay as the result of the Company reimbursing the Executive for the cost of the Executive’s health plan.

2

(b)           Perquisites. During the Term, the Executive shall be entitled to receive such perquisites as are or have previously been made available to other senior executives of the Company in accordance with Company policies as in effect from time to time.

(c)           Expenses. The Executive shall be entitled to reimbursement for reasonable and necessary business expenses incurred by him in the performance of his duties and responsibilities hereunder, such expenses to be documented and reimbursed in accordance with the Company’s reimbursement and expenses policies as in effect from time to time.

(d)           Vacation. The Executive shall be entitled to four (4) weeks paid vacation per annum; provided, that the Executive shall be paid annually in cash for vacation days not taken by him; provided that no more than four (4) weeks of vacation may be accrued each year for purposes of such cash payments; and provided further that any such payment shall be paid to the Executive not later than March 15 of the year following the calendar year in which the unused vacation days accrued.

5.             Termination.

(a)           Definitions. For purposes of this Agreement:

(i)            “Cause” shall mean (A) the Executive’s gross negligence and/or willful misconduct (as such terms are generally understood and applied to the performance of an executive) in the performance of his material duties with respect to the Company as determined, in each case, by a court of competent jurisdiction not subject to further appeal or a final arbitration award, as provided hereunder, (B) the conviction by the Executive of a crime constituting a felony or (C) the Executive shall have committed any material act of malfeasance, disloyalty, dishonesty or breach of fiduciary duty against the Company, for which the Executive shall have a ten (10) day cure period following notice thereof from the Company (except for a conviction pursuant to subsection (B), for which there shall be no cure period).

(ii)           “Change of Control” means the occurrence of any one or more of the following events (it being agreed that, with respect to paragraphs (A) and (C) of this definition below, a “Change of Control” shall not be deemed to have occurred if the applicable third party acquiring party is an “affiliate” of the Company within the meaning of Rule 405 promulgated under the Securities Act of 1933, as amended):

(A)          An acquisition (whether directly from the Company or otherwise) of any voting securities of the Company (the “Voting Securities”) by any “Person” (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities and Exchange Act of 1934, as amended (the “1934 Act”)), immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of forty percent (40%) or more of the combined voting power of the Company’s then outstanding Voting Securities; or

(B)           The individuals who, as of the consummation of any transaction or series of related transactions described in paragraphs (A) and (C) of this definition, are members of the Board cease, by reason of transactions, to constitute at least fifty-one percent (51%) of the members of the Board; or

3

(C)         The consummation, in one or a series of related transactions, of:

(I)             A merger, consolidation or reorganization involving the Company, where either or both of the events described in clauses (A) or (B) above would be the result; or

(II)            The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a subsidiary of the Company).

(iii)          “Date of Termination” shall mean the date the Notice of Termination is given to the respective party; provided, however, that with respect to a termination for Cause by the Company, the Date of Termination shall not occur prior to the expiration of any applicable cure period.

(iv)          “Disability” shall mean the Executive has become physically or mentally incapacitated and is therefore unable for a period of four (4) consecutive months to perform any of the material elements of his duties hereunder. Any question as to whether the Executive has a Disability as to which he (or his legal representative) and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Executive (or his legal representative) and the Company. If the Executive (or his legal representative) and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of whether the Executive has a Disability, as made in writing to the Company and the Executive by such physician(s), shall be final and conclusive for all purposes of this Agreement.

(v)           “Good Reason” shall mean (A) a breach by the Company of any of its material obligations or covenants or change to any of the material terms set forth in this Agreement, (B) a material reduction of the duties, responsibilities or title of the Executive, (C) the assignment to the Executive of any duties or responsibilities that are inconsistent, in any significant respect, with his position, for which the Company shall have a ten (10) day cure period following notice thereof from Executive to the Company, (D) an abandonment of, or fundamental change in, the primary business or primary products of the Company, (E) a Change of Control, but only if the Executive’s termination occurs within twelve (12) months after the occurrence of such Change of Control.

(vi)          “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated, and shall be communicated, in writing, to the other party hereto in accordance with the provisions of Section 6(g) hereof.

(b)           By the Company for Cause or by the Executive Without Good Reason.

(i)            The Term and the Executive’s employment hereunder may be terminated by the Company for Cause, immediately upon the delivery of a Notice of Termination by the Company to the Executive (except where the Executive is entitled to a cure period hereunder, in which case such Date of Termination shall be upon the expiration of such cure period if such matter constituting Cause is not cured) and shall terminate automatically upon the Executive’s resignation (other than for Good Reason or due to the Executive’s death or Disability).

4

(ii)            If the Executive’s employment is terminated by the Company for Cause, or if the Executive resigns other than for Good Reason, the Executive shall be entitled to receive:

(A)          any earned but unpaid Base Salary and/or accrued but unused vacation, all vested equity, and any earned but unpaid bonus awards through the Date of Termination,

(B)           reimbursement for any unreimbursed business expenses incurred by the Executive in accordance with the Company’s policy prior to the Date of Termination (with such reimbursements to be paid promptly after the Executive provides the Company with the necessary documentation of such expenses to the extent required by such policy but in no event later than the end of the second calendar month following the year in which the Date of Termination occurred), and

(C)           such Employee Benefits, if any, as to which he may be entitled upon termination of employment under the terms of the plan documents and applicable law (including under the applicable provisions of Consolidated Omnibus Budget Reconciliation Act of 1985, as amended).

Following the Executive’s termination of employment by the Company for Cause or if he resigns other than for Good Reason, except as set forth above or as required by applicable law, the Executive shall have no further rights to any compensation or any other benefits or perquisites under this Agreement and all unvested option or restricted stock grant awards shall immediately be cancelled without the need for any action by the Company.

(c)           By the Company Other Than for Cause or by the Executive for Good Reason.

(i)            The Term and the Executive’s employment hereunder may be terminated by the Company other than for Cause, immediately upon the delivery of a Notice of Termination by the Company to the Executive and shall terminate automatically and immediately upon the Executive’s resignation for Good Reason at the end of any applicable cure period if the circumstances giving rise to Good Reason are not cured.

(ii)           If the Executive’s employment is terminated by the Company other than for Cause, or if the Executive resigns for Good Reason, the Executive shall receive and the Company shall pay to Executive on the Date of Termination:

(A)          any earned but unpaid Base Salary and/or accrued but unused vacation, all vested equity, and any earned but unpaid bonus awards through the Date of Termination, plus an additional twelve (12) months of Annual Compensation (other than the case of a Change of Control, in which case the payment shall be an additional eighteen (18) months of Annual Compensation), together in a lump sum payment;

(B)           acceleration of any then-unvested stock options, restricted stock grants or other equity awards;

(C)           payment or reimbursement, as applicable, of the full health insurance costs for the Executive and his family under a Company-provided group health plan or otherwise for twenty-four (24) months following termination by the Company other than for Cause or resignation by Executive for Good Reason, provided that any such payment or reimbursement which constitutes deferred compensation under Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”), shall be made annually within thirty (30) days after the end of the calendar year in which the health insurance costs were incurred;

5

(D)           in the event any bonus or other form of additional compensation is paid to any other executive(s) of the Company for the fiscal year during which Executive’s employment ceased pursuant to this Section 5(c), a cash amount equal to the largest bonus or other form of additional compensation payment made by the Company to any other executive of the Company during such fiscal year, provided that in the event such bonus or other form of compensation is not ascertainable on the Date of Termination, such payment shall be made no later than March 15 of the year following the calendar year in which the Date of Termination occurred;

(E)           reimbursement for any accrued but unused vacation days and/or unreimbursed business expenses incurred by the Executive in accordance with the Company’s policy prior to the Date of Termination (with such reimbursements to be paid promptly after the Executive provides the Company with the necessary documentation of such expenses to the extent required by such policy but in no event later than the end of the second calendar month following the year in which the Date of Termination occurred); and

(F)           such other Employee Benefits, if any, as to which he may be entitled upon termination of employment hereunder.

Following the Executive’s termination of employment by the Company other than for Cause or if he resigns for Good Reason, except as set forth above or as required by applicable law, the Executive shall have no further rights to any compensation or any other benefits under this Agreement. Notwithstanding the foregoing, in order to be eligible for any of the severance payments and benefits under this Section 5(c), the Executive must execute and deliver to the Company a general release in a form reasonably satisfactory to the Board. If the payments to be made under this Section 5(c) are otherwise subject to Section 409A, they shall be made, or commence to be made, on the first pay period following the date that is thirty (30) days after the Executive’s employment terminates. If the payments are not otherwise subject to Section 409A, they shall be made, or commence to be made, on the first business day after the release becomes effective. The initial payment shall include any unpaid amounts from the date the Executive’s employment terminated, subject to the Executive’s executing and delivering the release on the terms as set forth above.

(d)           Death or Disability. The Executive’s employment hereunder shall terminate upon the Executive’s death and may be terminated by the Company, within ten (10) days after the delivery of a Notice of Termination by the Company to the Executive (or his legal representative) in the event of the Executive’s Disability. Upon termination of the Executive’s employment hereunder for either Disability or death, the Executive shall be entitled to receive the same payments and other items as set forth in clause (ii) of Section 5(b) hereof, except that Executive (in case of Disability) or the estate (in the event of death) shall have the right to exercise any unexercised and vested options for a period of 90 days, and, in addition, to receive payment for accrued but unpaid vacation time, if any. Following the Executive’s termination of employment due to death or Disability, except as set forth herein or as required by applicable law, the Executive (nor his estate) shall have no further rights to any compensation or any other benefits under this Agreement.

(e)           Payment of Amounts Owed upon Termination of Employment. Unless otherwise provided herein, any amounts payable to the Executive for earned but unpaid Base Salary and cash, equity or other bonus awards through the Date of Termination shall be paid within ten (10) business days after the Date of Termination.

6

6.             Miscellaneous.

(a)           Governing Law. This Agreement shall be construed and governed under and by the laws of the State of New York, without regard to the conflicts of laws principles thereof.

(b)           Arbitration of Claims. In the event of any dispute, claim, question or disagreement arising from or relating to this Agreement or the breach thereof (and except for cases in which the Company is entitled to injunctive or other equitable relief as described in Section 9 hereof), the Company and Executive agree to settle the dispute, claim, question or disagreement by arbitration before a single arbitrator in the City of New York, New York, selected by, and such arbitration to be administered by, the American Arbitration Association (“AAA”) in accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Each of the Company and Executive hereby agrees and acknowledges that all disputes between or among them are subject to the alternative dispute resolution procedures of this Section 6(b). Each of the Company and Executive agrees that any aspect of alternative dispute resolution not specifically covered in this Agreement shall be covered, without limitation, by the applicable AAA rules and procedures. Each of the Company and Executive further agree that any determination by the arbitrator regarding any dispute, claim, question or disagreement arising from or relating to this Agreement shall be final and binding upon the parties hereto and shall not be subject to further appeal. Each of the Company and Executive shall bear its own costs and expenses and an equal share of the arbitrator’s fees and administrative fees of arbitration; provided, however, that upon receipt of the determination by the arbitrator the prevailing party shall have all reasonable out-of-pocket fees and expenses reimbursed promptly (in all events within 10 calendar days following delivery to both parties of the arbitrator’s decision) by the non-prevailing party in any such dispute.

(c)           Entire Agreement; Amendments. This Agreement sets forth the entire understanding of the parties concerning the subject matter of this Agreement and incorporates all prior negotiations and understandings. There are no covenants, promises, agreements, conditions or understandings, either oral or written, between them relating to the subject matter of this Agreement other than those set forth herein. The publication, amendment, supplementation or replacement of an employee handbook by the Company shall not be deemed to alter, amend or modify the terms and conditions of this Agreement. No alteration, amendment, change or addition to this Agreement shall be binding upon any party unless in writing and signed by the party to be charged. No purported waiver by any party of any default by another party of any term or provision contained herein shall be deemed to be a waiver of such term or provision unless the waiver is in writing and signed by the waiving party. No such waiver shall in any event be deemed a waiver of any subsequent default under the same or any other term or provision contained herein. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto.

(d)           No Waiver. No waiver of any of the provisions of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed or be construed as a further, continuing or subsequent waiver of any such provision or as a waiver of any other provision of this Agreement. No failure to exercise and no delay in exercising any right, remedy or power hereunder will preclude any other or further exercise of any other right, remedy or power provided herein or by law or in equity.

7

(e)           Severability. If any term or provisions of this Agreement, or the application thereof to any person or circumstance, shall be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances, other than those as to which it is held invalid, shall both be unaffected thereby and each term or provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law.

(f)            Assignment. This Agreement, and the Executive’s rights and duties hereunder, shall not be assignable or delegable by the Executive; provided, however, that if the Executive shall die, all amounts then payable to the Executive hereunder shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee or other designee or, if there be no such devisee, legatee or designee, to his estate. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or successor person or entity.

(g)           Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or internationally recognized courier service addressed to the respective addresses set forth below in this Agreement, or via facsimile or email transmission to the number or email address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

If to the Company:

Board of Directors

PhotoMedex, Inc.

2300 Computer Drive, Building G

Willow Grove, PA 19090

Attention: Dr. Dolev Rafaeli

If to the Executive:

Suneet Singal

60 Broad Street, 25^th Floor, Suite 2501

New York, NY 10004

(h)           Prior Agreements. This Agreement supersedes all prior agreements and understandings (including verbal agreements) between the Executive and the Company regarding the terms and conditions of the Executive’s employment with the Company.

(i)            Cooperation. The Executive shall provide his reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during the Executive’s employment hereunder, but only to the extent the Company requests such cooperation with reasonable advance notice to the Executive and in respect of such periods of time as shall not unreasonably interfere with the Executive’s ability to perform his duties with any subsequent employer; provided, however, the Company shall pay any reasonable travel, lodging and related expenses that the Executive may incur in connection with providing all such cooperation, to the extent approved by the Company prior to incurring such expenses.

(j)            Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

8

(k)           Section 409A.

(i)            The parties intend that the payments and benefits provided for in this Agreement either be exempt from Section 409A, or be provided in a manner that complies with Section 409A and any ambiguity herein shall be interpreted so as to be consistent with the intent of this paragraph. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Section 409A or damages for failing to comply with Section 409A. Notwithstanding anything contained herein to the contrary, all payments and benefits which are payable upon a termination of employment hereunder shall be paid or provided only upon those terminations of employment that constitute a “separation from service” from the Company within the meaning of Section 409A (determined after applying the presumptions set forth in Treas. Reg. Section 1.409A-1(h)(1)). Further, if the Executive is a “specified employee” as such term is defined under Section 409A at the time of a termination of employment and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated recognition of income or additional tax under Section 409A, then the Company will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in payments or benefits ultimately paid or provided to the Executive) until the date that is at least six (6) months following the Executive’s termination of employment with the Company (or the earliest date permitted under Section 409A, e.g., immediately upon the Executive’s death), whereupon the Company will promptly pay the Executive a lump-sum amount equal to the cumulative amounts that would have otherwise been previously paid to the Executive under this Agreement during the period in which such payments or benefits were deferred. Thereafter, payments will resume in accordance with this Agreement.

(ii)           Notwithstanding anything to the contrary in this Agreement, in-kind benefits and reimbursements provided hereunder during any calendar year shall not affect in-kind benefits or reimbursements to be provided in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and are not subject to liquidation or exchange for another benefit. Notwithstanding anything to the contrary in this Agreement, reimbursement requests must be timely submitted by the Executive and, if timely submitted, reimbursement payments shall be promptly made to the Executive following such submission, but in no event later than December 31st of the calendar year following the calendar year in which the expense was incurred. In no event shall the Executive be entitled to any reimbursement payments after December 31st of the calendar year following the calendar year in which the expense was incurred. This paragraph shall only apply to in-kind benefits and reimbursements that would result in taxable compensation income to the Executive.

(iii)          Additionally, in the event that following the date hereof the Company or the Executive reasonably determines that any compensation or benefits payable under this Agreement may be subject to Section 409A, the Company and the Executive shall work together to adopt such amendments to this Agreement or adopt other policies or procedures (including amendments, policies and procedures with retroactive effect), or take any other commercially reasonable actions necessary or appropriate to (x) exempt the compensation and benefits payable under this Agreement from Section 409A and/or preserve the intended tax treatment of the compensation and benefits provided with respect to this Agreement or (y) comply with the requirements of Section 409A.

9

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

PHOTOMEDEX, INC.
By:	/s/ Stephen Johnson
	Name: Stephen Johnson
	Title: Chief Financial Officer
EXECUTIVE:
/s/ Suneet Singal
Suneet Singal

10