Note 10

Long-term Debt:

In the following table is a summary of the Company’s long-term debt:

	June 30, 2014		December 31, 2013
	(unaudited)
Senior-secured credit facilities, net of unamortized debt discount of $606	$	84,394	$	-
Term note		-		10,000
Third-party debt		1,472		-
Sub-total		85,866		10,000
Less: current portion		85,185		10,000
Long-term debt	$	681	$	-

Senior Secured Credit Facilities

On May 12, 2014, PhotoMedex, Inc. (the “Company”) entered into an $85 million senior secured credit facilities (“the Facilities”) with the lenders that are parties thereto (collectively, the “Lenders”) and JP Morgan Chase (“Chase”) as Administrative Agent for the Lenders. The Facilities included a $10 million revolving credit facility and a $75 million four-year term loan. The Facilities were utilized to refinance the existing term debt with Chase, fund the acquisition of LCA-Vision, Inc. and for working capital and other general corporate purposes.

Interest is determined at Eurodollar plus a margin between 3.25% and 4.50%. The margin is updated quarterly based on the then-current leverage ratio. The Facilities are secured by a first priority security interest in and lien on all assets of the Company. All current and future subsidiaries are guarantors on the Facilities.

There are financial covenants including a maximum leverage covenant and a minimum fixed charge covenant, which the Company must maintain. These covenants will be determined quarterly based on a rolling past four quarters of financial data. As of June 30, 2014, the Company failed to meet both financial covenants and is in default of the Facilities. On August 4, 2014, the Company received a notice of default and a reservation of rights from Chase and is engaging a third-party independent advisor to assist the Company in negotiating a longer term solution to the current default. As a result of the default, the Lenders may accelerate the $85 million outstanding under the Facilities. The Lenders also may increase the applicable interest on loans under the Facilities by 2%. As of the date of this report, the Lenders have neither accelerated the outstanding amount nor increased the applicable interest but may do so in the future.

Term-Note Credit Facility

In December 2013, the Company, through its subsidiary, Radiancy, Inc., entered into a term-note facility with JP Morgan Chase (“Chase”). The facility has maximum principal amount of $15 million and is for a term of one year. As of December 31, 2013, the Company had total borrowings of $10 million under this facility. The stated interest rate for any draw under the credit facility was set as the greater of (i) prime rate, (ii) federal funds effective rate plus .5% or (iii) LIBOR plus 2.5%. Each draw has a repayment period of one year with principal due at maturity, although any draw may be paid early with penalty. This term-note was cancelled at the time the senior secured credit facilities were entered into.

Third-party debt

Through the acquisition of LCA-Vision, the Company assumed debt to a third party for purchases of equipment. LCA-Vision had outstanding debt related to the 2013 purchases of excimer lasers for all of the full-service vision centers. The terms of the financing are over an original 36-month term at a fixed interest rate of 3.5%. The financing agreement does not contain any financial covenants and is secured by the excimer lasers.

The following table summarizes the future minimum payments that the Company expects to make for long-term debt:

Last six months of 2014	$	7,892
2015		17,405
2016		19,025
2017		20,900
2018		21,250
Total minimum payments		86,472

Less: unamortized discount		(606	)

Present value of total minimum obligations	$	85,866