Document:

EXECUTION

 

FOURTH AMENDMENT TO AMENDED AND RESTATED

REVOLVING CREDIT AND TERM LOAN AGREEMENT

 

 

 

This FOURTH AMENDMENT TO AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT(this “Fourth Amendment”) dated as of November 19, 2013 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 which was amended by that certain Third Amendment
to Amended and Restated Credit Agreement dated as of December 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 1.1 “Definitions”
contained in the Original Credit Agreement is hereby amended by deleting the definitions of “Adjusted EBITDA”, “Change
of Control”, “EBITDA”, “Lender Approved Add-Backs”, “Omniglow Reserve” 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.

 

“Change of Control”.
The occurrence of any one of the following events: (i) the common stock of Holding Company is no longer publicly traded or held
under the Securities and Exchange Act of 1934; (ii) the Holding Company shall cease to own 100% of the Shares of the Borrower;
(iii) there is a sale of all or substantially all of the assets of the Borrower or (iv) any "person" or "group"
(as such terms are used in Sections 15(d) and 14(d) of the Securities Exchange Act of 1934) other than Renova US Management, LLC,
d/b/a Columbus Nova or any of its Affiliates, including, without limitation US VC Partners, L.P., becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall
be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire (such right,
an "option right" whether such right is exercisable immediately or only after the passage of time)) directly or indirectly,
of 40% or more of the equity interests of the Holding Company on a fully diluted basis.

 

    	 

    	 

    

 

“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) income tax expense, 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.

 

“Lender Approved Add-Backs”.
The sum of the following to the extent incurred: (i) non-cash goodwill impairment charges not to exceed $1,100,000 in the aggregate
during the Borrower’s 2013 Fiscal Year, (ii) severance costs not to exceed $500,000 in the aggregate during the Borrower’s
2013 Fiscal Year, (iii) non-cash compensation awards, (iv) non-recurring legal expenses incurred during the Borrower’s
2013 Fiscal Year not to exceed an aggregate of $2,500,000, (v) non-cash write-downs of assets and non-cash asset adjustments taken
during the Borrower’s 2013 Fiscal Year, and (vi) non-cash losses derived from foreign currency transactions entered into
for business purposes and not for speculation.

 

“Omniglow Reserve.” $1,000,000.

 

“Revolving Credit Loan Maturity
Date”. December 19, 2015, unless sooner occurring following acceleration.

 

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

 

“Colorado Real Estate”.
2450 Canada Drive, Colorado Springs, Colorado.

 

“Columbus Nova Transaction”.
The purchase and sale of certain preferred stock of Holdings and the issuance of certain common stock warrants of Holdings in connection
therewith of Holdings to US VC Partners, L.P., a Delaware limited partnership pursuant to that securities purchase agreement dated
as of November ___, 2013 for an aggregate purchase price of $4,000,003.00.

 

“Colon Note”. That certain
subordinated promissory note issued by the Borrower to Antonio Colon, dated the date of the Fourth Amendment, in an aggregate principal
amount of $1,075,000, on such terms and conditions as are acceptable to Agent in its sole discretion.

 

    	-2-

    	 

    

 

(C) Section 2.1 “Commitment to Lend”
of the Original Credit Agreement is hereby amended to delete the text therein contained and to insert the following in lieu thereof:

 

Subject to the terms and conditions
set forth in this Credit Agreement, each Revolving Credit Lender severally agrees to lend to the Borrower and the Borrower may
borrow, repay, and reborrow from time to time between the Closing Date and the Revolving Credit Loan Maturity Date upon notice
by the Borrower to the Agent given in accordance with Section 2.5 (each a “Revolving Loan” and collectively “Revolving
Credit Loans”), such sums equal to such Revolving Credit Lender’s Revolving Credit Loan Commitment Percentage of amounts
requested by Borrower hereunder; provided, that the sum of the outstanding amount of the Revolving Credit Loans (after giving
effect to all amounts requested) plus the Foreign Exchange Reserve plus the Omniglow Reserve plus the
Maximum Drawing Amount and Unpaid Reimbursement Obligations, shall not at any time exceed the lesser of (a) the Revolving
Credit Loan Commitment minus $1,000,000 and (b) the Borrowing Base. Each request for a Revolving Credit
Loan or the entering into a Foreign Exchange Contract or the submission of an application for the issuance of a Letter of Credit
hereunder shall constitute a representation and warranty by the Borrower that the conditions set forth in Article 13, in the case
of entering into this Credit Agreement on the Closing Date, and Article 14, in the case of all others have been satisfied on the
date of such request.

 

(D) Section 5.3 “Mandatory Payments”
of the Original Credit Agreement is hereby amended by deleting subsections (a), (b) and (c) and inserting the following in lieu
thereof:

 

(a) an amount equal to 100% of the
Net Proceeds received by the Borrower or any of its Subsidiaries from the sale or other disposition of any of its Capital Assets,
except for (i) sales of inventory in the ordinary course of business, (ii) sales of the Colorado Real Estate which such prepayment
in connection therewith shall be governed by the terms and conditions of the Fourth Amendment, or (iii) sales of any assets no
longer used or useful in the conduct of such business, provided, with respect to clause (iii) immediately preceding, that
no Default or Event of Default then exists or would exist after giving effect to such use of Net Proceeds, the value of such assets
does not exceed $250,000 in any fiscal year, the Borrower or such Subsidiary uses the cash proceeds of any such sale to purchase
replacement or other equipment within 60 days of such sale, and such sales are at fair market value;

 

(b) subject to Section 11.1, an
amount equal to 100% of the proceeds received by the Borrower, Guarantor or any of its Subsidiaries (i) from the incurrence
of any Indebtedness for borrowed money other than borrowings permitted hereunder and (ii) from the issuance of any Shares of the
Borrower, Guarantor or any of its Subsidiaries, in each case, excluding reasonable fees and expenses incurred by such Person relating
to the incurrence of such Indebtedness or issuance of such Shares, other than (i) Net Proceeds of up to $3,300,000 from the
issuance under the Columbus Nova Transaction, and (ii) Net Proceeds from all issuances after the effectiveness of the Fourth
Amendment of up to $3,000,000;

 

    	-3-

    	 

    

 

(c) an amount equal to 100% of the
Net Proceeds received by the Borrower or any of its Subsidiaries as insurance proceeds or condemnation awards, other than insurance
proceeds or condemnation awards not in excess of an aggregate amount of $250,000 in respect of loss or damage to equipment, Inventory,
fixed assets or real property to the extent such cash proceeds are applied to replace or repair the equipment, Inventory, fixed
assets or real property in respect of which such proceeds were received, so long as such application is made within sixty (60)
days after the occurrence of such loss, damage, or condemnation;

 

Notwithstanding the introductory paragraph
of Section 5.3, the Net Proceeds of at least $3,300,000 from the issuance under the Columbus Nova transaction will be used
to prepay Outstanding Revolving Loans (and the amount thereof in excess of the Outstanding Revolving Loans on the date hereof may
be retained by the Borrower) and Net Proceeds from all issuances after the effectiveness of the Fourth Amendment up to $3,000,000
will be used to prepay outstanding Revolving Loans (in each case such repayments shall not reduce the amount of the Revolving Credit
Loan Commitment).

 

(E) Section 6.2 “Interest on Loans”
of the Original Credit Agreement is hereby amended by deleting subsections (a) and (b) and inserting the following in lieu thereof:

 

(a) Unless an Event of Default shall
have occurred and the Default Rate applies, the outstanding principal amount of all Loans will bear interest at the Base Rate plus
three percent (3.0%) per annum. Notwithstanding anything to the contrary herein contained, the Borrower may not borrow any amounts
after the date hereof at the LIBOR Rate nor have the LIBOR Rate apply to any Loans whether by direct borrowings or by conversions.

 

(b) reserved.

 

(F) Section 10.5 “Notices”
of the Original Credit Agreement is hereby amended by adding the following new subsection (j):

 

(j) The Borrower will promptly notify
Agent, in writing, if the Borrower or any of its Subsidiaries become the subject of a DCAA audit or investigation.

 

(G) Section 10.4, “Financial Statements,
Certificates and Information”, of the Original Credit Agreement is hereby amended by adding the following clause (j):

 

    	-4-

    	 

    

 

and (j) (i) weekly, a 90 day monthly
cash flow forecast of Holdings and its Subsidiaries in which the first month is forecasted weekly and otherwise in detail reasonably
satisfactory to the Required Lenders and (ii) as soon as practicable, but in any event not later than December 31 of each fiscal
year of the Borrower, projections of Holdings and its Subsidiaries updating those projections delivered to the Lenders and referred
to in Section 10.4(g) or, if applicable, updating any later such projections delivered in response to a request pursuant to this
Section 10.4(j) and a proposed annual detailed business operating budget for the next succeeding fiscal year prepared on a monthly
basis which shall set forth, in detail reasonably satisfactory to the Required Lenders, the assumptions underlying such business
operating budget.

 

(H) Section 10.13 “Further Assurances”
of the Original Credit Agreement is hereby amended by adding the following as a last sentence to such section:

 

The Borrower will, within ten (10)
days of Agent’s request, execute and deliver to Agent agreements, instruments or documents, in form and substance satisfactory
to Agent, and will cooperate with Agent in processing and filing such agreements, instruments or documents, to enable the Borrower
to comply with the Federal Assignment of Claims Act.

 

(I) Section 10.17 “Consultant/Operating
Budget”, contained in the Original Credit Agreement is hereby amended by deleting the terms and subsections contained
therein and inserting the following in lieu thereof:

 

Section 10.17 Consultant/Operating
Budget.

 

If Adjusted EBITDA for the twelve
month period ending December 31, 2014 is less than $4,400,000, within thirty (30) days, the Borrower and the board of directors
of the Borrower shall engage and duly appoint a consultant or financial advisory firm acceptable to Agent, on terms and conditions
(including, without limitation, as to scope of duties and authority) acceptable to Agent.

 

(J) Section 11.1 “Restricted on Indebtedness”,
contained in the Original Credit Agreement is hereby amended by (i) deleting subsection (n) and inserting the following in lieu
thereof, and (ii) adding the new clause (p):

 

(n) Subordinated Debt evidenced
by the Granite Subordinated Notes in an aggregate principal amount on the Closing Date not to exceed $8,500,000 (plus any paid-in-kind
interest added to the principal thereon pursuant to the terms of the Granite Subordinated Debt Documents);

 

(p) Subordinated Debt evidenced
by the Colon Note in an aggregate principal amount on the date of the Fourth Amendment not to exceed $1,075,000.

 

(K) Section 11.4 “Restricted Payments”,
contained in the Original Credit Agreement is hereby amended by (a) deleting subsections (i), (iv), (v), (vi), (vii), (viii) and
(ix) thereof, (b) amending subsection (iv) by deleting the text therein contained and inserting the following in lieu thereof,
and (c) adding the following new clause (x):

 

    	-5-

    	 

    

 

(iv) provided, that the Borrower
may pay or may make a Distribution to the Holding Company to allow the Holding Company to pay Selway Capital, LLC in an amount
of up to $11,000 per month for work performed for the Borrower.

 

(x) provided, that the Borrower
may make payments of principal of the Colon Note in the amount of $107,500 on each of March 27, 2014, September 29, 2014, March
30, 2015, September 30, 2015, March 30, 2016, September 30, 2016, March 30, 2017, April 2, 2018 and October 2, 2018, which may
bear interest at a rate of up to two percent (2%) per annum under the Colon Note.

 

(L) Section 11.5 “Merger, Consolidation
and Disposition of Assets” of the Original Credit Agreement is hereby amended at subsection (d) by deleting the amount
“500,000” therein contained and inserting the amount “250,000” in lieu thereof.

 

(M) The following new sections 11.20 and 11.21
are hereby added to the Original Credit Agreement:

 

Section 11.20 Compensation.

 

The Borrower and its Subsidiaries
will not permit any salary increases or payment of any cash bonuses to officers of Borrower and its Subsidiaries, with the exception
of the contractual obligation to pay bonuses to Michael Bielonko, until the payment of cash interest on the Subordinated Debt has
resumed for six months.

 

Section 11.21 Corporate Offices.

 

The Borrower and its Subsidiaries
will not permit the total payments for relocation, build out, furniture and fixture and other associated costs for movement of
Borrower to new corporate offices to exceed $350,000 in the aggregate.

 

(N) Article 12 “Financial Covenants
of Borrower” contained in the Original Credit Agreement is hereby amended by deleting Sections 12.1, 12.2, 12.3,
12.4 and 12.5 and the terms and subsections therein contained and inserting the following in lieu thereof:

 

Section 12.1 Total Debt Service
Coverage.

 

As of the last day of the fiscal
year ending December 31, 2014, the Total Debt Service Coverage Ratio shall not be less than 0.80:1.00 and as of the last day
of the fiscal year ending December 31, 2015, the Total Debt Service Coverage Ratio shall not be less than 1.70:1.00.

 

Section 12.2 Reserved.

 

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:

 

    	-6-

    	 

    

 

The Borrower will not make, nor
permit any Subsidiary to make any Capital Expenditures (x) that exceed $1,400,000 in the Borrower’s 2013 Fiscal Year; (y)
that exceed $1,400,000 during the Borrower’s 2014 Fiscal Year; or (z) that exceed $1,500,000 during the Borrower’s
2015 Fiscal Year; provided, however, in the event that the Borrower receives a capital contribution through the issuance
of common-equity securities through which the Borrower received Net Proceeds, in cash, of $2,000,000 in addition to the capital
contribution of at least $3,300,000 of Net Proceeds in connection with the Columbus Nova Transaction the maximum annual amount
of Capital Expenditures will be increased by an aggregate amount of up to $500,000 during the next succeeding twelve (12) months
commencing when any of such Net Proceeds are first received.

 

Section 12.4 Reserved.

 

Section 12.5 “Minimum
Adjusted EBITDA” is hereby added to the Original Credit Agreement as follows:

 

On the dates set forth below the
minimum Adjusted EBITDA of the Borrower and its Subsidiaries for the fiscal quarter then ending shall not be less than the amount
set forth below

 

	 

Quarter
                                                                                                                                                                                                              End
	 	minimum Adjusted
 EBITDA	 
	December 31, 2013	 	$	(1,175,000	)
	March 31, 2014	 	$	(150,000	)
	June 30, 2014	 	$	350,000	 
	September 30, 2014	 	$	975,000	 
	December 31, 2014	 	$	900,000	 
	March 31, 2015	 	$	300,000	 
	June 30, 2015	 	$	975,000	 
	September 30, 2015	 	$	1,550,000	 
	December 31, 2015	 	$	1,500,000	 

 

(O) Section 15.1 “Events of Default”
of the Original Credit Agreement is hereby amended by adding the following new subsection (s) and moving the word “or”
at the end of subsection (q) to the end of subsection (r):

 

The Borrower or any of its Subsidiaries
shall be subject to any suspension, debarment, termination for default or like procedure with the United States of America or any
agency or subdivision thereof.

 

(P) Schedules 1.1, 9.5, 9.6, 9.7, 9.8, 9.26,
9.31 and 9.32 of the Original Credit Agreement are each hereby deleted in their entirety and Schedules 1.1, 9.5, 9.6, 9.7, 9.8,
9.26, 9.31 and 9.32 attached hereto are hereby substituted therefor.

 

    	-7-

    	 

    

 

(Q) Exhibit C, Borrowing Base
Report of the Original Credit Agreement is hereby amended by deleting the Exhibit C attached thereto and inserting
the Exhibit C attached to this Fourth Amendment in lieu thereof.

 

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

 

(a) the Borrower shall have delivered to
the Agent a fully executed counterpart of this Fourth 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) Agent and the Lender shall have indicated
its consent and agreement by executing this Fourth 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 Fourth Amendment and the actions contemplated herein, in form and substance satisfactory to Agent;

 

(e) after giving effect to this Fourth 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 Agent and the Lender for entering into this Fourth 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
Fourth Amendment; and

 

(g) the Agent shall have received fully
executed copies of the Fourth Amendment to Subordinated Loan Agreement dated November 19, 2013 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, all in form and substance satisfactory to Agent, with amended financial covenants limited
to those contained in the Credit Agreement which contain a 15% cushion from the levels set in Section 12 of the Credit Agreement,
an extension of the maturity date to at least June 30, 2016 and an acknowledgement by the holders of such Subordinated Debt that
no payments on such Subordinated Debt are permitted and expressly stating such non-payment will not constitute an Event of Default
under such Subordinated Debt Documents.

 

(h) the Borrower will have received gross
proceeds, in cash, from the issuance of common equity securities of at least $4,000,000 and will have used such Net Proceeds to
immediately repay outstanding Revolving Credit Loans.

 

(i) Agent shall have received an amendment
to each of the other Subordinated Debt Documents (in addition to those referred to in (g) above) extending the maturity date thereof
to at least June 30, 2016 and an acknowledgement by the holders of such Subordinated Debt that no payments on such Subordinated
Debt are permitted and expressly stating such non-payment will not constitute an Event of Default under such Subordinated Debt
and the documents executed in connection therewith, and otherwise in form and substance satisfactory to the Agent.

 

    	-8-

    	 

    

 

(j) the Borrower will have delivered to
the Administrative Agent, in form and substance satisfactory to the Administrative Agent, an Inventory report containing a detailed
description of the Inventory, by type, amount and location.

 

(k) Agent will have received a fully executed
amendment to each Subordination Agreement, in form and substance satisfactory to Agent, wherein the holders of the applicable Subordinated
Debt will have agreed not to accept any payments on account of the applicable Subordinated Debt and agree that any non-payment
of such Subordinated Debt will not constitute an event of default under such Subordinated Debt.

 

(l) Agent will have received certified counterparts
of the Securities Purchase Agreement executed in connection with the Columbus Nova Transaction and all material documents executed
in connection therewith, all of which must be in form and substance satisfactory to Agent.

 

(m) Agent will have received property and
casualty and general comprehensive liability insurance certificates dated on or about the date of this Fourth Amendment naming
Agent as loss payable and additional insured, in form and substance satisfactory to Agent.

 

3. Miscellaneous.

 

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

 

    	-9-

    	 

    

 

(c) Release. In addition,
to induce the Agent and Lender to agree to the terms of this Fourth Amendment, the Borrower, for and on behalf of, itself and its
Subsidiaries and its direct and indirect equity holders represents and warrants that as of the date of its execution of this Fourth
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 Fourth 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 of its Subsidiaries or direct or indirect
equity holders 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 Fourth Amendment, including without limitation, the reasonable
costs and fees of the Agent’s legal counsel.

 

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

 

    	-10-

    	 

    

 

(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 Fourth 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 Fourth
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
Fourth 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 Fourth Amendment. There are no
oral agreements among the parties hereto with respect to the subject matter hereof.

 

(m) Colorado Real Estate. Agent
will release the Negative Pledge regarding the Colorado Real Estate owned by Realty provided each of the following conditions is
met:

 

(i) the Borrower prepays a portion
of the outstanding principal amount of the Term Loan with at least $200,000 of proceeds of the sale of the Colorado Real Estate
simultaneous with the closing of title for such sale;

 

(ii) the Borrower deposits $300,000
in an account with Agent of the proceeds of the sale of the Colorado Real Estate to be held by Agent until Agent receives an appraisal
of the Colorado Real Estate (the “Colorado Appraisal”), in form and substance satisfactory to Agent, determining a
value of the Colorado Real Estate; and

 

(iii) Upon delivery of the Colorado
Appraisal to the Borrower, the Borrower will prepay an additional portion of the outstanding principal amount of the Term Loan
equal to the lesser of (a) the value of the Colorado Real Estate as determined in the Colorado Appraisal and (b) $500,000. The
Borrower will receive a $200,000 credit to such prepayment under this subsection (iii) on account of the $200,000 paid prior to
the receipt of the Colorado Appraisal.

 

    	-11-

    	 

    

 

(n) Waiver. Effective on the
effectiveness of the Fourth Amendment, Agent and Lender waive the Excess Cash Flow Payment due, if any, for the Borrowers Fiscal
Year 2013 and Fiscal Year 2014. The forgoing waiver is limited to the waiver of such Excess Cash Flow payments and is not a waiver
of any other term. Agent and the Lenders by providing such waiver are not agreeing to provide any waiver in the future.

 

 

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

 

    	-12-

    	 

    

 

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

 

 

	 	BORROWER
	 	 
	 	CYALUME TECHNOLOGIES, INC.
	.	 
	 	 
	 	By: 	/s/ Zivi Nedivi
	 	 	Name: Zivi Nedivi

Title: Chief Executive Officer

 

 

	 	GUARANTORS
	 	 
	 	COMBAT TRAINING SOLUTIONS, INC.
	.	 
	 	 
	 	By: 	/s/ Zivi Nedivi
	 	 	Name: Zivi Nedivi

Title: Chief Executive Officer

 

 

	 	CYALUME SPECIALTY PRODUCTS, INC.
	.	 
	 	 
	 	By: 	/s/ Zivi Nedivi
	 	 	Name: Zivi Nedivi

Title: Chief Executive Officer

 

 

	 	CYALUME REALTY, INC.
	.	 
	 	 
	 	By: 	/s/ Zivi Nedivi
	 	 	Name: Zivi Nedivi

Title: Chief Executive Officer

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT]

 

    	 

    	 

    

 

 

	 	HOLDING COMPANY
	 	 
	 	CYALUME TECHNOLOGIES, INC.
	.	 
	 	 
	 	By: 	/s/ Zivi Nedivi
	 	 	Name: Zivi Nedivi

Title: Chief Executive Officer

 

 

	 	AGENT
	 	 
	 	TD BANK, N.A.
	.	 
	 	 
	 	By: 	/s/ Bethany H. Buitenhuys
	 	 	Name: Bethany H. Buitenhuys

Title: Vice President

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT]FOURTH AMENDMENT TO SUBORDINATED LOAN
AGREEMENT

 

This FOURTH AMENDMENT
TO SUBORDINATED LOAN AGREEMENT (this "Fourth Amendment") dated as of November 19, 2013 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"),
GRANITE CREEK FLEXCAP I, L.P., a Delaware limited partnership ("GCF"), and PATRIOT CAPITAL II, L.P., a Delaware limited
partnership ("Patriot" and, together with GCF, the "Subordinated Lenders"), and GRANITE CREEK PARTNERS AGENT,
L.L.C., a Delaware limited liability company, as agent ("Granite Agent").

 

Background

 

The Borrower, the Holding
Company, the lenders party thereto and the Granite Agent entered into an that certain Subordinated Loan Agreement dated as of July 29,
2010 which was amended by that certain First Amendment to Subordinated Loan Agreement and Limited Consent and Joinder dated as
of January 20, 2012, that certain Second Amendment to Subordinated Loan Agreement dated as of March 30, 2012 and that certain Third
Amendment to Subordinated Loan Agreement dated as of December 20, 2012 (as further amended, modified or supplemented to the date
hereof, the "Existing Subordinated Loan 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 Granite Agent and Subordinated Lenders 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 Existing Subordinated
Loan Agreement shall be amended as follows:

 

(a) Section 1.1 "Definitions"
contained in the Existing Subordinated Loan Agreement is hereby amended by deleting the definition of "Closing Date"
therein contained.

 

(b) Section 1.1 "Definitions"
contained in the Existing Subordinated Loan Agreement is hereby amended by deleting the definitions of "Adjusted EBITDA",
"Change of Control", "EBITDA", "Lender Approved Add-Backs", "Maturity Date" and Warrants"
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.

 

"Change
of Control". The occurrence of any one of the following events: (i) the common stock of Holding Company is
no longer publicly traded or held under the Securities and Exchange Act of 1934; (ii) the Holding Company shall cease to own 100%
of the Shares of the Borrower; (iii) there is a sale of all or substantially all of the assets of the Borrower or (iv) any "person"
or "group" (as such terms are used in Sections 15(d) and 14(d) of the Securities Exchange Act of 1934) other than Renova
US Management, LLC, d/b/a Columbus Nova or any of its Affiliates, including, without limitation, US VC Partners, L.P., becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right
to acquire (such right, an "option right" whether such right is exercisable immediately or only after the passage of
time)) directly or indirectly, of 40% or more of the equity interests of the Holding Company on a fully diluted basis.

 

    	 

    	 

    

 

"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, and (iii) income tax expense, 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.

 

"Lender
Approved Add-Backs". The sum of the following to the extent incurred: (i) non-cash goodwill impairment charges not
to exceed $1,100,000 in the aggregate during the Borrower's 2013 Fiscal Year, (ii) severance costs not to exceed $500,000 in the
aggregate during the Borrower's 2013 Fiscal Year, (iii) non-cash compensation awards, (iv) non-recurring legal expenses incurred
during the Borrower's 2013 Fiscal Year not to exceed an aggregate of $2,500,000, (v) non-cash write-downs of assets and non-cash
asset adjustments taken during the Borrower's 2013 Fiscal Year, and (vi) non-cash losses derived from foreign currency transactions
entered into for business purposes and not for speculation.

 

"Term
Loan Maturity Date". June 30, 2016, unless sooner occurring following acceleration.

 

"Warrants",
collectively, the Second Amended and Restated Warrant to Purchase Common Stock of Cyalume Technologies Holdings, Inc. dated
as of November 19, 2013 issued by the Holding Company in favor of GCF and the Second Amended and Restated Warrant to Purchase Common
Stock of Cyalume Technologies Holdings, Inc. dated as of November 19, 2013 issued by Holding Company in favor of Patriot, in each
case, as may be amended, modified or supplemented from time to time.

 

(c) Section 1.1 "Definitions"
contained in the Existing Subordinated Loan Agreement is hereby amended by adding the following definition in its appropriate alphabetical
order:

 

"Applicable
PIK Rate" shall mean (a) prior to the earlier of (x) the payment in full of the Senior Debt and (y) December 19,
2015, 11%, or (b) on and after the earlier of (x) the payment in full of the Senior Debt and (y) December 19, 2015, 0%.

 

    	-2-

    	 

    

 

"Colon
Note". That certain subordinated promissory note issued by the Borrower to Antonio Colon, dated the Fourth Amendment
Date and any replacements thereof, in an aggregate principal amount of $1,075,000, on such terms and conditions as are acceptable
to Granite Agent in its sole discretion.

 

"Columbus
Nova Transaction". The purchase and sale of certain preferred stock of the Holding Company and the issuance of certain
common stock warrants of Holdings in connection therewith of Holdings to US VC Partners, L.P., a Delaware limited partnership pursuant
to that securities purchase agreement dated as of November 19, 2013 for an aggregate purchase price of $4,000,003.00.

 

"Fourth
Amendment Date" means November 19, 2013.

 

(d) Section 5.3 "Mandatory
Payments" of the Original Credit Agreement is hereby amended by deleting subsections (a), (b), and (c) and inserting the
following in lieu thereof:

 

(a) an amount
equal to 100% of the Net Proceeds received by the Borrower or any of its Subsidiaries from the sale or other disposition of any
of its Capital Assets, except for (i) sales of inventory in the ordinary course of business, (ii) sales of the Colorado Real Estate
which such prepayment in connection therewith shall be governed by the terms and conditions of the Fourth Amendment, or (iii) sales
of any assets no longer used or useful in the conduct of such business, provided, with respect to clause (iii) immediately
preceding, that no Default or Event of Default then exists or would exist after giving effect to such use of Net Proceeds, the
value of such assets does not exceed $250,000 in any fiscal year, the Borrower or such Subsidiary uses the cash proceeds of any
such sale to purchase replacement or other equipment within 60 days of such sale, and such sales are at fair market value;

 

(b) subject
to Section 11.1, an amount equal to 100% of the proceeds received by the Borrower, Guarantor or any of its Subsidiaries (i) from
the incurrence of any Indebtedness for borrowed money other than borrowings permitted hereunder, and (ii) from the issuance of
any Shares of the Borrower, Guarantor or any of its Subsidiaries, in each case, excluding reasonable fees and expenses incurred
by such Person relating to the incurrence of such Indebtedness or issuance of such Shares, other than (1) Net Proceeds of up to
$3,300,000 from the issuance under the Columbus Nova Transaction, and (2) Net Proceeds from all issuances after the Fourth Amendment
Date of up to $3,000,000;

 

(c) an amount
equal to 100% of the Net Proceeds received by the Borrower or any of its Subsidiaries as insurance proceeds or condemnation awards,
other than insurance proceeds or condemnation awards not in excess of an aggregate amount of $250,000 in respect of loss or damage
to equipment, Inventory, fixed assets or real property to the extent such cash proceeds are applied to replace or repair the equipment,
Inventory, fixed assets or real property in respect of which such proceeds were received, so long as such application is made within
sixty (60) days after the occurrence of such loss, damage, or condemnation.

 

    	-3-

    	 

    

 

Notwithstanding
the introductory paragraph of Section 5.3, the Net Proceeds of at least $3,300,000 from the issuance of Shares under the Columbus
Nova Transaction will be used to prepay outstanding Revolving Loans (and the amount thereof in excess of the outstanding Revolving
Loans on the date hereof may be retained by the Borrower) under the Senior Loan Agreement and proceeds from all issuances after
the effectiveness of the Fourth Amendment, up to $3,000,000, will be used to prepay outstanding Revolving Loans under the Senior
Loan Agreement (in each case such repayments shall not reduce the Revolving Credit Loan Commitment under the Senior Loan Agreement).

 

(e) Section 6.1. contained
in the Existing Subordinated Loan Agreement is hereby amended and restated in its entirety as follows.

 

6.1 Exit
Fee.

 

Upon the
occurrence of the earliest of (a) a Change of Control or (b) sale of substantially all of the equity or assets of the Borrower
or (c) the repayment in full of the Term Loan (the "Exit Fee Event"), the Borrower will pay to the Agent for the benefit
of the Lenders an exit fee equal to 3.0% of the principal balance outstanding on the Term Loan on November 19, 2013 multiplied
by the number of months that have elapsed since November 19, 2013 (determined on the date of the Exit Fee Event) divided by 12.

 

(f) Section 6.2. "Interest
on Loans", contained in the Existing Subordinated Loan Agreement is hereby amended by deleting clause (b) therein contained
and inserting the following in lieu thereof.

 

(b) The Borrower
promises to pay interest on the outstanding amount of each of the Loans, in arrears, on the first day of each calendar month commencing
with the payment to be made on September 1, 2010 (subject to the Following Business Day Convention); provided, that all accrued
interest on the Term Loan equal to the Applicable PIK Rate per annum shall be payable (i) on the last day of each such calendar
month prior to the Term Loan Maturity Date by adding such amount to the principal balance of the Term Loan and (ii) on the Term
Loan Maturity Date in cash.

 

(g) Section 10.4 contained
in the Existing Subordinated Loan Agreement is hereby amended by deleting clause (g) thereof and inserting the following in lieu
thereof.

 

(g) (i) weekly,
a 90 day monthly cash flow forecast of the Holding Company and its Subsidiaries in which the first month is forecasted weekly and
otherwise in detail reasonably satisfactory to the Required Lenders and (ii) as soon as practicable, but in any event not later
than December 31 of each fiscal year of the Borrower, projections of the Holding Company and its Subsidiaries updating those projections
delivered to the Lenders and referred to in Section 9.4(b) or, if applicable, updating any later such projections delivered in
response to a request pursuant to this Section 10.4(g) and a proposed annual detailed business operating budget for the next succeeding
fiscal year prepared on a monthly basis which shall set forth, in detail reasonably satisfactory to the Required Lenders, the assumptions
underlying such business operating budget; and

 

    	-4-

    	 

    

 

(h) Section 10.5 “Notices”
of the Existing Subordinated Loan Agreement is hereby amended by adding the following new subsection (k):

 

(k) The Borrower
will promptly notify Agent, in writing, if the Borrower or any of its Subsidiaries become the subject of a DCAA audit or investigation.

 

(i) Section 10.9 contained
in the Existing Subordinated Loan Agreement is hereby amended by deleting the last sentence of clause (a) thereof.

 

(j) Section 10.9 contained
in the Existing Subordinated Loan Agreement is hereby amended by deleting the proviso at the end of the first sentence of clause
(b) thereof.

 

(k) Section 10.17 contained
in the Existing Subordinated Loan Agreement is hereby amended by deleting the terms and subsections contained therein and inserting
the following in lieu thereof:

 

Section
10.17 Consultant/Operating Budget.

 

(a) If Adjusted
EBITDA for the twelve month period ending December 31, 2014 is less than $4,400,000, within thirty (30) days, the Borrower and
the board of directors of the Borrower shall engage and duly appoint a consultant or financial advisory firm acceptable to Agent,
on terms and conditions (including, without limitation, as to scope of duties and authority) acceptable to Agent.

 

(b) On or
prior to December 31, 2013, Borrower shall deliver to Agent the 2014 Operating Budget of Borrower in form acceptable to Secured
Subordinated Lenders.

 

(l) Section 11.1 contained
in the Existing Subordinated Loan Agreement is hereby amended by adding the following new section at the end thereof:

 

(p) Subordinated
Debt evidenced by the Colon Note, in the aggregate principal amount on the Fourth Amendment Date not to exceed $1,075,000.

 

(m) Section 11.4 contained
in the Existing Subordinated Loan Agreement is hereby amended by (a) deleting subsections (i), (iv), (v), (vi), (vii), (viii) and
(ix) thereof, (b) amending subsection (iv) by deleting the text therein contained and inserting the following in lieu thereof,
and (c) adding the following new clause (x):

 

(iv) provided
that Borrower may pay or make a Distribution to the Holding Company to allow the Holding Company to pay Selway Capital, LLC in
an amount of up to $11,000 per month for work performed for the Borrower;

 

(x) provided
that the Borrower may make payments of principal of the Colon Note in the amount of $107,500 on each of March 27, 2014, September
29, 2014, March 30, 2015, September 30, 2015, March 30, 2016, September 30, 2016, March 30, 2017, April 2, 2018 and October 2,
2018, which may bear interest at a rate of up to two percent (2%) per annum under the Colon Note.

 

    	-5-

    	 

    

 

(n) Section 11.5 contained
in the Existing Subordinated Loan Agreement is hereby amended at subsection (b) by deleting the amount "$500,000" therein
contained and inserting the amount "$250,000" in lieu thereof.

 

(o) Section 11 of the
Existing Subordinated Loan Agreement is hereby amended by adding the following new sections at the end thereof:

 

Section
11.20 Compensation

 

The Borrower
and its Subsidiaries will not permit any salary increases or payment of any cash bonuses to officers of Borrower and its Subsidiaries,
with the exception of the contractual obligation to pay bonuses to Michael Bielonko, until the payment of cash interest on the
Term Loan has resumed for six months.

 

Section
11.21 Corporate Offices

 

The Borrower
and its Subsidiaries will not permit the total payments for relocation, build out, furniture and fixture and other associated costs
for movement of Borrower to new corporate offices to exceed $350,000 in the aggregate.

 

(p) Section 12.1 "Coverage
Ratios" contained in the Existing Subordinated Loan 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) [Reserved]

 

(b) Total
Debt Service Coverage Ratio. As of the last day of the fiscal quarter ending December 31, 2014, the Total Debt Service Coverage
Ratio shall not be less than 0.68:1.00, and as of the last day of the fiscal quarter ending December 31, 2015 and for each fiscal
quarter thereafter, the Total Debt Service Coverage Ratio shall not be less than 1.445:1.00.

 

(q) Section 12.2 contained
in the Existing Subordinated Loan Agreement is hereby amended by deleting the terms and subsections therein contained and inserting
the following in lieu thereof:

 

Section
12.2 [Reserved].

 

(r) Section 12.3 "Capital
Expenditures" contained in the Existing Subordinated Loan Agreement is hereby amended by deleting the terms and subsections
therein contained and inserting the following in lieu thereof:

 

12.3
Capital Expenditures.

 

The Borrower
will not make, nor permit any Subsidiary to make any Capital Expenditures in any fiscal year that exceed $1,600,000 for the fiscal
year ending December 31, 2014 or $1,700,000 for any fiscal year thereafter (of which there will be no Capital Expenditures related
to the manufacturing of the Visi-Pad product unless the Company receives cash proceed of not less than $2,000,000 from additional
equity (not including up to $4,000,000 of equity from Columbus Nova on November 19, 2013) (the "Additional Capital Raise");
provided, that if the Borrower consummates the Additional Capital Raise in any fiscal year, the maximum Capital Expenditures level
set forth above shall be increased by an aggregate amount of up to $500,000 for such fiscal year during the next succeeding twelve
(12) months, commencing when any of such Additional Capital Raise is first received.

 

    	-6-

    	 

    

 

(s) Section 12.5 "Minimum
EBITDA" contained in the Existing Subordinated Loan Agreement is hereby amended by deleting the terms and subsections therein
contained and inserting the following in lieu thereof:

 

Section
12.5 Minimum Adjusted EBITDA.

 

At any
time during the periods ending on the dates set forth below the minimum Adjusted EBITDA of the Borrower and its Subsidiaries for
the quarter then ending shall not be less than the amount set forth below:

	 
Period
	 	Minimum EBITDA	 
	 	 	 	 
	December 31, 2013	 	$	(1,350,000	)
	March 31, 2014	 	$	(175,000	)
	June 30, 2014	 	$	297,000	 
	September 30, 2014	 	$	828,000	 
	December 31, 2014	 	$	765,000	 
	March 31, 2015	 	$	255,000	 
	June 30, 2015	 	$	828,000	 
	September 30, 2015	 	$	1,317,000	 
	December 31, 2015	 	$	1,317,000	 
	March 31, 2016 and the last day of each fiscal quarter thereafter	 	$	1,800,000	 

 

(t) Section 15.1 “Events
of Default” of the Original Credit Agreement is hereby amended by adding the following new subsection (s) and moving
the word “or” at the end of subsection (q) to the end of subsection (r):

 

(s) The
Borrower or any of its Subsidiaries shall be subject to any suspension, debarment, termination for default or like procedure with
the United States of America or any agency or subdivision thereof.

 

(u) Schedules 1.1,
9.5, 9.6, 9.7, 9.8, 9.26, 9.31 and 9.32 of the Original Credit Agreement are each hereby deleted in their entirety and Schedules
1.1, 9.5, 9.6, 9.7, 9.8, 9.26, 9.31 and 9.32 attached hereto are hereby substituted therefor.

 

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

 

    	-7-

    	 

    

 

(a) the Borrower shall
have delivered to the Granite Agent a fully executed counterpart of this Fourth Amendment and a fully executed counterpart of a
First Amendment to the Subordinated Intellectual Property Security Agreement made by Borrower in favor of Granite Agent, in form
and substance satisfactory to Granite Agent;

 

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

 

(c) the Granite Agent
and the Subordinated Lenders shall have indicated their consent and agreement by executing this Fourth 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 Fourth Amendment and the actions contemplated herein, in form and substance satisfactory
to the Granite Agent;

 

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

 

(f) the Borrower shall
have paid the Subordinated Lenders amendment fees in the aggregate of Twenty Five Thousand Dollars ($25,000), as directed by the
Granite Agent, to compensate the Subordinated Lenders for entering into this Fourth Amendment, which amount, when paid, is not
subject to refund or rebate and will be fully earned upon the Granite Agent and the Subordinated Lenders executing this Fourth
Amendment;

 

(g) the Subordinated
Lenders shall have received amendments to the Warrants Subordinated Lenders currently hold for the Holding Company's common stock,
exercisable at each Subordinated Lender's option at a strike price of $1.50 per share, amending the exercise price to $.01 and
additional warrants equal to 1% of Holding Company's fully-diluted common stock, exercisable at each Subordinated Lender's option
at a strike price of $.01 per share, in each case on terms and conditions acceptable to Subordinated Lenders;

 

(h) the Granite Agent
shall have received a cash flow forecast for Holding Company and its Subsidiaries, in form and substance acceptable to Granite
Agent;

 

(i) Borrower shall
have received at least $4,000,000 (less fees and expenses) in cash proceeds from the additional issuance of equity of the Holding
Company, on terms and conditions acceptable to Granite Agent, and such proceeds shall have been used to immediately repay the revolving
loans under the Senior Loan Agreement;

 

(j) the Granite Agent
shall have received fully executed copies of the Fourth Amendment to Amended and Restated Revolving Credit and Term Loan Agreement
dated November 19, 2013 among Borrower, Holding Company, CTS, Realty, Specialty, and TD Bank, NA, in form and substance acceptable
to Granite Agent (as amended, the "Senior Loan Agreement"); and

 

(k) the Granite Agent
shall have received fully executed copies of an amendment to the Subordination Agreement, in form and substance acceptable to Granite
Agent;

 

    	-8-

    	 

    

 

(l) The Granite Agent
shall have received certified counterparts of the Securities Purchase Agreement executed in connection with the Columbus Nova Transaction
and all material documents executed in connection therewith, all of which must be in form and substance acceptable to Granite Agent;
and

 

(m) Granite Agent shall
have received property and casualty and general and comprehensive liability insurance certificates dated on or about the date of
this Fourth Amendment naming Granite Agent as loss payee and additional insured, in form and substance satisfactory to Granite
Agent.

 

3. Miscellaneous.

 

(a) Ratification.
The terms and provisions set forth in this Fourth Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Existing Subordinated Loan Agreement and except as expressly modified and superseded by this Fourth Amendment, the
terms and provisions of the Existing Subordinated Loan Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect. The Borrower and the Granite Agent agree that the Existing Subordinated Loan 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 Fourth Amendment, the Existing Subordinated Loan Agreement (as
unmodified by this Fourth Amendment) shall control. The Borrower hereby acknowledges that, as of the date hereof, the security
interests and liens granted to the Granite Agent under the Existing Subordinated Loan 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 Existing Subordinated
Loan Agreement and the other Loan Documents.

 

(b) Representations
and Warranties. The Borrower hereby represents and warrants to the Granite 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 Granite Agent that the execution, delivery and performance by the Borrower
of this Fourth 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 Granite Agent;
(vii) do not require the consent or approval of any Governmental Authority. All representations and warranties made in this
Fourth Amendment shall survive the execution and delivery of this Fourth Amendment, and no investigation by the Granite Agent shall
affect the representations and warranties or the right of the Granite Agent to rely upon them.

 

    	-9-

    	 

    

 

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

 

(ii) Releases
and discharges the Granite Agent, the Subordinated Lenders and their respective 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 Existing Subordinated Loan 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
Existing Subordinated Loan Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the
Existing Subordinated Loan Agreement shall mean a reference to the Existing Subordinated Loan Agreement as amended hereby.

 

(e) Expenses
of the Granite Agent. As provided in the Existing Subordinated Loan Agreement, the Borrower agrees to pay all reasonable
costs and expenses incurred by the Granite Agent in connection with the preparation, negotiation, and execution of this Fourth
Amendment, including without limitation, the reasonable costs and fees of the Granite Agent's legal counsel.

 

(f) Severability.
Any provision of this Fourth Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Fourth 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 State of Illinois and the applicable
laws of the United States of America.

 

(h) Successors
and Assigns. This Fourth Amendment is binding upon and shall inure to the benefit of the Granite Agent, the Subordinated
Lenders, 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 Granite Agent.

 

(i) Counterparts.
This Fourth 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.

 

    	-10-

    	 

    

 

(j) Effect of
Waiver. No consent or waiver, express or implied, by the Granite 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 Fourth 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.]

 

    	-11-

    	 

    

 

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

 

	 	BORROWER
	 	 
	 	CYALUME TECHNOLOGIES, INC.
	.	 
	 	 
	 	By: 	/s/ Zivi Nedivi
	 	 	Name: Zivi Nedivi

Title: Chief Executive Officer

 

	 	SUBSIDIARIES
	 	 
	 	COMBAT TRAINING SOLUTIONS, INC.
	.	 
	 	 
	 	By: 	/s/ Zivi Nedivi
	 	 	Name: Zivi Nedivi

Title: Chief Executive Officer

 

 

	 	CYALUME SPECIALTY PRODUCTS, INC.
	.	 
	 	 
	 	By: 	/s/ Zivi Nedivi
	 	 	Name: Zivi Nedivi

Title: Chief Executive Officer

 

 

	 	CYALUME REALTY, INC.
	.	 
	 	 
	 	By: 	/s/ Zivi Nedivi
	 	 	Name: Zivi Nedivi

Title: Chief Executive Officer

 

[Signatures continued
on next page.]

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO SUBORDINATED
LOAN AGREEMENT]

 

    	 

    	 

    

 

 

	 	HOLDING COMPANY
	 	 
	 	CYALUME TECHNOLOGIES HOLDINGS, INC.
	.	 
	 	 
	 	By: 	/s/ Zivi Nedivi
	 	 	Name: Zivi Nedivi

Title: Chief Executive Officer

 

 

	 	GRANITE  AGENT
	 	 
	 	GRANITE CREEK PARTNERS AGENT, L.L.C.
	.	 
	 	 
	 	By: 	/s/ Brian B. Boorstein
	 	 	Name: Brian B. Boorstein 

Title: Member

  

 

	 	GRANITE CREEK FLEXCAP I, LP
	 	 
	 	 
	.	 
	 	By: 	GRANITE CREEK GP FLEXCAP I, L.L.C., its General Partner
	 	 	 
	 	 	By:	/s/ Brian B. Boorstein
	 	 	Name:	Brian B. Boorstein
	 	 	Title:	Member

 

 

 

	 	PATRIOT CAPITAL II, L.P.
	 	 
	 	 
	.	 
	 	By: 	PATRIOT PARTNERS II, LLC,

its General Partner
	 	 	 
	 	 	By:	/s/ Thomas O. Holland Jr.
	 	 	Name:	Thomas O. Holland Jr.
	 	 	Title:	Member

 

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO SUBORDINATED
LOAN AGREEMENT]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00224-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00224-of-00352.parquet"}]]