THIRD AMENDMENT TO AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT

 

This THIRD AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN
AGREEMENT(this “Third Amendment”) dated as of December 20, 2012 made by and
among CYALUME TECHNOLOGIES, INC., a Delaware corporation (the “Borrower”),
CYALUME TECHNOLOGIES HOLDINGS, INC., a Delaware corporation (the “Holding
Company”), COMBAT TRAINING SOLUTIONS, INC., a Colorado corporation (“CTS”),
CYALUME REALTY, INC., a Delaware corporation (“Realty”), CYALUME SPECIALTY
PRODUCTS, INC., a Delaware corporation (“Specialty”), and TD BANK, N.A., as
Administrative Agent and as the Lender (the “Agent”).

 

Background

 

The Borrower, the Holding Company, the lenders party thereto and the Agent
entered into an that certain Amended and Restated Revolving Credit and Term Loan
Agreement dated as of July 29, 2010 which was amended by that certain First
Amendment to Amended and Restated Revolving Credit and Term Loan Agreement and
Limited Consent and Joinder dated as of January 20, 2012 which was amended by
that certain Second Amendment to Amended and Restated Revolving Credit and Term
Loan Agreement dated as of March 30, 2012 (as further amended, modified or
supplemented to the date hereof, the “Original Credit Agreement”).

 

NOW, THEREFORE, in consideration of the promises and the agreements, provisions
and covenants herein contained, the Borrower, the Holding Company, CTS, Realty
and Specialty and the Agent and Lender hereby agree as follows:

 

1.          Amendment. Subject to the terms and conditions herein contained and
in reliance on the representations and warranties of the Borrower herein
contained, effective upon satisfaction of the conditions precedent contained in
section 2 below, the Original Credit Agreement shall be amended as follows:

 

(A)         Section 1.1 “Definitions” contained in the Original Credit Agreement
is hereby amended by deleting the definitions of “Adjusted EBITDA” “EBITDA” and
“Revolving Credit Loan Maturity Date” therein contained and inserting the
following in lieu thereof:

 

“Adjusted EBITDA”: With respect to any period, an amount equal to EBITDA for
such period plus to the extent accounted for in EBITDA and without duplication,
the sum of (i) Acquired EBITDA and (ii) Lender Approved Add-Backs.

 

“EBITDA”: With respect to any period, an amount equal to the Consolidated Net
Income of the Borrower and its Subsidiaries for such period, plus to the extent
accounted for in Consolidated Net Income during such period and without
duplication the sum of: (i) depreciation and amortization, (ii) Consolidated
Total Interest Expense for such period, (iii) non-cash expenses, (iv) income tax
expense, (v) non-cash stock or compensation expense to the extent deducted from
Consolidated Net Income and (vi) losses incurred in foreign currency
transactions, minus the sum of: (a) interest and dividend income during such
period, (b) gain on the sale of assets other than the sale of inventory in the
ordinary course of business during such period, (c) extraordinary gains during
such period, (d) any non-cash components of income during such period, and
(e) gains received in foreign currency transactions.

 

 

 

 

“Revolving Credit Loan Maturity Date”. December 19, 2013, unless sooner
occurring following acceleration.

 

(B)         Section 1.1 “Definitions” contained in the Original Credit Agreement
is hereby amended by adding the following definitions:

 

“Cash Equivalents” shall mean, as to any Person: (a) investments in direct
obligations of the United States of America or of any agency or instrumentality
thereof whose obligations constitute full faith and credit obligations of the
United States of America, provided, that any such obligations shall mature
within one year of the date of issuance thereof; (b) investments in commercial
paper rated at least P-1 by Moody's and at least A-1 by S&P maturing within one
year of the date of issuance thereof; (c) investments in certificates of deposit
issued by Agent or by any United States commercial bank having capital and
surplus of not less than $100,000,000 which have a maturity of one year or less;
(d) investments in repurchase obligations with a term of not more than seven
(7) days for underlying securities of the types described in clause (a) above
entered into with any bank meeting the qualifications specified in clause (c)
above, provided all such agreements require physical delivery of the securities
securing such repurchase agreement, except those delivered through the Federal
Reserve Book Entry System; (e) investments in money market funds that invest
solely, and which are restricted by their respective charters to invest solely,
in investments of the type described in the immediately preceding
subsections (a), (b), (c), and (d) above.

 

“Lender Approved Add-Backs”: The sum of the following to the extent incurred:
(i) expenses in connection with Permitted Acquisitions not to exceed $200,000 in
the aggregate during the term of this Agreement, (ii) non-cash goodwill
impairment charges not to exceed $47,500,000 in the aggregate during the term of
this Agreement, (iii) non-cash inventory write-downs not to exceed $600,000 in
the aggregate during the term of this Agreement, (iv) cash severance costs not
to exceed $500,000 in the aggregate during the term of this Agreement and (v)
non-cash equipment write-offs not to exceed $300,000 in the aggregate during the
term of this Agreement.

 

“Liquidity”: As of any date of determination, Availability plus Qualified Cash.

 

“Liquidity Test Expiration Date”: The date: April 30, 2013, so long as each of
the following conditions are met: (i) Adjusted EBITDA for the trailing twelve
month period ending December 31, 2012 is equal to or greater than $6,000,000,
(ii) the Fixed Charge Coverage Ratio as of December 31, 2012 is not less than
1.20:1.00 based upon the Borrower’s audited financial statements for fiscal year
2012 delivered in accordance with the terms hereof and (iii) the Borrower is in
compliance with all covenants under Article 12 as of March 31, 2013 based upon
the Borrower’s quarterly financial statements delivered in accordance with the
terms hereof; and if such conditions are not so satisfied, the Maturity Date.”

 

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“Qualified Cash”: as of any date of determination, the amount of unrestricted
cash and unrestricted Cash Equivalents of the Borrower and the Guarantors, in
each case, that are on deposit with the Agent.

 

(C)         Section 11.4. “Restricted Payments”, contained in the Original
Credit Agreement is hereby amended by deleting clause (i) therein contained and
inserting the following in lieu thereof.

 

(i)          provided, that: the Borrower may make a Distribution to the Holding
Company to allow the Holding Company to make a payment of the Management Fee
under the Management Agreement in the amount of such Management Fees, so long as
upon such payments: (x) the aggregate amount of all of such payments made
pursuant to this clause (i) shall not exceed $21,000 in any calendar month,
$10,500 of which may be paid in cash and $10,500 of which shall accrue pursuant
to the terms of the Management Agreement, (y) both at the time of and after
giving effect to each such payment no Default or Event of Default shall have
occurred and be continuing or would be caused if such payment were made, and (z)
both at the time of and after giving effect to each such payment, the Borrower
is in compliance with the financial covenants set forth in Article 12; provided,
however any cash portion of the Management Fee or Consulting Fee not paid due to
clause (y) or (z) above shall accrue and regularly scheduled cash payments may
resume when such Default or Event of Default is cured or waived and the Borrower
is in compliance with the financial covenants set forth in Article 12, provided,
further, however notwithstanding clause (x) above, any accrued amounts of the
Management Fee shall be permitted to be paid in cash or Shares pursuant to the
terms of the Management Agreement and for so long as the Borrower is in
compliance with clauses (y) and (z) above.

 

(D)         Section 12.1 “Coverage Ratios” contained in the Original Credit
Agreement is hereby amended by deleting the terms and subsections therein
contained and inserting the following in lieu thereof:

 

Section 12.1         Coverage Ratios.

 

(a)          Fixed Charge Ratio. As of the last day of the fiscal year ending
December 31, 2012, the Fixed Charge Coverage Ratio for such fiscal year shall
not be less than 1.00:1.00, and as of the last day of the fiscal year ending
December 31, 2013 and for each fiscal year thereafter, the Fixed Charge Coverage
Ratio for such fiscal year shall not be less than 1.10:1.00.

 

(b)          Total Debt Service Coverage Ratio. As of the last day of the fiscal
quarter ending September 30, 2012, the Total Debt Service Coverage Ratio shall
not be less than 1.20:1.00, as of the last day of the fiscal quarters ending
December 31, 2012 and March 31, 2013, the Total Debt Service Coverage Ratio
shall not be less than 1.00:1.00, as of the last day of the fiscal quarters
ended June 30, 2013 and September 30, 2013, the Total Debt Service Coverage
Ratio shall not be less than 1.10:1.00, and as of the last day of the fiscal
quarter ending December 31, 2013 and for each fiscal quarter thereafter, the
Total Debt Service Coverage Ratio shall not be less than 1.20:1.00 .

 

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(E)         Section 12.2 “Leverage Ratio” contained in the Original Credit
Agreement is hereby amended by deleting the terms and subsections therein
contained and inserting the following in lieu thereof:

 

Section 12.2         Leverage Ratio.

 

(a)          At any time during the periods set forth below, the Senior Leverage
Ratio shall not be more than the ratio set forth below during such period:

 

Period   Ratio         September 30, 2012 through and including June 30, 2013 
 2.25:1.00         September 30, 2013, and each fiscal quarter thereafter 
 2.00:1.00 

 

(b)          At any time during the periods set forth below, the Total Leverage
Ratio shall not be more than the ratio set forth below during such period:

 

Period   Ratio         September 30, 2012   3.75:1.00         December 31, 2012
through and including March 31, 2013   4.00:1.00         June 30, 2013 
 3.50:1.00         September 30, 2013   3.25:1.00         December 31, 2013, and
each fiscal quarter thereafter   3.00:1.00 

 

(c)          For purposes of calculating the Senior Leverage Ratio and the Total
Leverage Ratio in subsections 12.2(a) and 12.2(b), respectively, the following
amounts will be added to EBITDA for the following periods:

 

Period   Amount         fiscal quarter ending September 30, 2012  $150,000    
    Thereafter  $0 

 

(F)         Section 12.3 “Capital Expenditures” contained in the Original Credit
Agreement is hereby amended by deleting the terms and subsections therein
contained and inserting the following in lieu thereof:

 

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Section 12.3         Capital Expenditures. The Borrower will not make, nor
permit any Subsidiary to make any Capital Expenditures in any fiscal year that
exceed $2,000,000 for any fiscal year.

 

(G)         Section 12.4 “Current Ratio” contained in the Original Credit
Agreement is hereby amended by deleting the terms and subsections therein
contained and inserting the following in lieu thereof:

 

Section 12.4         Current Ratio. As of the last day of any fiscal quarter,
the Holding Company and its Subsidiaries shall not permit the Current Ratio to
be less than 1.00:1.00.

 

(H)         Section 12.5 “Minimum Liquidity” is hereby added to the Original
Credit Agreement as follows:

 

Section 12.5         Minimum Liquidity. At all times tested as of the end of
each month commencing with the month ending December 31, 2012 and the end of
each month thereafter until the earlier of the Maturity Date or the Liquidity
Test Expiration Date, Liquidity shall not be less than $1,000,000.

 

2.          Conditions Precedent. The provisions of this Third Amendment shall
be effective as of the date on which all of the following conditions shall be
satisfied:

 

(a)          the Borrower shall have delivered to the Agent a fully executed
counterpart of this Third Amendment;

 

(b)          the Borrower shall have paid all costs and expenses owing to the
Agent and its counsel on or before the date hereof;

 

(c)          the Agent and the Lender shall have indicated its consent and
agreement by executing this Third Amendment;

 

(d)          the Borrower, the Holding Company, CTS, Specialty and Realty shall
have delivered certified copies of the resolutions of its Board of Directors
approving the execution, delivery and performance of this Third Amendment and
the actions contemplated herein, in form and substance satisfactory to the
Agent;

 

(e)          after giving effect to this Third Amendment, no Default or Event of
Default shall have occurred or be continuing;

 

(f)          the Borrower shall have paid the Agent an amendment fee of One
Hundred Thousand Dollars ($100,000) to compensate the Agent and the Lender for
entering into this Third Amendment, which amount, when paid, is not subject to
refund or rebate and will be fully earned upon the Agent and the Lender
executing this Third Amendment; and

 

(g)          the Agent shall have received fully executed copies of the Third
Amendment to Subordinated Loan Agreement dated December 20, 2012 among Borrower,
Holding Company, CTS, Realty, Specialty, Granite Creek Partners Agent, LLC,
Granite Creek Flexcap I, L.P., and Patriot Capital II, L.P., and all documents
executed in connection therewith, with amended financial covenants that are 15%
above the levels set in Section 12 of the amended Revolving Credit and Term Loan
Agreement.

 

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3.          On or before March 1, 2013, the Borrower will deliver to the Agent a
Phase One environmental report regarding the owned Real Property, the firm
writing such report to be reasonably acceptable to Agent, and such report to be
in form and substance satisfactory to Agent. Failure to comply with this
provision shall constitute an Event of Default under the Loan Documents for
which there will be no cure period.

 

4.          Miscellaneous.

 

(a)          Ratification. The terms and provisions set forth in this Third
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Original Credit Agreement and except as expressly modified and
superseded by this Third Amendment, the terms and provisions of the Original
Credit Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect. The Borrower and the Agent agree that
the Original Credit Agreement as amended hereby and the other Loan Documents
shall continue to be legal, valid, binding and enforceable in accordance with
their respective terms. For all matters arising prior to the effective date of
this Third Amendment, the Original Credit Agreement (as unmodified by this Third
Amendment) shall control. The Borrower hereby acknowledges that, as of the date
hereof, the security interests and liens granted to the Agent under the Credit
Agreement and the other Loan Documents are in full force and effect, are
properly perfected and are enforceable in accordance with the terms of the
Credit Agreement and the other Loan Documents.

 

(b)          Representations and Warranties. The Borrower hereby represents and
warrants to the Agent that the representations and warranties set forth in the
Loan Documents are true and correct in all material respects on and as of the
date hereof, with the same effect as though made on and as of such date except
with respect to any representations and warranties limited by their terms to a
specific date. The Borrower further represents and warrants to the Agent that
the execution, delivery and performance by the Borrower of this Third Amendment
(i) are within the Borrower’s power and authority; (ii) have been duly
authorized by all necessary corporate and shareholder action; (iii) are not in
contravention of any provision of the Borrower’s certificate or articles of
incorporation or bylaws or other organizational documents; (iv) do not violate
any law or regulation, or any order or decree of any Governmental Authority in
any material respect; (v) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which the Borrower is a party or by which the Borrower or any of
its property is bound; (vi) do not result in the creation or imposition of any
Lien upon any of the property of the Borrower other than in favor of Agent;
(vii) do not require the consent or approval of any Governmental Authority. All
representations and warranties made in this Third Amendment shall survive the
execution and delivery of this Third Amendment, and no investigation by the
Agent shall affect the representations and warranties or the right of the Agent
to rely upon them.

 

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(c)          Release. In addition, to induce the Agent and Lender to agree to
the terms of this Third Amendment, the Borrower represents and warrants that as
of the date of its execution of this Third Amendment there are no claims or
offsets against or rights of recoupment with respect to or defenses or
counterclaims to its obligations under the Loan Documents and in accordance
therewith it:

 

(i)          Waives any and all such claims, offsets, rights of recoupment,
defenses or counterclaims, arising prior to the date of its execution of this
Third Amendment and

 

(ii)         Releases and discharges the Agent and its officers, directors,
employees, agents and affiliates (collectively the “released parties”) from any
and all liabilities, claims, causes of action, in law or equity, which the
Borrower or any Guarantor may have against any released party arising prior to
the date hereof in connection with the Loan Documents or the transactions
contemplated thereby.

 

(d)          Reference to Agreement. Each of the Loan Documents, including the
Original Credit Agreement and any and all other agreements, documents, or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Original Credit Agreement as amended hereby, are
hereby amended so that any reference in such Loan Documents to the Original
Credit Agreement shall mean a reference to the Original Credit Agreement as
amended hereby.

 

(e)          Expenses of the Agent. As provided in the Original Credit
Agreement, the Borrower agrees to pay all reasonable costs and expenses incurred
by the Agent in connection with the preparation, negotiation, and execution of
this Third Amendment, including without limitation, the reasonable costs and
fees of the Agent’s legal counsel.

 

(f)          Severability. Any provision of this Third Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Third Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

 

(g)          Applicable Law. This Amendment shall be governed by and construed
in accordance with the laws of The Commonwealth of Massachusetts and the
applicable laws of the United States of America.

 

(h)          Successors and Assigns. This Third Amendment is binding upon and
shall inure to the benefit of the Agent, the Holding Company and the Borrower,
and their respective successors and assigns, except the Borrower may not assign
or transfer any of its rights or obligations hereunder without the prior written
consent of the Agent.

 

(i)          Counterparts. This Third Amendment may be executed in one or more
counterparts and on facsimile counterparts, each of which when so executed shall
be deemed to be an original, but all of which when taken together shall
constitute one and the same agreement.

 

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(j)          Effect of Waiver. No consent or waiver, express or implied, by the
Agent to or for any breach of or deviation from any covenant, condition or duty
by the Borrower shall be deemed a consent or waiver to or of any other breach of
the same or any other covenant, condition or duty.

 

(k)          Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.

 

(l)          Entire Agreement. This Third Amendment embodies the entire
agreement among the parties hereto with respect to the subject matter thereof,
and supersedes any and all prior representations and understandings, whether
written or oral, relating to this Amendment. There are no oral agreements among
the parties hereto with respect to the subject matter hereof.

 

[The remainder of this page is intentionally left blank.]

 

 

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IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment as of
the date first above written.

 

  BORROWER       CYALUME TECHNOLOGIES, INC.         By: /s/ Michael Bielonko    
Name: Michael Bielonko     Title: Chief Financial Officer

 

  GUARANTORS       COMBAT TRAINING SOLUTIONS, INC.         By: /s/ Michael
Bielonko     Name: Michael Bielonko     Title: Chief Financial Officer

 

  CYALUME SPECIALTY PRODUCTS, INC.         By: /s/ Michael Bielonko     Name:
Michael Bielonko     Title: Chief Financial Officer

 

  CYALUME REALTY, INC.         By: /s/ Michael Bielonko     Name: Michael
Bielonko     Title: Chief Financial Officer

 

 

 

 

  HOLDING COMPANY       CYALUME TECHNOLOGIES HOLDINGS, INC.         By: /s/
Michael Bielonko     Name: Michael Bielonko     Title: Chief Financial Officer

 

  AGENT       TD BANK, N.A.         By: /s/ Gregory Spurr     Name: Gregory
Spurr     Title:   Senior Vice President