SECOND AMENDMENT TO AMENDED AND RESTATED

REVOLVING CREDIT AND TERM LOAN AGREEMENT


 


 


 


This SECOND AMENDMENT TO AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT(this “Second Amendment”) dated as of March 30, 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 (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 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 12.1Coverage
Ratios.


 


(a)               
Fixed Charge Ratio. As of the last day of the fiscal year ending December 31, 2011 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 quarters ending on March 31, 2012 and on June
30, 2012, the Total Debt Service Coverage Ratio shall not be less than 1.00:1.00; and, as of the last day of the fiscal quarter
ending September 30, 2012 and for each fiscal quarter thereafter, the Total Debt Service Coverage Ratio shall not be less
than 1.20:1.00.


 






    	 



    	 



    
 


(B)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 12.2Leverage
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	 
	 	 	 	 	 
	January 1, 2011, through and including December 31, 2011	 	 	2.50:1.00	 
	 	 	 	 	 
	March 31, 2012, through and including September 30, 2012	 	 	2.25:1.00	 
	 	 	 	 	 
	December 31, 2012, 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	 
	 	 	 	 	 
	January 1, 2011, through and including December 31, 2011	 	 	3.50:1.00	 
	 	 	 	 	 
	March 31, 2012, through and including September 30, 2012	 	 	3.75:1.00	 
	 	 	 	 	 
	December 31, 2012, 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 December 31, 2011	 	 	$	600,000	 
	 	 	 	 	 	 	 
	 	fiscal quarter ending March 31, 2012	 	 	$	450,000	 
	 	 	 	 	 	 	 
	 	fiscal quarter ending June 30, 2012	 	 	$	300,000	 
	 	 	 	 	 	 	 
	 	fiscal quarter ending September 30, 2012	 	 	$	150,000	 
	 	 	 	 	 	 	 
	 	Thereafter	 	 	$	0	 




  



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(C)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:


 


Section 12.3Capital
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.


 


(D)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 12.4Current
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.


 


(E)Section 12.5 “Minimum EBITDA”
contained in the Original Credit Agreement is hereby deleted.


 


2.                 
Conditions Precedent. The provisions of this Second 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 Second 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 Second 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 Second Amendment and the actions contemplated
herein, in form and substance satisfactory to the Agent;


 


(e)               
after giving effect to this Second 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 Twenty Thousand Dollars ($20,000) to compensate the Agent and
the Lender for entering into this Second 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 Second Amendment; and


 


(g)              
the Agent shall have received fully executed copies of the Second Amendment to Subordinated Loan Agreement dated March 30,
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.


 






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3.                 
Miscellaneous.


 


(a)               
Ratification. The terms and provisions set forth in this Second 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 Second
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 Second Amendment, the Original Credit Agreement (as unmodified by this
Second 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 Second 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 Second Amendment shall survive the execution and delivery of this Second Amendment, and no investigation by the Agent shall
affect the representations and warranties or the right of the Agent to rely upon them.


 


(c)               
Release. In addition, to induce the Agent and Lender to agree to the terms of this Second Amendment, the Borrower
represents and warrants that as of the date of its execution of this Second 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 Second 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.


 






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(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 Second Amendment,
including without limitation, the reasonable costs and fees of the Agent’s legal counsel.


 


(f)               
Severability. Any provision of this Second Amendment held by a court of competent jurisdiction to be invalid
or unenforceable shall not impair or invalidate the remainder of this Second 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 Second 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 Second 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.


 


(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 Second 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.


 



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IN WITNESS WHEREOF, the parties hereto have
executed this Second 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