REGISTRATION RIGHTS AGREEMENT
 
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the
29th day of July 2010, by and among Cyalume Technologies Holdings, Inc., a
Delaware corporation (the “Company”), and Granite Creek FlexCap I, L.P.
(the “Investor”).
 
WHEREAS, the Investor is making an equity investment in the Company on the date
hereof; and
 
WHEREAS, pursuant to such investment by the Investor, the Company is issuing to
the Investor a common stock purchase warrant as of the date hereof to purchase
94,118 shares common stock of the Company at a price of $2.00 per share (the
"Warrant); and
 
WHEREAS, the Investor and the Company desire to enter into this Agreement to
provide the Investor with certain rights relating to the registration of the
Warrant Shares;
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
 
1. DEFINITIONS; INTERPRETATION.  The following capitalized terms used herein
have the following meanings:
 
“Agreement” means this Agreement, as amended, restated, supplemented, or
otherwise modified from time to time.
 
“Commission” means the Securities and Exchange Commission, or any other federal
agency then administering the Securities Act or the Exchange Act.
 
“Common Stock” means the common stock, par value $0.001 per share, of the
Company.
 
“Company” is defined in the preamble to this Agreement.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder, all as the same
shall be in effect at the time.
 
“Indemnified Party” is defined in Section 4.3.
 
“Indemnifying Party” is defined in Section 4.3.
 
“Investor” is defined in the preamble to this Agreement.
 
“Investor Indemnified Party” is defined in Section 4.1.
 
“Maximum Number of Shares” is defined in Section 2.1.2.
 
“Notices” is defined in Section 6.2.
 
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“Piggy-Back Registration” is defined in Section 2.1.1.
 
“Register,” “registered” and “registration” mean a registration effected by
preparing and filing a registration statement or similar document in compliance
with the requirements of the Securities Act, and the applicable rules and
regulations promulgated thereunder, and such registration statement becoming
effective.
 
“Registrable Securities” means on and after the issuance of the Warrant to the
Investor by the Company, the Warrant Shares.  As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when: (a) a
Registration Statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
sold, transferred, disposed of or exchanged in accordance with such Registration
Statement; (b) such securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent public distribution of them
shall not require registration under the Securities Act; (c) such securities
shall have ceased to be outstanding or (d) the securities are able to be sold
without volume limitations pursuant to Rule 144 under the Securities Act.
 
“Registration Statement” means a registration statement filed by the Company
with the Commission in compliance with the Securities Act and the rules and
regulations promulgated thereunder for a public offering and sale of Common
Stock (other than a registration statement on Form S-4 or Form S-8, or their
successors, or any registration statement covering only securities proposed to
be issued in exchange for securities or assets of another entity).
 
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder, all as the same shall be
in effect at the time.
 
“Underwriter” means a securities dealer who purchases any Registrable Securities
as principal in an underwritten offering and not as part of such dealer’s
market-making activities.
 
“Warrant” is defined in the preamble above.
 
“Warrant Issue Date” means the date that the Warrant is issued to the Investor
by the Company.
 
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants and any Common Stock issued as a dividend or other distribution with
respect to or in exchange for or in replacement of such shares of Common Stock.
 
2. REGISTRATION RIGHTS.
 
2.1 Piggy-Back Registration.
 
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2.1.1. Piggy-Back Rights.  If at any time on or after the Warrant Issue Date the
Company proposes to file a Registration Statement under the Securities Act with
respect to an offering of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into, equity securities, by the
Company for its own account or for the account of other securityholders of the
Company, other than a Registration Statement (i) filed in connection with any
employee stock option or other benefit plan, (ii) for an exchange offer or
offering of securities solely to the Company’s existing shareholders, (iii) for
an offering of debt that is convertible into equity securities of the Company or
(iv) for a dividend reinvestment plan, then the Company shall (x) give written
notice of such proposed filing to the holders of Registrable Securities as soon
as practicable but in no event less than ten (10) days before the anticipated
filing date, which notice shall describe the amount and type of securities to be
included in such offering, the intended method(s) of distribution, and the name
of the proposed managing Underwriter or Underwriters, if any, of the offering,
and (y) offer to the holders of Registrable Securities in such notice the
opportunity to register the sale of such number of shares of Registrable
Securities as such holders may request in writing within fifteen (15) days
following receipt of such notice (a “Piggy-Back Registration”). The Company
shall cause such Registrable Securities to be included in such registration and
shall use its best efforts to cause the managing Underwriter or Underwriters of
a proposed underwritten offering to permit the Registrable Securities requested
to be included in a Piggy-Back Registration to be included on the same terms and
conditions as any similar securities of the Company and to permit the sale or
other disposition of such Registrable Securities in accordance with the intended
method(s) of distribution thereof. All holders of Registrable Securities
proposing to distribute their securities through a Piggy-Back Registration that
involves an Underwriter or Underwriters shall enter into an underwriting
agreement in customary form with the Underwriter or Underwriters selected for
such Piggy-Back Registration.  The Company shall have no obligation under this
Section 2.1 to complete any offering of its securities that it proposes to make.
 
2.1.2. Reduction of Offering.  If the managing Underwriter or Underwriters for a
Piggy-Back Registration that is to be an underwritten offering advises the
Company and the holders of Registrable Securities in writing that the dollar
amount or number of shares of Common Stock or other securities which the Company
desires to sell, taken together with shares of Common Stock or other securities,
if any, as to which registration has been demanded pursuant to written
contractual arrangements with persons other than the holders of Registrable
Securities hereunder, the Registrable Securities as to which registration has
been requested under this Section 2.1, and the shares of Common Stock or other
securities, if any, as to which registration has been requested pursuant to the
written contractual piggy-back registration rights of other shareholders of the
Company, exceeds the maximum dollar amount or maximum number of shares that can
be sold in such offering without adversely affecting the proposed offering
price, the timing, the distribution method, or the probability of success of
such offering (such maximum dollar amount or maximum number of shares, as
applicable, the “Maximum Number of Shares”), then the Company shall include in
any such registration:
 
(i) first, the shares of Common Stock or other securities that the Company or
such other requesting holders, as the case may be, desire to sell; and
 
(ii) to the extent that the Maximum Number of Shares has not been reached under
the foregoing clause (i), the number of securities as to which registration as
been requested pursuant to Piggy-Back Registration, including the Registrable
Securities, that can be sold without exceeding the Maximum Number of Shares,
provided, however, that if the Maximum Number of Shares is less than the total
number of securities for which Piggy-Back Registration has been requested, then
each security holder requesting Piggy-Back Registration shall be entitled to
have registered the pro-rata number of the shares requested by each such holder
based on the number of shares requested by each holder.
 
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2.1.3. Withdrawal.  Any holder of Registrable Securities may elect to withdraw
such holder’s request for inclusion of Registrable Securities in any Piggy-Back
Registration by giving written notice to the Company of such request to withdraw
prior to the effectiveness of the Registration Statement.  The Company may also
elect to withdraw a registration statement at any time prior to the
effectiveness of the Registration Statement.  Notwithstanding any withdrawal by
the Company, the Company shall pay all expenses incurred by the holders of
Registrable Securities in connection with such Piggy-Back Registration as
provided in Section 3.3.
 
3. REGISTRATION PROCEDURES.
 
3.1 Filings; Information.  Whenever the Company is required to effect the
registration of any Registrable Securities pursuant to Section 2, in connection
with any such request:
 
3.1.1. Copies.  The Company shall, prior to filing a Registration Statement or
prospectus, or any amendment or supplement thereto, furnish without charge to
the holders of Registrable Securities included in such registration, and such
holders’ legal counsel, copies of such Registration Statement as proposed to be
filed, each amendment and supplement to such Registration Statement (in each
case including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such Registration Statement (including each
preliminary prospectus), and such other documents as the holders of Registrable
Securities included in such registration or legal counsel for any such holders
may request in order to facilitate the disposition of the Registrable Securities
owned by such holders.
 
3.1.2. Notification.  After the filing of a Registration Statement, the Company
shall promptly, and in no event more than two (2) business days after such
filing, notify the holders of Registrable Securities included in such
Registration Statement of such filing, and shall further notify such holders
promptly and confirm such advice in writing in all events within two (2)
business days of the occurrence of any of the following: (i) when such
Registration Statement becomes effective; (ii) when any post-effective amendment
to such Registration Statement becomes effective; (iii) the issuance or
threatened issuance by the Commission of any stop order (and the Company shall
take all actions required to prevent the entry of such stop order or to remove
it if entered); and (iv) any request by the Commission for any amendment or
supplement to such Registration Statement or any prospectus relating thereto or
for additional information or of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of the securities covered by such
Registration Statement, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and promptly make
available to the holders of Registrable Securities included in such Registration
Statement any such supplement or amendment; except that before filing with the
Commission a Registration Statement or prospectus or any amendment or supplement
thereto, including documents incorporated by reference, the Company shall
furnish to the holders of Registrable Securities included in such Registration
Statement and to the legal counsel for any such holders, copies of all such
documents proposed to be filed sufficiently in advance of filing to provide such
holders and legal counsel with a reasonable opportunity to review such documents
and comment thereon.
 
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3.1.3. State Securities Laws Compliance.  The Company shall use its best efforts
to (i) register or qualify the Registrable Securities covered by the
Registration Statement under such securities or “blue sky” laws of such
jurisdictions in the United States as the holders of Registrable Securities
included in such Registration Statement (in light of their intended plan of
distribution) may request and (ii) take such action necessary to cause such
Registrable Securities covered by the Registration Statement to be registered
with or approved by such other Governmental Authorities as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be necessary or advisable to enable the holders of
Registrable Securities included in such Registration Statement to consummate the
disposition of such Registrable Securities in such jurisdictions; provided,
however, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this paragraph (e) or subject itself to taxation in any such
jurisdiction.
 
3.1.4. Agreements for Disposition.  The Company shall enter into customary
agreements (including, if applicable, an underwriting agreement in customary
form) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of Registrable Securities.  The
representations, warranties and covenants of the Company in any underwriting
agreement which are made to or for the benefit of any Underwriters, to the
extent applicable, shall also be made to and for the benefit of the holders of
the Registrable Securities included in such underwritten public offering.  No
holder of Registrable Securities included in such registration statement shall
be required to make any representations or warranties in the underwriting
agreement except as reasonably requested by the Company and, if applicable, with
respect to such holder’s organization, good standing, authority, title to
Registrable Securities, lack of conflict of such sale with such holder’s
material agreements and organizational documents, and with respect to written
information relating to such holder that such holder has furnished in writing
expressly for inclusion in such Registration Statement.  Holders of Registrable
Securities shall agree to such covenants and indemnification and contribution
obligations for selling shareholders as are customarily contained in agreements
of that type.  Further, such holders shall cooperate fully in the preparation of
the Registration Statement and other documents relating to any offering in which
they include Registrable Securities pursuant to Section 2 hereof.  Each holder
shall also furnish to the Company such information regarding itself, the
Registrable Securities held by such holder, as applicable, and the intended
method of disposition of such securities as shall be reasonably required to
effect the registration of the Registrable Securities.
 
3.1.5. Cooperation.  The principal executive officer of the Company, the
principal financial officer of the Company, the principal accounting officer of
the Company and all other officers and members of the management of the Company
shall cooperate fully in any offering of Registrable Securities hereunder, which
cooperation shall include, without limitation, the preparation of the
Registration Statement with respect to such offering and all other offering
materials and related documents, and participation in meetings with
Underwriters, attorneys, accountants and potential investors.
 
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3.1.6. Records.  The Company shall make available for inspection by the holders
of Registrable Securities included in such Registration Statement, any
Underwriter participating in any disposition pursuant to such Registration
Statement and any attorney, accountant or other professional retained by any
holder of Registrable Securities included in such Registration Statement or by
any Underwriter participating in such distribution, all financial and other
records, pertinent corporate documents and properties of the Company, as shall
be necessary to enable them to exercise their due diligence responsibility, and
cause the Company’s officers, directors and employees to supply all information
requested by any of them in connection with such Registration Statement.
 
3.1.7. Listing.  The Company shall use its best efforts to cause all Registrable
Securities included in any registration to be listed on such exchanges or
otherwise designated for trading in the same manner as similar securities issued
by the Company are then listed or designated.
 
3.2 Obligation to Suspend Distribution.  Upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
3.1.2(iv), each holder of Registrable Securities included in any registration
shall immediately discontinue disposition of such Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such holder receives the supplemented or amended prospectus contemplated
by Section 3.1.2(iv) and, if so directed by the Company, each such holder will
deliver to the Company all copies, other than permanent file copies then in such
holder’s possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice.
 
3.3 Registration Expenses.  The Company shall bear all costs and expenses
incurred in connection with any Piggy-Back Registration pursuant to Section 2.1
and all expenses incurred in performing or complying with its other obligations
under this Agreement, whether or not the Registration Statement becomes
effective, including, without limitation: (i) all registration and filing fees;
(ii) fees and expenses of compliance with securities or “blue sky” laws
(including fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities); (iii) printing expenses; (iv) the
Company’s internal expenses (including, without limitation, all salaries and
expenses of its officers and employees); (v) the fees and expenses incurred in
connection with the listing of the Registrable Securities as required by Section
3.1.7; (vi) National Association of Securities Dealers, Inc. fees; (vii) fees
and disbursements of counsel for the Company and fees and expenses for
independent certified public accountants retained by the Company; (viii) the
fees and expenses of any special experts retained by the Company in connection
with such registration and (ix) the fees and expenses of one legal counsel
selected by the holders of a majority in interest of the Registrable Securities
included in such registration. The Company shall have no obligation to pay any
underwriting discounts or selling commissions attributable to the Registrable
Securities being sold by the holders thereof, which underwriting discounts or
selling commissions shall be borne by such holders.  Additionally, in an
underwritten offering, all selling shareholders and the Company shall bear the
expenses of the underwriter pro rata in proportion to the respective amount of
shares each is selling in such offering.
 
3.4 Information.  The holders of Registrable Securities shall provide such
information as may reasonably be requested by the Company, or the managing
Underwriter, if any, in connection with the preparation of any Registration
Statement, including amendments and supplements thereto, in order to effect the
registration of any Registrable Securities under the Securities Act pursuant to
Section 2 and in connection with the Company’s obligation to comply with federal
and applicable state securities laws.
 
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4. INDEMNIFICATION AND CONTRIBUTION.
 
4.1 Indemnification by the Company.  The Company agrees to indemnify and hold
harmless the Investor and each other holder of Registrable Securities, and each
of their respective officers, employees, affiliates, directors, partners,
members, attorneys and agents, and each person, if any, who controls the
Investor and each other holder of Registrable Securities (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, an
“Investor Indemnified Party”), from and against any expenses, losses, judgments,
claims, damages or liabilities, whether joint or several, arising out of or
based upon any untrue statement (or allegedly untrue statement) of a material
fact contained in any Registration Statement under which the sale of such
Registrable Securities was registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arising out of or based upon any omission (or alleged omission) to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities Act or
any rule or regulation promulgated thereunder applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration; and the Company shall promptly reimburse the Investor
Indemnified Party for any legal and any other expenses reasonably incurred by
such Investor Indemnified Party in connection with investigating and defending
any such expense, loss, judgment, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such expense, loss, claim, damage or liability arises out of or is based
upon any untrue statement or allegedly untrue statement or omission or alleged
omission made in such Registration Statement, preliminary prospectus, final
prospectus, or summary prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company, in
writing, by such selling holder expressly for use therein.
 
4.2 Indemnification by Holders of Registrable Securities.  Each selling holder
of Registrable Securities will, in the event that any registration is being
effected under the Securities Act pursuant to this Agreement of any Registrable
Securities held by such selling holder, indemnify and hold harmless the Company,
each of its directors and officers and each Underwriter (if any), and each other
person, if any, who controls such selling holder or such Underwriter or the
Company within the meaning of the Securities Act or the Exchange Act, against
any losses, claims, judgments, damages or liabilities, whether joint or several,
insofar as such losses, claims, judgments, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
allegedly untrue statement of a material fact contained in any Registration
Statement under which the sale of such Registrable Securities was registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission or the alleged omission to state a material fact required to be stated
therein or necessary to make the statement therein not misleading, if the
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by such selling holder expressly
for use therein, and shall reimburse the Company, its directors and officers,
and each such controlling person for any legal or other expenses reasonably
incurred by any of them in connection with investigation or defending any such
loss, claim, damage, liability or action. Each selling holder’s indemnification
obligations hereunder shall be several and not joint and shall be limited to the
amount of any net proceeds actually received by such selling holder from the
sale of Registrable Securities which gave rise to such indemnification
obligation.
 
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4.3 Conduct of Indemnification Proceedings.  Promptly after receipt by any
person of any notice of any loss, claim, damage or liability or any action in
respect of which indemnity may be sought pursuant to Section 4.1 or 4.2, such
person (the “Indemnified Party”) shall, if a claim in respect thereof is to be
made against any other person for indemnification hereunder, notify such other
person (the “Indemnifying Party”) in writing of the loss, claim, judgment,
damage, liability or action; provided, however, that the failure by the
Indemnified Party to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which the Indemnifying Party may have to
such Indemnified Party hereunder, except and solely to the extent the
Indemnifying Party is actually prejudiced by such failure. If the Indemnified
Party is seeking indemnification with respect to any claim or action brought
against the Indemnified Party, then the Indemnifying Party shall be entitled to
participate in such claim or action, and, to the extent that it wishes, jointly
with all other Indemnifying Parties, to assume control of the defense thereof
with counsel satisfactory to the Indemnified Party.  After notice from the
Indemnifying Party to the Indemnified Party of its election to assume control of
the defense of such claim or action, the Indemnifying Party shall not be liable
to the Indemnified Party for any legal or other expenses subsequently incurred
by the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that in any action in
which both the Indemnified Party and the Indemnifying Party are named as
defendants, the Indemnified Party shall have the right to employ separate
counsel (but no more than one such separate counsel) to represent the
Indemnified Party and its controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Indemnified Party against the Indemnifying Party, with the fees and expenses of
such counsel to be paid by such Indemnifying Party if, based upon the written
opinion of counsel of such Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, consent to entry of judgment or effect any
settlement of any claim or pending or threatened proceeding in respect of which
the Indemnified Party is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Party, unless such judgment or
settlement includes an unconditional release of such Indemnified Party from all
liability arising out of such claim or proceeding.
 
4.4 Contribution.
 
4.4.1. If the indemnification provided for in the foregoing Sections 4.1, 4.2
and 4.3 is unavailable to any Indemnified Party in respect of any loss, claim,
damage, liability or action referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
claim, damage, liability or action in such proportion as is appropriate to
reflect the relative fault of the Indemnified Parties and the Indemnifying
Parties in connection with the actions or omissions which resulted in such loss,
claim, damage, liability or action, as well as any other relevant equitable
considerations. The relative fault of any Indemnified Party and any Indemnifying
Party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such
Indemnified Party or such Indemnifying Party and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
 
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4.4.2. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 4.4 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding Section
4.4.1.  The amount paid or payable by an Indemnified Party as a result of any
loss, claim, damage, liability or action referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such Indemnified Party in
connection with investigating or defending any such action or
claim.  Notwithstanding the provisions of this Section 4.4, no holder of
Registrable Securities shall be required to contribute any amount in excess of
the dollar amount of the net proceeds (after payment of any underwriting fees,
discounts, commissions or taxes) actually received by such holder from the sale
of Registrable Securities which gave rise to such contribution obligation.  No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
 
5. UNDERWRITING AND DISTRIBUTION.
 
5.1 Rule 144.  The Company covenants that it shall file any reports required to
be filed by it under the Securities Act and the Exchange Act and shall take such
further action as the holders of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 under the Securities Act, as
such Rules may be amended from time to time, or any similar Rule or regulation
hereafter adopted by the Commission.
 
6. MISCELLANEOUS.
 
6.1 Assignment; No Third Party Beneficiaries.  This Agreement and the rights,
duties and obligations of the Company hereunder may not be assigned or delegated
by the Company in whole or in part.  This Agreement and the rights, duties and
obligations of the holders of Registrable Securities hereunder may be freely
assigned or delegated by such holder of Registrable Securities in conjunction
with and to the extent of any transfer of Registrable Securities by any such
holder.  This Agreement and the provisions hereof shall be binding upon and
shall inure to the benefit of each of the parties and their respective
successors and the permitted assigns of the Investor or holder of Registrable
Securities or of any assignee of the Investor or holder of Registrable
Securities.  This Agreement is not intended to confer any rights or benefits on
any persons that are not party hereto other than as expressly set forth in
Section 4 and this Section 6.1.
 
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6.2 Notices.  All notices, demands, requests, consents, approvals or other
communications (collectively, “Notices”) required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served, delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery or facsimile, addressed as set
forth below, or to such other address as such party shall have specified most
recently by written notice.  Notice shall be deemed given on the date of service
or transmission if personally served or transmitted by telegram, telex or
facsimile; provided, that if such service or transmission is not on a business
day or is after normal business hours, then such notice shall be deemed given on
the next business day.  Notice otherwise sent as provided herein shall be deemed
given on the next business day following timely delivery of such notice to a
reputable air courier service with an order for next-day delivery.
 
To the Company:
Cyalume Technologies Holdings, Inc.
96 Windsor Street
West Springfield, Massachusetts 01089
Attn:    Derek Dunaway, President
 
with a copy to:
 
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
Attn:    Mitchell S. Nussbaum, Esq.
 
To the Investor, to:
 
Their address of record on the books of the Company
 
with a copy to:
 
Goldberg Kohn Ltd.
55 East Monroe, Suite 3300
Chicago Illinois 60603
Attn:    Denise Caplan
 
6.3 Severability.  This Agreement shall be deemed severable, and the invalidity
or unenforceability of any term or provision hereof shall not affect the
validity or enforceability of this Agreement or of any other term or provision
hereof.  Furthermore, in lieu of any such invalid or unenforceable term or
provision, the parties hereto intend that there shall be added as a part of this
Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
 
6.4 Counterparts.  This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
 
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6.5 Entire Agreement.  This Agreement (including all agreements entered into
pursuant hereto and all certificates and instruments delivered pursuant hereto
and thereto) constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written.
 
6.6 Modifications and Amendments.  This Agreement shall not be charged, modified
or amended except by a writing signed by the Company and the holdings of at
least a majority in interest of the then outstanding Registrable Securities
affected thereby.
 
6.7 Titles and Headings.  Titles and headings of sections of this Agreement are
for convenience only and shall not affect the construction of any provision of
this Agreement.
 
6.8 Waivers and Extensions.  Any party to this Agreement may waive any right,
breach or default which such party has the right to waive, provided that such
waiver will not be effective against the waiving party unless it is in writing,
is signed by such party, and specifically refers to this Agreement.  Waivers may
be made in advance or after the right waived has arisen or the breach or default
waived has occurred.  Any waiver may be conditional.  No waiver of any breach of
any agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained.  No waiver or extension of time for performance of any
obligations or acts shall be deemed a waiver or extension of the time for
performance of any other obligations or acts.
 
6.9 Remedies Cumulative.  In the event that the Company fails to observe or
perform any covenant or agreement to be observed or performed under this
Agreement, the Investor or any other holder of Registrable Securities may
proceed to protect and enforce its rights by suit in equity or action at law,
whether for specific performance of any term contained in this Agreement or for
an injunction against the breach of any such term or in aid of the exercise of
any power granted in this Agreement or to enforce any other legal or equitable
right, or to take any one or more of such actions, without being required to
post a bond. None of the rights, powers or remedies conferred under this
Agreement shall be mutually exclusive, and each such right, power or remedy
shall be cumulative and in addition to any other right, power or remedy, whether
conferred by this Agreement or now or hereafter available at law, in equity, by
statute or otherwise.
 
6.10 Governing Law.  This Agreement shall be governed by, interpreted under, and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed within the State of New York,
without giving effect to any choice-of-law provisions thereof that would compel
the application of the substantive laws of any other jurisdiction. Each of the
parties hereby agrees that any action, proceeding or claim against it arising
out of or relating in any way to this Agreement shall be brought and enforced in
the courts of the State of New York or the United States District Court for the
Southern District of New York (each, a “New York Court”), and irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. Each of the
parties hereby waives any objection to such exclusive jurisdiction and that such
courts represent an inconvenient forum.
 
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6.11 Waiver of Trial by Jury.  Each party hereby irrevocably and unconditionally
waives the right to a trial by jury in any action, suit, counterclaim or other
proceeding (whether based on contract, tort or otherwise) arising out of,
connected with or relating to this Agreement, the transactions contemplated
hereby, or the actions of the Investor in the negotiation, administration,
performance or enforcement hereof.
 
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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be executed and delivered by their duly authorized representatives as of the
date first written above.
 

 
CYALUME TECHNOLOGIES HOLDINGS, INC.
         
By:
/s/ Derek Dunaway      
Derek Dunaway, President
 

 
- Signature page of the Investor immediately follows -

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  INVESTOR:           GRANITE CREEK FLEXCAP I, L.P.          
 
By:
/s/ Brian Boorstein       Its: Managing Member  

 

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