Document:

Exhibit
10.15

     

    SECURITY
AND PLEDGE AGREEMENT

     

    This
Security and Pledge Agreement (this “Agreement”), dated
the 19th day of December, 2008, is made by CYALUME TECHNOLOGIES, INC., a
Delaware corporation having its principal place of business and chief executive
office at 96 Windsor Street, West Springfield, Massachusetts (the “Debtor”), for the
benefit of TD BANK, N.A., a national banking association, as Agent (the “Agent”) and for
itself and the other lending institutions (hereinafter, collectively, the “Lenders”) which are
or may become parties to the Loan Agreement (as defined below) (in such capacity
the “Secured
Party”).

     

    WITNESSETH

     

    WHEREAS, pursuant to that certain
Revolving Credit and Term Loan Agreement dated as of December 19, 2008, by and
among the Debtor, Vector Intersect Security Acquisition Corp., a Delaware
corporation (the “Holding Company”),
the Lenders, and the Secured Party, as Agent and Lender (as amended, restated,
modified, supplemented and in effect from time to time, the “Loan Agreement”;
capitalized terms used herein without definition having the respective meanings
ascribed to them in the Loan Agreement), the Lenders have agreed to make Loans
to the Debtor; and

     

    WHEREAS, the obligation of the Lenders
to make such Loans is subject to the condition, among others, that the Debtor
execute and deliver this Agreement and grant the liens in favor of the Secured
Party as hereinafter described.

     

    NOW, THEREFORE, for good and valuable
consideration, receipt and sufficiency of which is hereby acknowledged, it is
hereby agreed as follows:

     

    1.           Security
Interest.  As security for the due and punctual payment and
performance of the Secured Obligations described in Section 2 hereof, the Debtor
hereby grants to the Secured Party for the benefit of the Lenders and itself, a
continuing security interest in and to all of its right, title and interest in
the Collateral, whether now owned or existing or hereafter acquired or
arising.

     

    As used herein, “Collateral” shall
mean all of Debtor’s tangible and intangible personal property and fixtures (but
none of its obligations with respect thereto), including, without limitation,
all of Debtor’s right, title and interest in the property described below, as
each such term is used in the Uniform Commercial Code as in effect from time to
time in The Commonwealth of Massachusetts (the “UCC”):

     

    (i)           all
investment property;

     

    (ii)          goods;

     

    (iii)         equipment;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (iv)         inventory;

     

    (v)          instruments
(including, without limitation, promissory notes);

     

    (vi)         accounts;

     

    (vii)        documents;

     

    (viii)       chattel
paper (whether tangible or electronic);

     

    (ix)         
deposit accounts;

     

    (x)           fixtures;

     

    (xi)          letter-of-credit
rights and support obligations;

     

    (xii)         the
commercial tort claims (i.e., any claims arising in
tort that the Debtor may have) set forth on Exhibit 1(xii)
hereto;

     

    (xiii)        general
intangibles (including, without limitation, payment intangibles and Intellectual
Property Collateral (as defined below)); and

     

    (xiv)        any
and all additions, accessions and attachments to and of the foregoing and any
substitutions, replacements, proceeds (including, without limitation, insurance
proceeds), products and supporting obligations of the foregoing.

     

    Notwithstanding
anything to the contrary contained herein, the security interests granted under
this Agreement shall not extend to (and such property shall not constitute
Collateral) the equity interests of the Debtor in CTSA, other than as set forth
in that certain Financial Instruments Account Pledge Agreement, dated as of the
date hereof, by the Debtor in favor of the Agent.

     

    It is
understood and agreed that the security interests and liens created hereby and
under the Loan Agreement and the other Loan Documents shall not prevent, as long
as no Event of Default has occurred and continuing and after written notice from
the Agent, Debtor from using the Collateral in the ordinary course of its
business.

     

    2.           Secured
Obligations.  The lien hereby granted shall secure equally and
ratably the due and punctual payment and performance of the following
liabilities and obligations (collectively, the “Secured
Obligations”):

     

    (a)           principal
of and premium, if any, and interest on and fees (including, without limitation,
the Origination Fee, the Commitment Fee and all other fees from time to time due
from Debtor pursuant to the Loan Agreement) and other amounts payable with
respect to the Term A Note, the Term B Note, or the Revolving Credit Note (or
any of them) and all Derivative Contracts and any guarantees thereof;
and

     

    
      
        
        

      

      
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    (b)           any
and all other indebtedness and obligations of the Debtor and/or any of its
Subsidiaries under the Loan Agreement or under any other agreement, document or
instrument relating thereto, all as amended, modified or supplemented from time
to time, related in any way to the Term A Note, the Term B Note or the Revolving
Credit Note or any Derivative Contract (or any of them).

     

    3.           Special Warranties and Covenants of
the Debtor.  Debtor hereby represents and warrants to and
covenants and agrees with the Secured Party and the Lenders that:

     

    (a)           Debtor
is the owner of and has good and marketable title to the Collateral free from
any liens, other than liens created hereby and Permitted Liens, and Debtor will
defend the Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein.

     

    (b)           The
address shown at the beginning of this Agreement is the chief executive office
and principal place of business of Debtor and the location of all records
concerning that portion of Collateral consisting of accounts receivable and
other general intangibles.  Debtor’s only additional places of
business and the only additional locations of any Collateral (including
Collateral located at warehouses and the like) are listed on Exhibit 3(b) attached
hereto (which includes legal descriptions of all real property sufficient for
fixture filings).  Except as set forth on Exhibit 3(b) attached
hereto, during the five (5) years ended on the date hereof, neither Debtor nor
any of its predecessors-in-interest has conducted any business or sold any goods
under any name (including any fictitious business or trade name) other than its
legal name.  Debtor’s legal name and jurisdiction of organization is
correctly set forth at the beginning of this Agreement.  Debtor will
not change its corporate form or jurisdiction of organization, or change its
chief executive office or principal place of business or any other place of
business, or the location of any Collateral (other than inventory in transit)
(including, without limitation, the records relating thereto), or make any
change in its legal name or conduct business operations under any fictitious
business or trade name (other than any names specified on Exhibit 3(b) attached
hereto), (i) in contravention of the Loan Agreement or (ii) without, in
each such case, (A) giving at least twenty (20) days’ prior written notice
thereof to the Secured Party and (B) executing, delivering, filing and
recording all necessary financing statements (or amendments thereto) or other
instruments and documents in order to maintain the validity, enforceability,
priority and perfection of the lien arising hereunder and under the other Loan
Documents.

     

    (c)           Except
as explicitly permitted by the Loan Agreement, (i)  Debtor will not sell or
otherwise dispose of any of the Collateral or any interest therein and
(ii)  Debtor will not create, assume, incur or suffer to exist any lien of
any kind (whether senior, pari
passu or subordinate) on the Collateral, other than Permitted
Liens.

     

    (d)           Subject
to the terms of the Loan Agreement, Debtor will keep the Collateral, including,
without limitation, all inventory and equipment, used or useful in the conduct
of its business, in good repair, working order and condition, ordinary wear and
tear excepted, and adequately insured at all times in accordance with the
provisions of the Loan Agreement and the other Loan Documents.  Each
insurance policy pertaining to any of the Collateral shall be in form and
substance and shall have such limits and deductibles as shall be reasonably
satisfactory to the Secured Party and, without limiting the generality of the
foregoing, shall:

     

    
      
        
        

      

      
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    (i)           name
the Secured Party as loss payee (in the case of property insurance) and as an
additional insured (in the case of liability insurance) pursuant to a so-called
standard mortgagee clause and shall contain the so-called agreed upon
replacement cost endorsement and waiver of subrogation;

     

    (ii)          provide
that no action of Debtor or any of its Subsidiaries or any tenant or subtenant
shall void such policy as to the Secured Party;

     

    (iii)         provide
that the Secured Party shall be notified (and Debtor hereby covenants to notify
the Secured Party) of any expiration, cancellation or material amendment of such
policy at least thirty (30) days in advance of the effective date thereof and
provide that the Secured Party shall have the right to cure any deficiency
resulting in the same;

     

    (iv)      
  provide that the Secured Party shall receive (and Debtor shall cause
the Secured Party to receive) annually, certificates of insurance (or other
appropriate documentation) demonstrating compliance by Debtor with all
provisions of the Loan Agreement relating to insurance matters; and

     

    (v)      
   be issued by an insurance company or insurance companies
licensed to do business in the jurisdiction in which the Collateral is located
and having the highest or second highest rating available from A.M. Best Company
or an equivalent Person.

     

    Certified
copies of all such insurance policies relating to the Collateral shall be
delivered to the Secured Party upon written request.  In the event of
any material damage or destruction to the Collateral, Debtor shall give prompt
written notice to the Secured Party.  Debtor shall not adjust,
compromise or settle any claim for insurance proceeds in excess of $100,000
without the prior written consent of the Secured Party.  Subject to
the terms of the Loan Agreement and so long as no Default or Event of Default
shall have occurred and be continuing, and so long as each of the following
conditions are satisfied, Debtor may apply the proceeds of any insurance to the
repair and restoration or replacement of any of the Collateral which was the
subject of the loss, provided that (i) the cost of repair and restoration or
replacement shall not exceed $100,000, (ii)  Debtor continues to be the
sole owner of the Collateral subject to the lien arising hereunder and under the
other Loan Documents and, if applicable, said Permitted Liens, (iii) the
contemplated repair and restoration or replacement shall reconstruct or restore
the Collateral to substantially its previous condition within ninety (90) days
from the date of the damage or destruction to the Collateral, (iv) all sums
necessary to effect the repair and restoration or replacement over and above any
available insurance proceeds shall be at the sole cost and expense of the
Debtor, (v) Debtor shall deposit all available proceeds together with the
additional sums referred to in subsection (iv) with the Secured Party prior to
commencing any repair and restoration or replacement and (vi) at all times
during any repair and restoration or replacement Debtor shall, at its sole cost
and expense, maintain workers’ compensation and public liability insurance in
amounts satisfactory to the Secured Party and in accordance with the provisions
of this Section 3(d).  If at any time the Secured Party determines, in
good faith, that the foregoing conditions have not been or cannot be satisfied,
then the Secured Party may apply the proceeds of insurance to the prepayment,
without premium, of the Term Loans in accordance with Section 5.3 of the Loan
Agreement and, thereafter, to the Revolving Credit Note.  Any
insurance proceeds that are received at a time when a Default or Event of
Default shall have occurred and be continuing may be applied by the Secured
Party to the repayment of the Secured Obligations in accordance with the terms
of the Loan Agreement.  If Debtor fails to provide insurance as
required by this Agreement, the Loan Agreement or any of the other Loan
Documents, the Secured Party may, at its option, provide such insurance, and the
Debtor will on demand pay to the Secured Party the amount of any disbursement
made by the Secured Party for such purpose and any such unreimbursed amounts
shall constitute Secured Obligations for all purposes of this
Agreement.

     

    
      
        
        

      

      
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    Notwithstanding
anything to the contrary herein, the Mortgage shall control with respect to the
insurance policies required on the Premises and property covered
therein.

     

    (e)           To
the extent required by the Loan Agreement, Debtor will pay and discharge
promptly as they become due and payable all taxes, assessments and other
governmental charges or levies imposed upon it or its income or upon any of its
properties, real, personal or mixed, or upon any part thereof, including,
without limitation, the Collateral or any part of the Collateral, as well as all
claims of any kind (including claims for labor, materials and supplies) which if
unpaid might by law become a lien or charge upon its property.

     

    (f)           Debtor
will, upon the reasonable request of the Secured Party, promptly make, execute
(as applicable), acknowledge and deliver and file and record in all proper
offices and places, including, without limitation, the U.S. Patent and Trademark
Office and the U.S. Copyright Office, such financing statements, continuation
statements, certificates, collateral agreements and other agreements, documents
or instruments as may be necessary to perfect or from time to time renew the
lien arising hereunder and under the other Loan Documents, including, without
limitation, those that may be necessary to perfect such lien in any additional
Collateral hereafter acquired by Debtor or in any replacements or proceeds
thereof, and Debtor will take all such action as may be deemed reasonably
necessary by the Secured Party to carry out the intent and purposes of the Loan
Documents or for assuring and confirming to the Secured Party the grant and
perfection of the lien in the Collateral, including, without limitation, the
Intellectual Property Collateral (as defined below).  To the extent
permitted by law, Debtor authorizes and appoints (such appointment being coupled
with an interest and irrevocable) the Secured Party to execute (as applicable)
and to file and record such financing statements, continuation statements,
certificates, collateral agreements and other agreements, documents and
instruments in its stead, with full power of substitution, as Debtor’s
attorney-in-fact to be exercised only (i) if Debtor fails or refuses to do so
promptly following a written request therefor or (ii) following an Event of
Default and during the continuance thereof.

     

    
      
        
        

      

      
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    (g)           Debtor
hereby authorizes the Secured Party to file and record in all proper offices and
places, including, without limitation, the U.S. Patent and Trademark Office and
the U.S. Copyright Office, such financing statements, continuation statements,
certificates, collateral agreements and other agreements, documents and
instruments as may be necessary to perfect from time to time renew the lien
arising hereunder and under the other Loan Documents, including, without
limitation, those that may be necessary to perfect such lien in any additional
Collateral hereafter acquired by Debtor or in any replacements or proceeds
thereof.

     

    (h)           Debtor
agrees that if any warehouse receipt or receipt in the nature of a warehouse
receipt is issued with respect to any of the inventory (or any other
Collateral), such receipt shall not be “negotiable” (as such term is used in the
Uniform Commercial Code as in effect in any relevant jurisdiction or under other
relevant law).  If, notwithstanding the foregoing, any negotiable
warehouse receipts or other negotiable documents are issued with respect to any
of the inventory (or other Collateral), all such instruments shall be held in
trust for the Secured Party and shall be immediately endorsed to the order of
the Secured Party and delivered to the Secured Party to be held by the Secured
Party as Collateral hereunder.  In addition, Debtor will notify all
warehousemen, bailees, agents, processors and other similar Persons of the lien
created pursuant to the Loan Documents and will cause each to hold all
Collateral for the account of, and subject to the instructions of, the Secured
Party.

     

    (i)     
      Except in the ordinary course of business or
as otherwise explicitly permitted by the Loan Agreement, without the prior
written consent of the Secured Party, Debtor shall not amend or modify, or waive
any of its rights under or with respect to, any of the accounts receivable, if
the effect thereof would be to materially and adversely impair any remedies of
the Debtor or the Secured Party under or with respect thereto.  Upon
the occurrence and during the continuance of any Event of Default, the Secured
Party may notify or may require the Debtor to notify (and after any such
notification Debtor shall cause) all Persons obligated on the accounts
receivable to make payment directly to (or in accordance with the instructions
of) the Secured Party.  From and after the occurrence of any Event of
Default and during the continuance thereof, the Secured Party may
require:  (i) all sums collected or received and all property
recovered or possessed by Debtor in connection with any of the Collateral,
including, without limitation, all sums received in respect of any of the
accounts receivable, to be received and held by Debtor in trust for the Secured
Party and to be segregated from the assets and funds of Debtor and to be
immediately delivered to the Secured Party for application to the payment of the
Secured Obligations in accordance with the terms hereof and (ii) the
Debtor, upon the written request of the Secured Party, to institute depositary,
lockbox and other similar credit procedures providing for the direct receipt of
such sums.

     

    (j)    
       Debtor will, to the extent permitted
by applicable law, specifically assign to the Secured Party all federal
government contracts and will cooperate with the Secured Party in giving notice
of such assignment pursuant to the Federal Assignment of Claims
Act.  Debtor will cooperate with the Secured Party in providing such
further information with respect to contracts with any governmental authority as
the Secured Party may reasonably request and will provide such instruments of
further assurance with respect to such contracts as the Secured Party may
reasonably request.

     

    
      
        
        

      

      
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    (k)           Debtor
hereby constitutes and appoints the Secured Party its true and lawful attorney,
irrevocably, with full power, upon the occurrence and during the continuance of
any Event of Default, in the name of Debtor or otherwise, at the expense of
Debtor and without notice to or demand upon Debtor, to act, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due or to become due to Debtor, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or take any
action or institute any proceedings which the Secured Party may deem to be
reasonably necessary or advisable to protect the interests of the Secured Party,
which appointment as attorney is coupled with an interest and is
irrevocable.  Without limiting the generality of the foregoing, upon
the occurrence and during the continuance of any Event of Default, the Secured
Party shall have full power: (i) to demand, collect, receive payment of,
receipt for, settle, compromise or adjust, and give discharges and releases in
respect of any of the Collateral including, without limitation, any accounts
receivable; (ii) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect and/or to enforce any other rights in respect of any of the Collateral
including, without limitation, any accounts receivable; (iii) to defend any
suit, action or proceeding brought against Debtor with respect to any of the
Collateral including, without limitation, any account receivable; (iv) to
settle, compromise or adjust any suit, action or proceeding described in
clause (ii) or (iii) above, and, in connection therewith, to give such
discharges or releases as the Secured Party may deem appropriate; (v) to
endorse checks, notes, drafts, acceptances, money orders, bills of lading,
warehouse receipts or other instruments or documents including, without
limitation, those evidencing or securing the accounts receivable or any of them;
(vi) to receive, open and dispose of all mail addressed to Debtor and to
notify the post office authorities to change the address of delivery of mail
addressed to Debtor to such address, care of the Secured Party, as the Secured
Party may designate; (vii) to act as attorney for Debtor in obtaining,
adjusting, settling and canceling any insurance and endorsing any drafts and
retaining any amounts collected or received under any policies of insurance;
(viii) to discharge any taxes, assessments or other governmental charges or
levies or any other liens to which any Collateral is at any time subject; and
(ix) generally to sell, assign, transfer, pledge, make any agreement in
respect of or otherwise deal with the Collateral as fully and completely as
though the Secured Party was the absolute owner thereof for all
purposes.  Debtor agrees to reimburse the Secured Party upon written
demand for any payments made or reasonable expenses incurred by the Secured
Party pursuant to the foregoing authorization and any unreimbursed amounts shall
constitute Secured Obligations for all purposes hereof.

     

    (l)        
   The powers conferred on the Secured Party by this Agreement,
the Loan Agreement and the other Loan Documents are solely to protect the
interests of the Secured Party and the Lenders and shall not impose any duty
upon the Secured Party to exercise any such power, and if the Secured Party
shall exercise any such power, such exercise by the Secured Party shall not
relieve Debtor of any Default or Event of Default, and the Secured Party shall
be accountable only for amounts actually received as a result
thereof.  Except as otherwise required by applicable law, rule or
regulation, the Secured Party shall be under no obligation to take steps
necessary to preserve the rights in or value of or to collect any sums due in
respect of any Collateral against any other Person but may do so at its
option.  Without limiting the generality of the foregoing, except as
otherwise required by applicable law, rule or regulation, the Secured Party
shall have no duty or liability with respect to any claim or claims regarding
Debtor’s ownership or purported ownership, or rights or purported rights arising
from, the Intellectual Property Collateral (as defined below) (or any portion
thereof) or any use, license, or sublicense thereof, whether arising out of any
past, current or future event, circumstance, act or omission or
otherwise.  All of such duties and liabilities shall be exclusively
the obligation of the Debtor.  All expenses incurred in connection
with the application, protection, maintenance, renewal or preservation of any of
the Collateral including, without limitation, the Intellectual Property
Collateral (as defined below), shall be borne by the Debtor.

     

    
      
        
        

      

      
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    (m)          Debtor
shall defend, indemnify and hold harmless the Secured Party from any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, or disbursements (including reasonable attorneys’ fees) of any
kind whatsoever which may be imposed on, incurred by or asserted against the
Secured Party in connection with or in any way arising out of or relating to the
Collateral or this Agreement, other than those which result from a breach of
this Agreement by the Secured Party or its gross negligence or willful
misconduct.

     

    (n)           It
is the intention of the parties hereto that none of the Collateral shall become
fixtures and Debtor shall take all reasonable action or actions as may be
necessary to prevent any of the Collateral from becoming
fixtures.  Debtor will, if requested by the Secured Party, use its
best efforts to obtain waivers of lien, in form and substance satisfactory to
the Secured Party, from each Person (including lessors) having any interest in
the real property on which any of the Collateral is or is to be
located.

     

    (o)           To
the best of Debtor’s knowledge, all of Debtor’s inventory manufactured or
produced by Debtor has been (and from and after the date hereof will be)
produced in compliance with all material applicable laws, including, without
limitation, the Fair Labor Standards Act, as amended.

     

    (p)           Debtor
will promptly notify the Secured Party and the Lenders, as provided in the Loan
Agreement, of any loss or damage to any Collateral in excess of $250,000 or any
request by any other Person for any material credit or adjustment with respect
to any accounts receivable.

     

    (q)           Debtor
confirms that value has been given to it by the Secured Party, that it has
rights in the Collateral and that it has not agreed with the Secured Party to
postpone the time for attachment of any of the security interests in any of the
Collateral.  The security interests created by this Agreement will
have effect and be deemed to be effective whether or not the Secured Obligations
are owing or in existence before, after or upon the date of this
Agreement.

     

    (r)      
     Debtor will promptly notify the Secured Party
(which notification shall be deemed to automatically amend Exhibit 1(xii)
hereto) of any commercial tort claim of Debtor not specifically identified
herein and grant to the extent permitted under applicable law, to Secured Party
a security interest in any such commercial tort claim and the proceeds
thereof.

     

    
      
        
        

      

      
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    (s)           Debtor
shall and shall cause each of its Subsidiaries to place a conspicuous legend on
each of its contracts which constitutes chattel paper which legend will state:
“THIS IS CHATTEL PAPER IN WHICH A LIEN HAS BEEN GRANTED TO TD BANK, N.A.” and
shall, upon demand, deliver to the Secured Party or to such other Person as the
Secured Party shall designate, to act on its behalf, all Collateral in its
original form consisting of negotiable instruments or documents, certificated
securities, chattel paper and instruments (in each case, accompanied by stock
powers, allonges or other instruments of transfer executed in
blank).

     

    (t)           Debtor
shall take all steps necessary to grant the Secured Party or to such other
Person as the Secured Party shall designate, to act on its behalf, control of
all electronic chattel paper in accordance with the UCC and all “transferable
records” as defined in each of the Uniform Electronic Transactions Act and any
other applicable law.

     

    (u)           The
Debtor has no knowledge of any fact that would impair the validity or make
uncollectible any Collateral that is accounts receivable, chattel paper, general
intangibles, contract rights, documents or instruments, and, to the best of the
Debtor's knowledge, each obligor liable upon such Collateral has and will have
the capacity to contract.

     

    (v)           None
of the Equipment and Inventory has, within the four months preceding the date of
this Security Agreement, been located at any place other than the places
specified on Exhibit
3(b) attached hereto.  Other than as set forth on Exhibit 3(v) attached
hereto the Debtor has no trade names.  During the four months
preceding the date hereof, other than as set forth on Exhibit 3(v) the
Debtor has not been known by any legal name different from the one set forth on
the signature page hereto, nor has the Debtor been the subject of any merger or
other corporate reorganization, except as set forth on Exhibit 3(v)(1)
attached hereto.  The Debtor's federal taxpayer identification number
is (and, during the four months preceding the date hereof, the Debtor has not
had a federal taxpayer identification number different from)
13-3353274.  The Debtor is not a party to any federal, state or local
government contract except as set forth in Exhibit 3(v)(2)
attached hereto.

     

    (w)           The
items making up the Inventory at any time are and will be genuine and saleable
(or, in the case of non-finished goods Inventory, in good condition and
available to be incorporated into finished goods Inventory) in the ordinary
course of the Debtor's business.

     

    (x)           The
Debtor agrees that it will maintain exclusive possession of its goods,
instruments and inventory, other than Inventory in transit in the ordinary
course of business and Inventory which is in the possession or control of a
warehouseman, bailee agent or other Person (other than a Person controlled by or
under common control with the Debtor) that has been notified of the security
interest created in favor of the Debtor pursuant to this Security Agreement, and
has agreed to hold such Inventory subject to the Agent's lien and waive any Lien
held by it against such Inventory.

     

    (y)           Each
Account Receivable is and will be a true and correct statement of the actual
Indebtedness incurred by each account debtor with respect thereto, and arises
and will arise out of or in connection with the sale or lease of goods or for
the rendering of services by the Debtor to each such account debtor and each
Account Receivable included in the Borrowing Base complies with the requirements
of an Eligible Account Receivable.

     

    
      
        
        

      

      
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    4.           Special Provisions Concerning
Intellectual Property Collateral.  Without limiting the
generality of the other provisions of this Agreement:

     

    (a)          Debtor
hereby represents and warrants to and covenants and agrees with the Secured
Party that:

     

    (i)           a
true and complete list of all trademarks, patents and copyrights currently
owned, held (whether pursuant to a license or otherwise) or used by the Debtor,
in whole or in part, in conducting its business is set forth on Exhibit 4(a)(i)
attached hereto, and such exhibit correctly sets forth the information specified
therein;

     

    (ii)           each
and every trademark in use is subsisting; to the extent owned by the Debtor,
each and every trademark, patent and copyright is valid and enforceable; and, to
the best of Debtor’s knowledge, there is no infringement or unauthorized use of
any of the trademarks, patents or copyrights, in whole or in part;

     

    (iii)         no
claim has been made in writing that the use of any of the trademarks or
copyrights or the practice of any of the patents does or may violate the rights
of any other Person, and Debtor is not aware of any basis for any such claim to
be asserted;

     

    (iv)         the
Debtor is the sole and exclusive owner of the entire and unencumbered right,
title and interest in and to each of the trademarks, patents and copyrights
purported to be owned by it, free and clear of any lien, express or implied,
other than Permitted Liens, and except as set forth on Exhibit 4(a)(i)
attached hereto, no other Person has any license or other right with respect to
any of the trademarks, patents, copyrights or any other Intellectual Property
Collateral; and

     

    (v)          Debtor
and, to Debtor’s knowledge, its predecessors in interest has used the proper
statutory notice in connection with its use of the trademarks in all material
respects, and the Debtor has marked its products with all applicable patent
numbers.

     

    (b)          If
Debtor shall create or obtain rights to any trademarks, patents or copyrights
(or any other Intellectual Property Collateral) in addition to those set forth
on Exhibit
4(a)(i) attached hereto, the provisions of this Agreement shall
automatically apply thereto and Debtor shall take such action as the Secured
Party may reasonably request to more fully evidence the same.  Debtor
shall promptly notify the Secured Party in writing of any new patent application
or grant or trademark or copyright application or registration in which Debtor
has an ownership interest.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    (c)           Debtor:  (i) authorizes
the Secured Party, without any further action by Debtor, to amend Exhibit 4(a)(i) to
reference any trademark, patent or copyright (or any other Intellectual Property
Collateral (as defined below)) acquired by Debtor after the date hereof or to
delete any reference to any right, title or interest in any trademark or patent
or copyright (or any other Intellectual Property Collateral) in which Debtor no
longer has or claims any right, title or interest; (ii) will promptly (but
in any event within ten (10) days after becoming aware thereof) notify the
Secured Party and the Lenders, as provided in the Loan Agreement, of the
institution of, or any adverse determination in, any proceeding in the U.S.
Patent and Trademark Office, the U.S. Copyright Office or in any federal, state
or foreign court or agency regarding Debtor’s claim of ownership, or the
enforceability or validity of any of the Intellectual Property Collateral, in
each case which could reasonably be expected to materially adversely affect the
value of any of the Intellectual Property Collateral, the ability of Debtor or
the Secured Party to dispose of any of the same or the rights and remedies of
the Secured Party in relation thereto; (iii) will promptly notify the
Secured Party of any suspected infringement of any of the Intellectual Property
Collateral by any third party or any claim by any third party that Debtor is
infringing upon the intellectual property rights of such third party that does
or could reasonably be expected to materially adversely affect the value of any
of the Intellectual Property Collateral; (iv) concurrently with the filing
of any patent application or application for registration of any trademark or
copyright, will execute, deliver and record in all appropriate registers and
offices, an appropriate form of a collateral security agreement evidencing the
Secured Party’s security interest therein; and (v) will keep accurate and
complete records respecting the Intellectual Property Collateral.

     

    (d)           Debtor
shall:  (i) to the extent commercially reasonable, make and
diligently prosecute federal application on any existing or future registrable
but unregistered trademarks or copyrights or unpatented but patentable
inventions, (ii) to the extent still utilized in the operation of the
business, preserve, maintain and renew all of the Intellectual Property
Collateral and rights and interests related thereto, including, without
limitation, by payment of all taxes, annuities, issue and maintenance fees and
by the use of all proper statutory notices, designations and patent numbers, and
(iii) initiate and diligently prosecute in its own name, for its own benefit and
at its own expense, such suits, proceedings or other actions for infringement,
or other damage or opposition, cancellation, concurrent use or interference
proceedings as are reasonably necessary to protect any of the trademarks,
patents or copyrights or other Intellectual Property Collateral which Debtor
reasonably determines is material to its business; provided, that no
such suit, proceeding or other action shall be settled or voluntarily dismissed,
nor shall any party be released or excused from any claims or liability for
infringement, unless, in the reasonable judgment of Debtor, to do so is in the
best interests of the Debtor and is not disadvantageous in any material respect
to the Secured Party.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    (e)           Without
limiting the generality of the other provisions of this Agreement, the Loan
Agreement and the other Loan Documents, and in addition to all other rights and
remedies of the Secured Party hereunder and thereunder and referred to herein
and therein, Debtor hereby collectively assigns to the Secured Party all of its
right, title and interest in and to all and any of the Intellectual Property
Collateral including, without limitation, each patent, trademark and copyright,
now owned or hereafter acquired by Debtor, and all of the goodwill of the
business of Debtor symbolized by the same and all interest of Debtor in and to
any cause of action related thereto, and Debtor hereby grants to the Secured
Party an absolute power of attorney (which grant is coupled with an interest and
is irrevocable) to sign, upon the occurrence and during the continuance of any
Event of Default, any document which may be necessary or required by the U.S.
Patent and Trademark Office, the U.S. Copyright Office or by any other office or
authority in order to further evidence (and to effect and to record) the
foregoing assignment.  Debtor further agrees that, upon the occurrence
and during the continuance of any Event of Default, the Secured Party may take
any or all of the following actions: (i) declare the entire right, title
and interest of Debtor in and to the Intellectual Property Collateral vested in
the Secured Party, in which event such right, title and interest shall
immediately vest in the Secured Party; (ii) take and use and/or, subject to
the terms of Section 7 and applicable law, sell the Intellectual Property
Collateral (or any portion thereof) and carry on the business and use the assets
of Debtor in connection with which the Intellectual Property Collateral (or any
portion thereof) has been used; (iii) bring suit to enforce the Trademarks,
Patents and/or Copyrights or any of the other Intellectual Property Collateral
and/or any licenses thereunder or other rights with respect thereto;
(iv) direct Debtor to refrain, in which event Debtor shall refrain, from
using the Intellectual Property Collateral (or any portion thereof) in any
manner whatsoever, directly or indirectly; and (v) direct Debtor to
execute, in which event Debtor shall execute, other and further documents that
the Secured Party may reasonably request to further confirm the provisions
hereof and to further evidence the foregoing assignment.  Upon request
of the Secured Party, Debtor also shall make available to the Secured Party, to
the extent within Debtor’s power and authority, such individuals then in
Debtor’s employ to assist in the production, advertisement and sale of the
products and services sold under the Trademarks, Copyrights and Patents or any
of the other Intellectual Property Collateral, such individuals to be available
to perform their prior functions on the Secured Party’s behalf and to be
compensated at the expense of the Debtor.

     

    (f)           For
the purposes of this Agreement, “Intellectual Property
Collateral” means:

     

    (i)           all
trademarks, trademark applications and registrations and trade names, together
with the goodwill appurtenant thereto, owned, held (whether pursuant to a
license or otherwise), used or to be used, in whole or in part, in conducting
the Debtor’s business, (the “Trademarks”);

     

    (ii)           all
patents and patent applications of the Debtor, including, without limitation,
the inventions and improvements described and claimed therein (the “Patents”);

     

    (iii)         all
copyrights and applications for registration of copyrights of the Debtor and all
rights in literary property (the “Copyrights”);

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    (iv)         all
reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any Trademarks, Patents and/or Copyrights; all income,
royalties, damages and payments now or hereafter due and/or payable with respect
to any Trademarks, Patents and/or Copyrights, including, without limitation,
damages and payments for past or future infringements thereof; all rights (but
no obligation) to sue for past, present and future infringements of any
Trademarks, Patents and/or Copyrights or bring interference proceedings with
respect thereto; and all rights corresponding to any Trademarks, Patents and/or
Copyrights throughout the world;

     

    (v)          all
rights and interests of the Debtor pertaining to common law and statutory
trademark, service marks, trade names, slogans, labels, trade secrets, patents,
copyrights, corporate names, company names, business names, fictitious business
names, trademark or service mark registrations, designs, logos, trade styles,
applications for trademark registration and any other indicia of origin;
and

     

    (vi)          all
operating methods, formulae, processes, know-how and the like of the
Debtor.

     

    5.           Events of
Default.  The Debtor shall be in default under this Agreement
if any one or more of the following events (each an “Event of Default”)
shall occur and continue (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or Governmental Authority):

     

    (a)           if
default shall be made in the performance or observance of any covenant,
agreement or condition contained in Sections 3(a), 3(b), 3(c), 3(d), or 3(r) of
this Agreement;

     

    (b)           if
default shall be made in the performance or observance of any other of the
covenants, agreements or conditions contained in this Agreement and such default
shall have continued for a period of thirty (30) days after the earlier of
(i) the Debtor’s obtaining actual knowledge of such default or
(ii) the Debtor’s receipt of written notice of such default;

     

    (c)           if
any representation or warranty made by or on behalf of Debtor in this Agreement
or in any agreement, document or instrument delivered under or pursuant to any
provision hereof shall prove to have been materially false or incorrect on the
date as of which made; or

     

    (d)           if
any other Event of Default as defined in the Loan Agreement or any other Loan
Document shall occur.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    6.           Rights and
Remedies.

     

    (a)          Upon
the occurrence and during the continuance of any Event of Default, the Secured
Party shall have the following rights and remedies:

     

    (i)           all
rights and remedies provided by law or in equity, including, without limitation,
those provided by the UCC;

     

    (ii)          all
rights and remedies provided in this Agreement; and

     

    (iii)          all
rights and remedies provided in the Loan Agreement, the other Loan Documents or
in any other agreement, document or instrument pertaining to any of the Secured
Obligations.

     

    (b)          Notwithstanding
anything to the contrary set forth herein, the Secured Party shall have the
right to exercise (after the occurrence of any Event of Default) all of the
rights and remedies of the Secured Party relating to the Collateral which arise
under or are referred to in this Agreement (including the exercise of any power
of attorney granted herein and the right to enforce this Agreement, by judicial
proceedings or otherwise, to foreclose the lien created hereby, to take
possession of and, subject to the terms of Section 7 and applicable law, to sell
the Collateral (or any part thereof), and/or to direct the time, method and
place of conducting any proceeding for any such remedy or exercising any such
right), and all such rights and remedies may be exercised by the Secured Party
or by a duly authorized representative (or representatives) appointed by the
Secured Party.

     

    7.           Right to Dispose of Collateral,
Etc.

     

    (a)           Without
limiting the scope of Section 6 hereof, upon the occurrence and during the
continuance of any Event of Default, the Secured Party shall have the right and
power to take possession of all or any part of the Collateral and, in addition
thereto, the right to enter upon any premises on which all or any part of the
Collateral may be situated and remove the same therefrom and the Secured Party
may sell, resell, assign and deliver, or otherwise dispose of any or all of the
Collateral, for cash and/or credit, in one or more parcels, at any exchange or
broker’s board, or at public or private sale and upon such terms and at such
place or places and at such time or times and to such Persons (including,
without limitation, the Secured Party), to the extent permitted by applicable
law, as the Secured Party deems expedient, all without demand for performance by
the Debtor or any notice or advertisement whatsoever except as may be required
by this Agreement or by law.  The Secured Party may require the Debtor
to make all or any part of the Collateral (to the extent the same is moveable)
available to the Secured Party at a place to be designated by the Secured Party
which is reasonably convenient to the Secured Party and the
Debtor.  Unless the Collateral threatens to decline speedily in value
or is of a type customarily sold on a recognized market, the Secured Party will
give the Debtor at least ten (10) days’ prior written notice of the time and
place of any public sale thereof or of the time after which any private sale or
any other intended disposition thereof is to be made.  Any such notice
shall be deemed to meet any requirement hereunder or under any applicable law
(including the UCC) that reasonable notification be given of the time and place
of such sale or other disposition.  After deducting all costs and
expenses of collection, storage, custody, sale or other disposition and delivery
(including legal costs and reasonable attorneys’ fees) and all other charges
against the Collateral, the residue of the proceeds of any such sale or
disposition shall be applied to the payment of the Secured Obligations in the
manner set forth in Section 15.4 of the Loan Agreement.  In the event
the proceeds of any sale, lease or other disposition of the Collateral hereunder
are insufficient to pay all of the Secured Obligations in full, the Debtor will
be liable for the deficiency, including, if the Secured Party so elects,
interest thereon at a rate per annum equal to the Default Rate applicable
thereto until paid or a late fee as provided in Section 6.8 of the Loan
Agreement, and the cost and expenses of collection of such deficiency,
including, without limitation, reasonable attorneys’ fees, expenses and
disbursements.  Without limiting the generality of the foregoing or
the scope of Section 6 hereof, upon the occurrence and during the continuance of
any Event of Default, any amount owing by the Secured Party to any Debtor may,
without regard to the value of the Collateral, be offset and applied toward the
payment of the Secured Obligations as aforesaid, whether or not the Secured
Obligations, or any part thereof, shall be then due.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    (b)           Debtor
acknowledges that portions of the Collateral could be difficult to preserve and
dispose of and be further subject to complex maintenance and
management.  Accordingly, the Secured Party, in exercising its rights
hereunder, or otherwise, shall have the widest possible latitude to preserve and
protect the Collateral and the Secured Party’s lien
therein.  Moreover, Debtor acknowledges and agrees that the Secured
Party shall have no obligation to, and Debtor hereby waives to the fullest
extent permitted by law any right that it may have to require the Secured Party
to: (i) clean up or otherwise prepare any of the Collateral for sale, (ii)
pursue any Person to collect any of the Obligations, or (iii) exercise
collection remedies against any Persons obligated on the
Collateral.  The Secured Party’s compliance with applicable local,
state or federal law requirements, in addition to those imposed by the UCC, in
connection with a disposition of any or all of the Collateral will not be
considered to adversely affect the commercial reasonableness of any disposition
of any or all of the Collateral under the UCC.

     

    (c)           Certain
Affiliates of Debtor have executed and delivered or may hereafter execute and
deliver to the Secured Party additional Security Documents securing the Secured
Obligations.  Debtor acknowledges and agrees with Secured Party that
Secured Party’s rights and remedies, and recourse to the Collateral, hereunder,
are not in any way affected by and shall not in any manner be delayed or
impaired by Secured Party’s rights under such other Security Documents, or any
defenses available to or asserted by such Affiliates thereunder, or any exercise
or delay or failure to exercise any of Secured Party’s rights and remedies
thereunder.

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    8.           Right to Use the Collateral,
Etc.  Without limiting the scope of Section 6 hereof, upon the
occurrence and during the continuance of any Event of Default, but subject to
the provisions of the UCC or other mandatory provisions of applicable law, the
Secured Party shall have the right and power to take possession of all or any
part of the Collateral, and to exclude the Debtor and all Persons claiming under
Debtor wholly or partly therefrom, and thereafter to hold, store, and/or use,
operate, manage and control the same.  Upon any such taking of
possession, the Secured Party, from time to time, at the Debtor’s expense, may
(but shall not be obligated to) make all such repairs, replacements, alterations
and improvements to any of the Collateral and may manage and control the
Collateral and carry on the business and exercise all rights and powers of the
Debtor in respect thereto as the Secured Party shall deem reasonably
appropriate, including, without limitation, the right to enter into any and all
such agreements with respect to the use of the Collateral or any part thereof as
the Secured Party may see fit (including, without limitation, licensing
agreements related to the Intellectual Property Collateral); and the Secured
Party shall be entitled to collect and receive all rents, issues, profits, fees,
revenues and other income of the same and every part thereof.  Such
rents, issues, profits, fees, revenues and other income shall be applied to pay
the expenses of so holding, storing, using, operating, managing and controlling
the Collateral, and of conducting any business related thereto, and of all
maintenance, repairs, replacements, alterations, additions and improvements, and
to make all payments which the Secured Party may be required or may elect to
make, if any, for taxes, assessments, insurance and other charges upon the
Collateral or any part thereof, and all other payments which the Secured Party
may be required or authorized to make under any provision of this Agreement, the
Loan Agreement or any of the other Loan Documents (including legal costs and
reasonable attorneys’ fees).  The remainder of such rents, issues,
profits, fees, revenues and other income shall be applied to the payment of the
Secured Obligations in the manner set forth in Section 15.4 of the Loan
Agreement.

     

    9.           Waivers, Remedies Cumulative,
Etc.

     

    (a)           Debtor
hereby waives presentment, demand, notice, protest and, except as is otherwise
explicitly provided herein or in the Loan Agreement, all other demands and
notices in connection with this Agreement or the enforcement of any of the
rights and remedies of the Secured Party hereunder or in connection with any
Secured Obligations or any Collateral; consents to and waives notice of the
granting of renewals, extensions of time for payment or other indulgences to
Debtor or any other Person, or substitution, release or surrender of any
Collateral, the addition or release of Persons primarily or secondarily liable
on any Secured Obligation, the acceptance of partial payments on any Secured
Obligation and/or the settlement or compromise thereof.  To the extent
permitted by law, Debtor also hereby waives any rights and/or defenses Debtor
may have under any anti-deficiency laws or other laws limiting, qualifying or
discharging the Secured Obligations and/or any of the remedies of the Secured
Party against Debtor.  Debtor further waives, to the extent permitted
by law: (i) any right it may have under any applicable law (including the
constitution of any jurisdiction in which any of the Collateral may be located
and the Constitution of the United States of America) to notice (other than any
requirement of notice explicitly provided herein or in the Loan Agreement) or to
a judicial hearing prior to the exercise of any right or remedy provided by this
Agreement, the Loan Agreement or any of the other Loan Documents and any right
to set aside or invalidate any sale duly consummated in accordance with the
foregoing provisions hereof on the grounds (if such be the case) that the sale
was consummated without a prior judicial hearing; (ii) any right to damages
occasioned by any lawful exercise by the Secured Party of any right or remedy
hereunder or referred to herein, including any damages arising as a result of
any taking of possession of the Collateral; (iii) all other requirements as
to the time, place and terms of sale or other requirements with respect to the
enforcement of the Secured Party’s rights hereunder; (iv) all rights of
redemption, appraisement, valuation, stay, extension or moratorium now or
hereafter in force under any applicable law; and (v) the appointment of a
receiver as provided herein or in the Loan Agreement.  The Secured
Party shall not be required to marshall any Collateral (or any part thereof) in
any particular order.  To the extent permitted by law, Debtor hereby
agrees it will not invoke any right it may have under any law to require the
marshalling of Collateral or any other right under any law which might cause
delay in or impede the enforcement of the rights of the Secured Party under this
Agreement, the Loan Agreement or any of the other Loan Documents, and Debtor
hereby irrevocably waives the benefits of all such laws.  Any sale of,
or the grant of options to purchase, or any other realization upon, any
Collateral shall operate to divest all right, title, interest, claim and demand,
either at law or in equity, of Debtor therein and thereto, and shall be a
perpetual bar both at law and in equity against the Debtor and against any and
all Persons claiming or attempting to claim the Collateral so sold, optioned or
realized upon, or any part thereof, from, through and under Debtor.

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    (b)           To
the extent permitted by law, the obligations of the Debtor under this Agreement
shall remain in full force and effect without regard to, and shall not be
impaired by: (i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Debtor or of any other
Person (including the Holding Company); (ii) any exercise or nonexercise,
or any waiver, by the Secured Party, of any right, remedy, power or privilege
under or in respect of any of the Secured Obligations or any of the Collateral
or any other security therefor (including under any Loan Document executed by
the Holding Company); (iii) any amendment to or modification of or waiver
granted under this Agreement, the Loan Agreement or any of the other Loan
Documents; or (iv) the taking of additional security for or any guarantee
of any of the Secured Obligations or the release or discharge or termination of
any security or guarantee for any of the Secured Obligations including any
waiver granted under a termination of any Loan Document executed by the Holding
Company; and whether or not Debtor shall have notice or knowledge of any of the
foregoing.

     

    (c)           No
remedy conferred herein or in the Loan Agreement or any of the other Loan
Documents upon the Secured Party is intended to be exclusive of any other
remedy, and each and every such remedy (whether granted by Debtor or the Holding
Company) shall be cumulative and shall be in addition to every other remedy
given hereunder or under the Loan Agreement or any of the other Loan Documents
or now or hereafter existing at law or in equity or by statute or
otherwise.  No course of dealing between the Debtor or any Affiliate
of the Debtor (including the Holding Company) and the Secured Party, and no
delay in exercising any rights hereunder or under the Loan Agreement or any of
the other Loan Documents, shall operate as a waiver of any right of the Secured
Party.  No waiver by the Secured Party of any default shall be
effective unless made in writing and otherwise in accordance with the terms of
Article 28 of the Loan Agreement and no such waiver shall extend to or affect
any obligation not expressly waived or impair any right consequent
thereon.

     

    (d)           Debtor’s
waivers set forth in this Agreement (including, without limitation, those set
forth in this Section 9) have been made voluntarily, intelligently and knowingly
and after Debtor has been apprised and counseled by its attorneys as to the
nature thereof and its possible alternative rights.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    10.           Termination.  This
Agreement and the lien on the Collateral created hereby shall automatically
terminate, with no further actions required by any party hereto, when all of the
Secured Obligations have been indefeasibly paid and finally discharged in full
in cash (and all commitments of the Secured Party to lend any additional amounts
to the Debtor under the Loan Agreement shall have been terminated) (other than
contingent indemnification obligations which by their terms survive termination
of the Loan Documents).  Upon termination as aforesaid, the Secured
Party shall execute and deliver such releases and discharges as the Debtor may
reasonably request at Debtor’s expense.

     

    11.           Reinstatement.  Notwithstanding
the provisions of Section 10 to the contrary, and notwithstanding anything else
to the contrary contained herein, this Agreement shall continue to be effective
or be reinstated, as the case may be, if at any time any amount received by the
Secured Party in respect of the Collateral or the Secured Obligations is
rescinded, or must otherwise be restored or returned by the Secured Party upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of Debtor
or any Affiliates of Debtor or any guarantor of all or any part of the Secured
Obligations, or upon the appointment of any intervenor, receiver or conservator
of, or trustee or similar official for Debtor, any such Affiliate or guarantor,
or any substantial part of their respective properties or assets, or otherwise,
all as though such payment had not been made.

     

    12.           Consents, Approvals,
Etc.  Upon the exercise by the Secured Party of any power,
right, privilege or remedy pursuant to this Agreement, the Loan Agreement or any
of the other Loan Documents which requires any consent, approval, registration,
qualification or authorization of, or declaration or filing with, or other
action by, any other Person, including, without limitation, any governmental
authority or instrumentality, Debtor will execute and deliver, or will cause the
execution and delivery of, all such agreements, documents, applications,
certificates, instruments and other documents and papers and will take, or will
cause to be taken, such other action that may be required to obtain such
consent, approval, registration, qualification or authorization of or other
action by such other Person and/or that may be reasonably requested by the
Secured Party in connection therewith.

     

    13.           Certain
Definitions.  In addition to the descriptions contained in
Section 1 hereof, the items of Collateral referred to therein shall have
all of the meanings ascribed to them in the UCC.

     

    14.           Amendments.  All
amendments of this Agreement and all waivers of compliance herewith shall be in
writing and shall be effected in compliance with the provisions of Article 28 of
the Loan Agreement.

     

    15.           Communications.  All
communications provided for herein shall be made as specified in Article 22 of
the Loan Agreement.

     

    16.           Successors and
Assigns.  This Agreement shall bind and inure to the benefit of
and be enforceable by the Secured Party and the Debtor, successors to the Debtor
and the successors and assigns of the Secured Party.

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

    17.           Governing Law; Jurisdiction; Waiver
of Jury Trial.  This Agreement, including the validity hereof
and the rights and obligations of the parties hereunder, and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the domestic substantive laws of The
Commonwealth of Massachusetts without giving effect to any choice of law or
conflicts of law provision or rule that would cause the application of the
domestic substantive laws of any other jurisdiction.  Each party
hereto, to the extent that it may lawfully do so, hereby consents to service of
process, and to be sued, in The Commonwealth of Massachusetts and consents to
the jurisdiction of the courts of The Commonwealth of Massachusetts and the
United States District Court for the District of Massachusetts, as well as to
the jurisdiction of all courts to which an appeal may be taken from such courts,
for the purpose of any suit, action or other proceeding arising out of any of
its obligations hereunder and under the Loan Agreement and the other Loan
Documents or with respect to the transactions contemplated hereby or thereby,
and expressly waives any and all objections it may have as to venue in any such
courts.  Each party hereto further agrees that a summons and complaint
commencing an action or proceeding in any of such courts shall be properly
served and shall confer personal jurisdiction if served personally or by
certified mail to it in accordance with Section 15 or as otherwise provided
under the laws of The Commonwealth of Massachusetts.  Notwithstanding
the foregoing, each party hereto agrees that nothing contained in this Section
17 shall preclude the institution of any such suit, action or other proceeding
by the Secured Party in any jurisdiction other than The Commonwealth of
Massachusetts.  EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST
IT IN RESPECT OF ITS OBLIGATIONS HEREUNDER AND UNDER THE LOAN AGREEMENT AND ANY
OF THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND BY THE
LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     

    18.           Miscellaneous.  The
headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof.  This Agreement
(together with the Loan Agreement and the other Loan Documents) embodies the
entire agreement and understanding between the Secured Party and the Debtor and
supersedes all prior agreements and understandings relating to the subject
matter hereof.  Each covenant contained herein and in the Loan
Agreement and in each of the other Loan Documents shall be construed (absent an
express provision to the contrary) as being independent of each other covenant
contained herein and therein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant.  If any provision in this Agreement, the Loan
Agreement or any of the other Loan Documents refers to any action taken or to be
taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable, whether such action is taken directly or
indirectly by such Person, whether or not expressly specified in such
provision.  In case any provision in this Agreement, the Loan
Agreement or any of the other Loan Documents shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions hereof and thereof shall not in any way be affected or impaired
thereby.  This Agreement may be executed in any number of counterparts
and by the parties hereto on separate counterparts all such counterparts shall
together constitute but one and the same instrument.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

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

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the Debtor has
executed this Agreement as a sealed instrument as of the date first above
written with the intent to be legally bound.

    

    
      
        
          
            
              
                	CYALUME TECHNOLOGIES,
      INC.
	 	 
	
                        By: 

                      	
                        /s/
      Michael Bielonko

                      
	 
      	
                        Chief
      Financial
Officer

                      

              

            

          

        

      

    

     

    
      
        
          
            
              
                
                  
                    	TD BANK, N.A., as Agent and
      Lender
	 	 
	
                            By: 

                          	
                            /s/
      Greg Spurr

                          
	 
      	
                            Senior
      Vice
President

                          

                  

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Exhibit
1(xii)

     

    Commercial
Tort Claims

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
3(b)

     

    Places
of Business

     

    Location
of Collateral; Names

     

    Additional Places of
Business:

     

    Location of
Collateral:

     

    Assumed
Names:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
4(a)(i)

     

    Intellectual
Property

     

    Patents:

    

    Registered
Trademarks:

    

    Common Law
Trademarks:

    

    Domain
Names:

    

    Registered
Copyrights:Exhibit
10.16

    

    Table of
Contents

    

    
      
        
          	 
      	
                  Page

                
	 
      	 
      
	
                  1.

                	
                  Definition
      of Terms.

                	
                  4

                
	 
      	
                  1.1.

                	
                  Certain
      Definitions

                	
                  4

                
	 
      	
                  1.2.

                	
                  Other
      Capitalized Terms, Certain Usages and Gender

                	
                  8

                
	
                  2.

                	
                  Warranties,
      Covenants and Representations of the Mortgagor

                	
                  8

                
	 
      	
                  2.1.

                	
                  Payment
      and Performance of the Secured Obligations

                	
                  8

                
	 
      	
                  2.2.

                	
                  Title
      to the Mortgaged Property

                	
                  8

                
	 
      	
                  2.3.

                	
                  Maintenance,
      Operation, Inspection and Use of the Mortgaged Property

                	
                  8

                
	 
      	
                  2.4.

                	
                  Insurance;
      Repair and Restoration.

                	
                  9

                
	 
      	
                  2.5.

                	
                  Condemnation

                	
                  10

                
	 
      	
                  2.6.

                	
                  Application
      of Proceeds of Casualty.

                	
                  10

                
	 
      	
                  2.7.

                	
                  Impositions

                	
                  12

                
	 
      	
                  2.8.

                	
                  Payment
      of Liens

                	
                  12

                
	 
      	
                  2.9.

                	
                  Defending
      the Lien of this Mortgage

                	
                  12

                
	 
      	
                  2.10.

                	
                  Reimbursement
      of Advances and Expenses

                	
                  12

                
	 
      	
                  2.11.

                	
                  Interest
      on Advances and Expenses

                	
                  13

                
	 
      	
                  2.12.

                	
                  Indemnification.

                	
                  13

                
	 
      	
                  2.13.

                	
                  Prohibition
      Against Conveyances and Encumbrances

                	
                  14

                
	 
      	
                  2.14.

                	
                  Estoppel
      Certificates

                	
                  14

                
	 
      	
                  2.15.

                	
                  Assignment
      of Leases and Property Income

                	
                  14

                
	 
      	
                  2.16.

                	
                  Additional
      Representations, Warranties, and Covenants Respecting Compliance with
      Laws.

                	
                  15

                
	
                  3.

                	
                  Security
      Agreement.

                	
                  16

                
	 
      	
                  3.1.

                	
                  Additional
      Covenants and Representations of the Mortgagor

                	
                  16

                
	 
      	
                  3.2.

                	
                  Mortgage
      as Security Agreement and Financing Statement

                	
                  17

                
	
                  4.

                	
                  Default
      and Remedies.

                	
                  17

                
	 
      	
                  4.1.

                	
                  Events
      of Default

                	
                  17

                
	 
      	
                  4.2.

                	
                  Remedies

                	
                  17

                
	 
      	
                  4.3.

                	
                  General
      Provisions Regarding Remedies.

                	
                  19

                
	
                  5.

                	
                  No
      Usury

                	
                  22

                
	
                  6.

                	
                  Miscellaneous.

                	
                  22

                
	 
      	
                  6.1.

                	
                  Notices.

                	
                  22

                
	 
      	
                  6.2.

                	
                  Binding
      Obligations; Successors and Assigns

                	
                  23

                
	 
      	
                  6.3.

                	
                  Headings;
      Integration

                	
                  23

                
	 
      	
                  6.4.

                	
                  Further
      Assurances

                	
                  23

                
	 
      	
                  6.5.

                	
                  Severability

                	
                  24

                
	 
      	
                  6.6.

                	
                  The
      Mortgagor's Obligations Absolute

                	
                  24

                
	 
      	
                  6.7.

                	
                  Other
      Loan Documents and Schedules

                	
                  24

                
	 
      	
                  6.8.

                	
                  Governing
      Law; Jurisdiction

                	
                  25

                
	 
      	
                  6.9.

                	
                  Merger

                	
                  25

                

        

      

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      

    

     

      
        

      

    

     

     

    CYALUME
TECHNOLOGIES, INC.

     

    

    MORTGAGE,
ASSIGNMENT OF LEASES AND RENTS,

    AND
SECURITY AGREEMENT

     

     

    96
Windsor Street

    West
Springfield, MA

     

    

     

    
      

    

     

      
        

      

    

    
After
recording, please return to:

    

    James R.
Kane, Esq.

    Choate,
Hall & Stewart LLP

    Two
International Place

    Boston,
Massachusetts  02110

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    MORTGAGE,
ASSIGNMENT OF LEASES AND RENTS,

    AND
SECURITY AGREEMENT

    

    THIS MORTGAGE, ASSIGNMENT OF LEASES
AND RENTS, AND SECURITY AGREEMENT (as amended, modified or supplemented from
time to time, this "Mortgage") is executed and delivered this 19th day of
December, 2008, by CYALUME TECHNOLOGIES, INC., a Delaware corporation (the
“Mortgagor”) having a principal place of business at 96 Windsor Street,
West Springfield, MA, for the benefit of TD BANK, N.A., a national banking
association, as agent for the Lenders, (the “Mortgagee”), having an office at
370 Main Street, Worcester, MA 01608.

     

    GRANTING
CLAUSES

     

    FOR GOOD
AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, and to secure the payment and performance of the Secured
Obligations (as hereinafter defined), the Mortgagor hereby MORTGAGES, GRANTS,
ASSIGNS AND WARRANTS unto the Mortgagee and to the Mortgagee’s successors and
assigns, for the pro rata benefit of the Lenders, with MORTGAGE COVENANTS, the
following property:

     

    The
parcel or parcels of land described in Exhibit A attached hereto and by this
reference made a part hereof (sometimes hereinafter collectively referred to as
the "Land");

     

    TOGETHER
with all buildings, structures and improvements (including all fixtures) now or
hereafter located on or in the Land (sometimes hereinafter collectively referred
to as the "Improvements");

     

    TOGETHER
with all right, title and interest of the Mortgagor in and to the streets and
roads, opened or proposed, abutting the Land, all strips and gores within or
adjoining the Land, the air space and right to use the air space above the Land,
all rights of ingress and egress to and from the Land, all easements, rights of
way, reversions, remainders, hereditaments, and appurtenances now or hereafter
affecting the Land or the Improvements, all royalties, rights and privileges
appertaining to the use and enjoyment of the Land or the Improvements, including
all air, lateral support, alley, drainage, water, oil, gas and mineral rights,
all options to purchase or lease, and all other interests, estates or claims, in
law or in equity, which the Mortgagor now has or hereafter may acquire in or
with respect to the Land or the Improvements (sometimes hereinafter collectively
referred to as the "Appurtenances");

     

    The Land,
the Improvements, and the Appurtenances are sometimes hereinafter collectively
referred to as the "Premises";

     

    TOGETHER
with  (a) all of the intangible personal property of the Mortgagor
described in clauses (ii) through (v) below (but none of its obligations with
respect thereto), whether now owned or existing or hereafter acquired or
arising, now or hereafter relating to the ownership, maintenance, operation and
enjoyment of the Premises for any lawful purpose, together with any and all
substitutions, replacements, proceeds and products thereof, and (b) all of the
tangible personal property and fixtures of the Mortgagor (but none of its
obligations with respect thereto), whether now owned or existing or hereafter
acquired or arising, now or hereafter located or placed on or in the Premises or
relating to the ownership, maintenance, operation and enjoyment of the Premises
for any lawful purpose, including the tangible personal property and fixtures
described in clauses (i) through (v) below, together with any and all additions,
accessions and attachments thereto and substitutions, replacements, proceeds and
products thereof (all of the foregoing intangible and tangible personal property
and fixtures sometimes hereinafter collectively referred to as the "Related
Personalty"):

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (i)        
   all
equipment, machinery, fixtures, furniture, furnishings, computers and related
equipment, office equipment and supplies, tools, jigs, dies, manufacturing
implements, forklifts, trucks, trailers, railcars, barges and other vehicles,
all personalty relating to the ownership, maintenance, operation and enjoyment
of the Premises for any lawful purpose, (the foregoing items in this clause (i)
being sometimes hereinafter collectively referred to as the
"Equipment");

     

    (ii)           all
permits, licenses, variances, approvals and franchises relating to or arising
out of the operation of the Mortgaged Property (as hereinafter defined), all
contract rights of the Mortgagor under leases of Equipment located on or used in
connection with the Mortgaged Property, and all books, records, plans,
specifications, good will, actions and causes of action relating to or arising
out of the operation of the Mortgaged Property (the foregoing items in this
clause (ii) being sometimes hereinafter collectively referred to as the
"Intangibles");

     

    (iii)       
  all
right, title and interest of the Mortgagor in and under all leases, subleases,
occupancy agreements, lettings, tenancies and licenses, if any, of the Premises
or any part thereof now or hereafter entered into and all amendments, extensions
and renewals thereof, all security therefor, and all moneys payable thereunder
(the foregoing items in this clause (iii) being sometimes hereinafter
collectively referred to as the "Leases");

     

    (iv)     
    all
rents, income, issues, profits, deposits, security deposits, escrows, reserves
and other moneys and benefits to which the Mortgagor may now or hereafter be
entitled from all or any part of the Premises and/or the Related Personalty (the
foregoing items in this clause (iv) being sometimes hereinafter collectively
referred to as the "Property Income"); and

     

    (v)         
 all
proceeds, judgments, claims, compensation, awards of damages and settlements
with respect to or hereafter made as a result of or in lieu of any Taking (as
hereinafter defined) of the Premises and/or the Related Personalty, all proceeds
of insurance (including rental interruption insurance) maintained with respect
to any component of the Mortgaged Property, any casualty loss of or damage to
the Premises and/or the Related Personalty, all refunds with respect to the
payment of Impositions (as hereinafter defined), and all other proceeds of the
conversion, voluntary or involuntary, of the Mortgaged Property (as hereinafter
defined) or any part thereof into cash or liquidated claims (the foregoing items
in this clause (v) being sometimes hereinafter collectively referred to as the
"Proceeds").The Premises and the Related Personalty are sometimes hereinafter
collectively referred to as the "Mortgaged Property."

     

    TO HAVE
AND TO HOLD the Mortgaged Property, with all the privileges and appurtenances to
the same belonging, and with the possession and right of possession thereof,
unto the Mortgagee and to the Mortgagee’s successors and assigns forever, for
the pro rata benefit of the Lenders, upon the terms and conditions, herein set
forth.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    In
furtherance of the intent that a security interest be granted under and
evidenced by this Mortgage, the Mortgagor also hereby grants to the Mortgagee,
for the pro rata benefit of the Lenders, a Lien on the Related
Personalty.  The security interest granted hereby is in addition to
and not in lieu of any other security interest or security agreement in favor of
the Mortgagee.

     

    1.      
Definition of
Terms.

     

    1.1.   
Certain
Definitions.  As used in this Mortgage, the terms set forth
below shall have the following meanings:

     

    "Appurtenances" shall
have the meaning specified in the Granting Clauses.

     

    "Bankruptcy
Proceeding" shall mean any proceeding, action, petition or filing under
the Federal Bankruptcy Code or any similar state or Federal law now or hereafter
in effect relating to bankruptcy, reorganization or insolvency, or the
arrangement or adjustment of debts.

     

    "Default" shall mean
any condition or event which constitutes or, after notice or lapse of time or
both, would constitute an Event of Default.

     

    “Environmental Laws”
shall mean any and all applicable federal, state or municipal laws, ordinances,
rules and regulations now in force or subsequently enacted, modified, or amended
pertaining to the protection of the environment or to health or safety risks
arising therefrom, including, but not limited to, control of air pollution,
water pollution, groundwater pollution, and the generation, manufacture,
management, handling, use, sale, transportation, delivery, discharge, release,
emission, treatment, storage, disposal or release or threatened release of
Hazardous Materials.  To the extent applicable, such laws include, but
are not limited to: (a) the Clean Air Act, 42 U.S.C. § 7401, et seq; (b) the
Clean Water Act, 33 U.S.C. § 1251, et seq; (c) the Safe Drinking Water Act, 42
U.S.C. § 300f, et seq; (d) the Resource Conservation and Recovery Act (“RCRA”),
42 U.S.C. § 6901, et seq; (e) the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), 42 U.S.C. § 9601, et seq; (f) the
Toxic Substances Control Act (“TSCA”), 15 U.S.C. § 2601, et seq; (g) Title III
of the Superfund Amendments and Reauthorization Act (“SARA”), also known as the
Emergency Planning and Community Right-to-Know Act (“EPCRA”), 42 U.S.C. § 11001;
(h) the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq; (i)
federal regulations promulgated pursuant to any of the foregoing statutes; (j)
Massachusetts laws and regulations enacted in order to implement federal
environmental statutes and regulations; (k) the Massachusetts Hazardous Waste
Management Act, M.G.L. c. 21C; (l) the Massachusetts Oil and Hazardous Materials
Release Prevention and Response Act, M.G.L. c. 21E; (m) the Hazardous Substances
Disclosure by Employers Act, M.G.L. c. 111F; (n) Massachusetts regulations
promulgated pursuant to the authority of applicable state environmental laws;
and (o) local ordinances and regulations including those adopted by local
emergency planning districts pursuant to Title III of SARA and implementing
state legislation.

     

    "Equipment" shall have
the meaning specified in the Granting Clauses.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    "Event of Default"
shall have the meaning specified in section 4.1.

     

    "Expenses" shall mean
any and all costs and expenses of every kind and nature incidental to the
collection of the Secured Obligations, including all costs and expenses relating
to any foreclosure, enforcement, compromise or settlement of this Mortgage, any
of the other Loan Documents, any protection of the Mortgaged Property and the
maintenance and execution of this Mortgage or any of the other Loan Documents
and the protection of the Lien of this Mortgage and/or the Lien and security
interest of any of the other Loan Documents (including any and all costs and
expenses incurred by the Mortgagee in any legal, equitable, bankruptcy or
administrative proceedings pertaining to the Mortgaged Property, any of the
other Collateral, or the Secured Obligations) and any exercise of any right or
remedy hereunder or thereunder or in equity or under applicable law and any
defense or assertion of the rights or claims of the Mortgagee in respect hereof
and thereof, by litigation or otherwise, including reasonable attorneys' fees
and the fees and expenses of receivers, trustees, liquidators or similar
officials, appraisers, engineers, surveyors, management companies, consultants,
environmental engineers and title examiners.

     

    “Governmental
Authority” shall mean all agencies, authorities, bodies, boards,
commissions, courts, instrumentalities, legislatures and offices of any nature
whatsoever of any government unit or political subdivision, whether federal,
state, county, district, municipal, city, or otherwise, and whether now or
hereafter in existence.

     

    “Granting Clauses”
shall mean the provisions contained under the heading “Granting Clauses” and
before the beginning of Section 1 hereof.

     

    “Hazardous Materials”
shall mean products, wastes and substances which, because of their quantitative
concentration, chemical, radioactive, infectious or other characteristics,
constitute or may reasonably be expected to constitute or contribute to a danger
or hazard to public health, safety, welfare, or to the environment, including
asbestos (whether or not friable), flammable materials, explosives, radioactive
substances, polychlorinated biphenyls, other carcinogens, oil and other
petroleum products, pollutants, solvents and chlorinated oils, pesticides,
herbicides, radon gas, reactive metals and compounds, contaminants, and any
other hazardous or toxic materials, chemical, biological, radioactive, or other
wastes and substances which are defined, determined or identified as such in or
pursuant to any Environmental Laws.

     

    "Impositions" shall
mean all taxes of every kind and nature (other than income, franchise and doing
business taxes of the Mortgagee), sewer rents, garbage removal fees, charges for
water, for setting or repairing meters and for all other utilities serving the
Mortgaged Property or any part thereof, assessments, levies, inspection and
license fees and all other governmental charges or levies imposed upon or
assessed against the Mortgaged Property or any part thereof (including the
Property Income) and the use, maintenance and operation thereof, the Secured
Obligations and the Loan Documents, recording and filing fees, and registration
fees, excises and levies imposed upon the Mortgagee by reason of its respective
interests in the Secured Obligations or this Mortgage, all revenue, documentary
stamp and similar taxes, mortgage taxes and other taxes which might be required
to be paid on the Secured Obligations or this Mortgage, and all other charges
which if unpaid might by law become a Lien or charge upon the Mortgaged Property
or any part thereof (regardless of to whom assessed) or on any other property of
the Mortgagor, including interest and penalties on all of the
foregoing.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    "Improvements" shall
have the meaning specified in the Granting Clauses.

     

    "Indemnified Costs"
shall have the meaning specified in section 2.12.

     

    "Indemnitee" shall
have the meaning specified in section 2.12.

     

    “Insurance Policies”
shall have the meaning specified in section 2.4.

     

    "Intangibles" shall
have the meaning specified in the Granting Clauses.

     

    "Land" shall have the
meaning specified in the Granting Clauses.

     

    "Leases" shall have
the meaning specified in the Granting Clauses.

     

    “Legal Requirements”
shall mean all statutes, ordinances, by-laws, codes, rules, rulings,
regulations, restrictions, orders, judgments, decrees, writs, judicial or
administrative interpretations and injunctions, including without limitation,
all applicable building, health code, zoning, subdivision and other land use
licensing statutes, ordinances, by-laws, codes, rules and regulations, whether
now or hereafter enacted, promulgated or issued by any Governmental Authority,
affecting the Mortgagor or the Mortgaged Property or the ownership,
construction, development, maintenance, management, repair, use, occupancy,
possession or operation thereof, including, without limitation, any of the
foregoing which may (a) require repairs, modifications or alterations in or to
the Mortgaged Property, (b) in any way affect (adversely or otherwise) the use
and enjoyment of the Mortgaged Property or (c) require the assessment,
monitoring, clean­up, containment or removal of any Hazardous Substances on,
under or from the Mortgaged Property.  Without limiting the foregoing,
the term Legal Requirements shall also include all Permitted Encumbrances and
all permits and contracts issued by or entered into with any Governmental
Authority.

     

    "Lien" shall mean any
mortgage, pledge, hypothecation, assignment, deposit arrangement, Lien
(statutory or otherwise), preference, priority, security interest, chattel
mortgage or other charge or encumbrance of any kind, or any other type of
preferential arrangement, including the Lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property and any lease having substantially the same effect as any of
the foregoing.

     

    "Loan Agreement" shall
mean that certain Revolving Credit and Term Loan Agreement by and among Cyalume
Technologies Holdings, Inc., the Mortgagor, the Subsidiary Guarantors from time
to time party thereto, the Mortgagee and the Lenders from time to time party
thereto, dated the date hereof.

     

    "Loan Documents" shall
have the meaning specified in the Loan Agreement.

     

    "Mortgage" shall have
the meaning specified at the beginning of this instrument.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    "Mortgagee" shall mean
the meaning specified at the beginning of this instrument.

     

    "Mortgaged Property"
shall have the meaning specified in the Granting Clauses.

     

    "Mortgagor" shall mean
Cyalume Technologies, Inc., a Delaware corporation, each subsequent owner of the
Mortgaged Property (or any portion thereof), and its successors and
assigns.

     

    “Officers’
Certificate” shall have the meaning specified in the Notes.

     

    "Permitted
Encumbrances" shall mean the Liens on, and other exceptions to title to
and matters affecting, the Mortgaged Property set forth on Exhibit B
hereto.

     

    "Person" shall have
the meaning specified in the Notes.

     

    "Premises" shall have
the meaning specified in the Granting Clauses.

     

    "Proceeds" shall have
the meaning specified in the Granting Clauses.

     

    "Property Income"
shall have the meaning specified in the Granting Clauses.

     

    "Related Personalty"
shall have the meaning specified in the Granting Clauses.

     

    “Restoration” shall
have the meaning specified in section 2.6.

     

    "Secured Obligations"
shall mean:

     

    (a) principal
of and premium, if any, and interest on and fees (including, without limitation,
the Origination Fee, the Commitment Fee, the Term Loan A Commitment Fee,
and all other fees from time to time due from Mortgagor pursuant to the Loan
Agreement) and other amounts payable with respect to the Term A Note, the Term B
Note, or the Revolving Credit Note (or any of them), all Derivative Contracts
and any guarantees thereof; and 

     

    (b) any and
all other indebtedness and obligations of the Mortgagor and/or any of its
Subsidiaries under the Loan Agreement or under any other agreement, document or
instrument relating thereto, including, without limitation, all Derivative
Contracts, all as amended, modified or supplemented from time to time, related
in any way to the Term A Note, the Term B Note or the Revolving Credit Note (or
any of them) or Derivative Contracts.

     

    "Spill" shall mean a
discharge, spillage, uncontrolled loss, seepage, contamination or filtration of
Hazardous Materials.

     

    "State" shall mean The
Commonwealth of Massachusetts.

     

    "Taking" shall have
the meaning specified in section 2.5.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    "Uniform Commercial
Code" shall mean the Uniform Commercial Code of the State, as the same
may be amended, modified or supplemented from time to time.

     

    1.2.        
 Other Capitalized Terms,
Certain Usages and Gender.  Other capitalized terms used herein
without definition shall have the meanings ascribed to them in the Loan
Agreement.  The terms "include" and "including" shall be construed as
if followed by the phrase "without limitation."  All terms contained
herein shall be construed, whenever the context of this Mortgage so requires, so
that the singular number shall include the plural, and the plural the singular,
and the use of any gender shall include all genders.

     

    2.           
 Warranties, Covenants and
Representations of the Mortgagor.  In addition to the
warranties and representations and covenants and agreements contained in the
Loan Documents, the Mortgagor hereby warrants and represents to and covenants
and agrees with the Mortgagee as follows:

     

    2.1.        
 Payment and Performance of
the Secured Obligations.  The Mortgagor shall punctually pay
and perform the Secured Obligations at the times and in the manner provided in
the Loan Documents, all payments to be made in lawful money of the United States
of America.

     

    2.2.        
 Title to the Mortgaged
Property.  The Mortgagor (a) is the sole and exclusive owner of
the Mortgaged Property and has good and marketable fee simple absolute title to
the Premises and good and indefeasible title to the balance of the Mortgaged
Property, free from any Liens (including any restrictions on transfer thereof),
Leases and other encumbrances, other than (i) the Liens arising hereunder and
(ii) Permitted Encumbrances; and (b) will forever warrant and defend the
Mortgaged Property, and the validity and first priority of the Lien created or
intended to be created hereby, against all claims and demands of all Persons at
any time claiming the same or any interest therein.

     

    2.3.        
 Maintenance, Operation,
Inspection and Use of the Mortgaged Property.  The Mortgagor
shall maintain the Mortgaged Property in present condition and from time to time
make all needful and proper repairs, renewals and replacements.  The
Mortgagor shall comply with all Legal Requirements applicable to the Mortgaged
Property (including all Environmental Laws) and all covenants, conditions and
restrictions applicable to the Mortgaged Property (including Permitted
Encumbrances), and shall permit the Mortgagee to enter upon and inspect the
Mortgaged Property upon request from time to time.  The Mortgagor
shall not (a) change the use of the Mortgaged Property or cause or permit the
use or occupancy of any part of the Mortgaged Property to be discontinued if
such changed use or discontinuance would violate any permit, approval, Permitted
Encumbrance or zoning, land use or other law, ordinance or regulation, (b)
consent to any zoning reclassification, modification or restriction adversely
affecting the Premises or (c) threaten, commit or permit any waste, structural
or material alteration, demolition or removal of the Mortgaged Property or any
part thereof.  

     

    
      
        
        

      

      
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    2.4.        
 Insurance; Repair and
Restoration.

     

    (a)           The
Mortgagor shall keep or cause to be kept the Mortgaged Property insured against
damage by fire and the other hazards covered by an all-risk coverage insurance
policy for the full insurable value thereof (which shall mean the full repair
and replacement value thereof) without reduction for depreciation or
co-insurance and in no event less that $2,500,000, subject to any limitation of
applicable law.  The Mortgagor shall also maintain or cause to be
maintained public liability insurance with respect to the Mortgaged Property
provided for limits of liability in amounts satisfactory to the Mortgagee for
both injury to and death of Persons or individuals and for property
damage.  The Mortgagee may require the Mortgagor to obtain such other
insurance, including business interruption, flood, earthquake, war risk, nuclear
explosion, demolition and contingent liability from the operation of
“nonconforming” improvements of the Mortgaged Property, all within 10 days after
demand by the Mortgagee, and the Mortgagor shall maintain or cause to be
maintained such other coverages, in such amounts, as may from time to time be
required under the Loan Agreement.  The Mortgagor shall not maintain
any separate or additional insurance, unless it is properly endorsed and
otherwise reasonably satisfactory to the Mortgagee in all
respects.  The proceeds of insurance paid on account of any damage or
destruction to the Mortgaged Property or any part thereof shall be paid over to
the Mortgagee to be applied as hereinafter provided.

    
       

    

    (b)           All
insurance policies (collectively, the “Insurance Policies”) required pursuant to
this Mortgage shall be endorsed to name the Mortgagee as an additional insured
and loss payee, as the case may be, thereunder, as its interests may appear,
without contribution, under a long-form, non-contributory mortgagee clause, or
otherwise endorsed as the Mortgagee may reasonably require.  All such
insurance policies and endorsements shall be fully paid for and contain such
provisions and expiration dates and be in such form and issued by such insurance
companies licensed to do business in the State, with the highest or second
highest rating available from A.M. Best Company or an equivalent Person, as
shall be approved by the Mortgagee or otherwise comparable to the insurance in
place at the time this Mortgage is recorded.  Without limiting the
foregoing, each policy shall provide that such policy may not be cancelled or
materially changed except upon 30 days prior written notice to the Mortgagee of
intention of non-renewal, cancellation or material change, and that no act or
thing done by the Mortgagor or the Mortgagee shall invalidate the policy as
against the Mortgagee.  The Mortgagor shall deliver or cause to be
delivered all original policies, or copies thereof certified by the insurance
company or authorized agent as being true copies, to the Mortgagee (together
with the endorsements thereto required hereunder) upon request by the
Mortgagee.  If the Mortgagor fails to maintain insurance as required
by this Mortgage, the Mortgagee may, but shall not be obligated to, maintain
such insurance.

     

    (c)           In the
event of any damage or destruction to the Mortgaged Property, promptly following
Mortgagor gaining knowledge of the same the Mortgagor shall give written notice
to the Mortgagee.  In case of loss or damage covered by any of the
Insurance Policies, the Mortgagee (or, after entry of decree of foreclosure, the
purchaser at the foreclosure sale or decree creditor, as the case may be) is
hereby authorized at its option either (i) to settle and adjust any claim under
such Insurance Policies without the consent of the Mortgagor, or (ii) to allow
the Mortgagor to settle and adjust such claim; provided that in either case the
Mortgagee shall, and is hereby authorized to, collect and receipt for any such
insurance proceeds; and the expenses incurred by the Mortgagee in the adjustment
and collection of insurance proceeds shall be deemed Secured Obligations, and
shall be reimbursed to the Mortgagee upon demand or may be deducted by the
Mortgagee from said insurance proceeds prior to any other application
thereof.  Each insurance company which has issued an Insurance Policy
is hereby authorized and directed to make payment for all losses covered by an
Insurance Policy to the Mortgagee alone, and not to the Mortgagee and the
Mortgagor jointly.  Notwithstanding the foregoing, so long as no
Default or Event of Default has occurred and is continuing the Mortgagor may
adjust and settle any claim under such Insurance Policies without the consent of
the Mortgagee so long as the cost of Restoration with respect to such claims
does not exceed Two Hundred Fifty Thousand Dollars ($250,000).

     

    
      
        
        

      

      
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    (d)           In the
event of foreclosure of this Mortgage or other transfer of title to or
assignment of the Mortgaged Property toward extinguishment, in whole or in part,
of the Secured Obligations, all right, title and interest of the Mortgagor in
and to all policies of insurance required by this Mortgage and any proceeds
thereof shall inure to the benefit of and pass to the Mortgagee or any purchaser
or transferee of the Mortgaged Property, as the case may be.

     

    (e)           The
Mortgagor hereby irrevocably appoints the Mortgagee as the Mortgagor’s
attorney-in-fact, coupled with an interest, to be used during the continuance of
an Event of Default to endorse any checks, drafts or other instruments
representing any insurance proceeds, whether payable by reason of loss
thereunder or otherwise.

     

    2.5.        
 Condemnation.  The
Mortgagor, immediately upon obtaining knowledge of the institution of any
proceedings for the condemnation, taking or purchase in lieu thereof, of the
Mortgaged Property or any part thereof (each, a "Taking"), shall notify the
Mortgagee of the pendency of such proceedings.  The Mortgagee may
participate in such proceedings, and the Mortgagor from time to time shall
deliver to the Mortgagee all instruments requested by it to permit such
participation.  The Mortgagee is hereby irrevocably appointed as the
Mortgagor's attorney-in-fact, coupled with an interest, with power to collect
and receive, the proceeds of any Taking, and, to make any compromise or
settlement in connection with such proceedings.  In any event, the
Mortgagor shall not adjust, compromise or settle such proceedings and shall not
enter into any agreement with respect to such matters without the prior written
consent of the Mortgagee (which consent shall not be unreasonably withheld,
delayed or conditioned).  The Mortgagor, upon written request by the
Mortgagee, shall execute and deliver any and all instruments from time to time
reasonably requested for the purposes of confirming the foregoing assignment to
the Mortgagee.  The proceeds of any Taking shall be applied to or
toward the Secured Obligations.

     

    2.6.        
 Application of Proceeds of
Casualty.

     

    (a)    
      The
Mortgagee shall permit the application of the proceeds of Insurance Policies
consequent upon any casualty to the cost of restoring, repairing, replacing or
rebuilding the loss or damage caused by such casualty (collectively
“Restoration”) if and so long as the following conditions are met:

     

    (i)            the
Restoration is accomplished in accordance with the terms of Section 2.6(c)
provided that if the cost of the Restoration does not exceed Two Hundred Fifty
Thousand Dollars ($250,000) then the proceeds shall be paid directly to the
Mortgagor who will promptly and in a good and workmanlike manner complete the
Restoration;

     

    
      
        
        

      

      
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    (ii)           the cost
of the Restoration (as estimated by the Mortgagee) does not exceed more than
fifty percent (50%) of the outstanding aggregate principal balance of the
Secured Obligations at the time of the casualty;

     

    (iii)          there is
no Default or event which, with the giving of notice or passage of time, or
both, would constitute a Default; and

     

    (iv)         
the
Restoration can be completed within one year after the casualty and at least six
(6) months prior to maturity of the Note.  If the conditions set forth
in clauses (1) through (4) of this section 2.6(a) are not satisfied, the
Mortgagee may, in its sole discretion, elect to apply all or any part of the
proceeds of Insurance Policies consequent upon such casualty to or toward the
Secured Obligations.

     

    (b)         
Whether
or not insurance proceeds are made available to the Mortgagor, the Mortgagor
hereby covenants to complete the Restoration of the Improvements, to be of at
least equal value, and of substantially the same character as immediately prior
to such loss or damage, all to be effected in accordance with plans,
specifications and procedures which shall have been first submitted to and
approved in writing by the Mortgagee which approval shall not be unreasonably
delayed, withheld or conditioned, and the Mortgagor shall pay all costs of the
Restoration.  In the event and to the extent that the Mortgagee elects
to apply the proceeds of casualty insurance to reduce the Secured
Obligations.

     

    (c)          
Insurance
proceeds held by the Mortgagee for Restoration of the Mortgaged Property shall
be disbursed from time to time at such times as the Mortgagee deems appropriate
as progress payments during completion of the Restoration and, in any event,
only upon the Mortgagee being furnished with (i) evidence satisfactory to it of
the estimated cost of the Restoration, (ii) funds (or assurances satisfactory to
the Mortgagee that such funds are available) which shall be sufficient when
added to the proceeds of insurance held by the Mortgagee, to complete and fully
pay for the Restoration, and (iii) such architect’s certificates, waivers of
Lien, contractor’s sworn statements, title insurance endorsements, plats of
survey and such other evidences of cost, payment and performance as the
Mortgagee may require and approve; and the Mortgagee, in any event, may require
that all plans and specifications for such Restoration, be submitted to and
approved by the Mortgagee prior to commencement of work thereon.  No
payment made prior to the final completion of the Restoration shall exceed
ninety  percent (90%) of the value of the work performed from time to
time, as such value shall be determined by the Mortgagee in its sole and
exclusive judgment.  Funds other than proceeds of insurance shall be
disbursed prior to disbursement of insurance proceeds.  At all times
the undisbursed balance of insurance proceeds remaining in the hands of the
Mortgagee, together with funds deposited or irrevocably committed to the
satisfaction of the Mortgagee by or on behalf of the Mortgagor to pay the cost
of such Restoration, shall be at least sufficient in the sole and exclusive
judgment of the Mortgagee to pay the entire unpaid cost of the Restoration, free
and clear of all Liens or claims for Lien.  Any surplus which may
remain out of insurance proceeds held by the Mortgagee after payment of such
costs of Restoration, shall be applied to the Secured Obligations.  No
interest shall be allowed to the Mortgagor on account of any proceeds of
insurance or other funds held by the Mortgagee.

     

    
      
        
        

      

      
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    2.7.          Impositions.  The
Mortgagor shall pay and perform, or cause to be paid and performed, when due
(after the expiration of any grace periods) all Impositions and shall, upon the
request of the Mortgagee, furnish to the Mortgagee, within 15 days after the
same shall otherwise have become delinquent, validated receipts showing the
payment of the same; provided that the Mortgagor shall be permitted to contest
any such Imposition if the total amount being contested at any one time does not
exceed One Hundred Thousand Dollars ($100,000) and no Default or Event of
Default has occurred and is continuing and further provided that the Mortgagor
shall not be required to pay any such Imposition if the amount, applicability or
validity thereof shall currently be contested in good faith by appropriate
proceedings or other appropriate actions promptly initiated and diligently
conducted and if the Mortgagor shall have set aside on its books such reserves,
if any, with respect thereto as are required by GAAP and deemed adequate by the
Mortgagor and its independent accountants; provided, however, that the Mortgagor
will pay any such Imposition prior to the commencement of any proceeding to
foreclose any Lien securing the same.  If the Mortgagor defaults in
the payment of the Impositions as herein provided, the Mortgagee shall have the
right, but shall not be obligated, to pay the same or any part
thereof.

     

    2.8.         
Payment of
Liens.  The Mortgagor shall pay and perform or cause to be paid
and performed when due all obligations now or hereafter due under or in
connection with any Liens on the Mortgaged Property or any part thereof, all
rents and charges under any ground leases and other leases forming a part of the
Mortgaged Property, and all claims and demands of mechanics, materialmen,
laborers and others which, if unpaid, might become a Lien on the Mortgaged
Property or any part thereof, and shall cause the prompt (but in no event later
than five days after imposition), full and unconditional discharge of all Liens
imposed on or against the Mortgaged Property or any part thereof.  In
general, the Mortgagor shall do, or cause to be done, at the sole cost of the
Mortgagor, everything necessary to fully preserve the first priority of the Lien
of this Mortgage.  In the event the Mortgagor fails to make any such
payment, or if a Lien attaches to the Mortgaged Property or any part thereof,
the Mortgagee shall have the right, but shall not be obligated, to make such
payment or discharge such Lien.

     

    2.9.        
 Defending the Lien of this
Mortgage.  The Mortgagee shall have the right, but shall not be
obligated:  (a) to appear in and defend any action or proceeding, in
the name and on behalf of the Mortgagee or the Mortgagor, in which such Person
is named or which the Mortgagee determines may adversely affect the Mortgaged
Property, this Mortgage or the Lien hereof, and (b) to institute any action or
proceeding which the Mortgagee feels should be brought to protect the interests
or rights of the Mortgagee in the Mortgaged Property or under this
Mortgage.

     

    2.10.      
 Reimbursement of
Expenses.  Without limiting or derogating from section 2.12
below, the Mortgagor agrees to bear and, on demand, shall pay or reimburse the
Mortgagee for all amounts advanced or paid by the Mortgagee and/or the Lenders
under this Mortgage or otherwise, and all Expenses, and all such sums shall
constitute part of the Secured Obligations.  The obligations of the
Mortgagor under this section 2.10 shall survive repayment of the indebtedness
evidenced by the Notes and discharge of this Mortgage.

     

    
      
        
        

      

      
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    2.11.       
Interest on Advances and
Expenses.  All Loans and Expenses incurred at any time by
the  Mortgagee pursuant to the provisions of this Mortgage or under
applicable law in connection with the Secured Obligations shall bear interest
from the date that such amount is advanced or incurred, to the date of
reimbursement in full in cash, computed at the Default Rate.

     

    2.12.        Indemnification.

     

    (a)         
 Without
limiting or derogating from any other term or provision in this Mortgage, the
other Loan Documents, the Mortgagor will pay or cause to be paid (or reimbursed,
as the case may be) and will defend (with counsel selected by the Mortgagor and
approved by the Indemnitee in the Indemnitee's sole and absolute discretion),
indemnify and hold the Mortgagee, each Lender, and each director, officer,
employee, agent, advisor and Affiliate of any such Person (each, an
"Indemnitee") harmless (on an after tax basis) in respect of all costs, losses,
damages, and expenses (collectively, "Indemnified Costs") incurred by or
asserted against any Indemnitee in connection with the negotiation, execution,
delivery, performance and/or enforcement of this Mortgage, any other Security
Document, and/or the consummation of the transactions contemplated hereby or
thereby or which may otherwise be related in any way to this Mortgage, the other
Loan Documents, the Mortgaged Property, such transactions, or such Indemnitee's
relationship to any of the foregoing.  Without limiting the generality
of the foregoing, the Mortgagor will pay or cause or be paid and will defend
(with counsel selected by the Indemnitee), indemnify and hold each Indemnitee
harmless from and against any and all Indemnified Costs which are incurred by or
asserted against any Indemnitee in connection with or which are in any way
related to:

     

    (i)    
      the
negotiation, execution and delivery of this Mortgage, any other Loan Documents,
and/or any proposed amendments hereof or waivers hereunder (whether or not
effected), including so-called workouts and/or restructuring and including the
furnishing of opinions referred to herein and any other opinions which any
Indemnitee may reasonably request;

     

    (ii)          any suit,
claim, action or other proceeding or investigation involving the Mortgagor or
any of its Subsidiaries or Affiliates or in any way relating to or arising out
of this Mortgage, any other Loan Documents, the Mortgaged Property and/or any of
the transactions contemplated hereby, whether or not such Indemnitee is a party
thereto (including any bankruptcy or similar proceeding and any proceeding or
investigation relating to environmental matters);

     

    (iii)          the
preservation, exercise or enforcement of any of the rights or remedies of any
such Indemnitee under or referred to in this Mortgage or any other Loan
Documents, including all costs of collection;

     

    
      
        
        

      

      
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    (iv)          the
performance of and compliance with the terms and conditions of this Mortgage by
the Mortgagor, including insurance premiums, recording fees, filing fees,
mortgage taxes, fees and expenses of engineers and other consultants, and other
costs related to any of the Mortgaged Property;

     

    (v)          the
commissioning or obtaining of appraisals, insurance, surveys, engineering
reports, architectural reports, site assessments, title certifications,
environmental audits, opinions, title insurance or certificates required or
permitted under this Mortgage, in equity and under applicable law;
and

     

    (vi)          to the
extent not covered above in this section 2.12(a), any and all other Indemnified
Costs.

     

    (vii)         The
covenants contained in this section 2.12 shall survive repayment of the
indebtedness evidenced by the Notes and discharge of this Mortgage.

     

    2.13.        Prohibition Against
Conveyances and Encumbrances.  The Mortgagor shall not, and
shall not permit others to, without the prior written consent of the Mortgagee
(which consent may be given, withheld, or conditioned in Mortgagee’s sole
discretion, and if given, may be conditioned upon a change in the interest rate,
maturity date, amortization period or other terms of the Secured Obligations,
the payment of a transfer fee and/or any other requirements of the Mortgagee),
convey, assign, sell, lease, mortgage, encumber, pledge, hypothecate, grant a
Lien on, grant options with respect to, or otherwise dispose of (directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration or of record) all or any part of any legal or
beneficial interest in the Mortgaged Property or any part thereof (other than
Related Personalty as explicitly permitted elsewhere in this
Mortgage).  The existence of the Permitted Encumbrances shall not be a
breach of this section 2.13.

     

    2.14.       
Estoppel
Certificates.  The Mortgagor, within 10 days after written
request by the Mortgagee, shall furnish to the Mortgagee a written statement,
duly acknowledged, confirming the aggregate amount of the outstanding Secured
Obligations, the terms of payment and maturity dates of the Notes, the date to
which interest has been paid, and whether any offsets or defenses exist against
the payment of the Secured Obligations, if any such offsets or defenses are
alleged to exist, the nature thereof shall be set forth in detail, as the
Mortgagee may request.

     

    2.15.       
Assignment of Leases and
Property Income.  As additional security for the Secured
Obligations, independent of the security of this Mortgage, the Mortgagor hereby
assigns and transfers to the Mortgagee (for the pro rata benefit of the
Lenders), grants a security interest and Lien to the Mortgagee (for the pro rata
benefit of the Lenders), in and on all Leases (which includes, without
limitation, all Leases hereafter entered into) and Property Income to secure the
Secured Obligations.  The Mortgagor shall not otherwise assign,
transfer or encumber in any manner any Leases, any rights of the Mortgagor
thereunder, or the Property Income, or any part thereof, or terminate, extend,
renew, or otherwise modify any Lease, without the prior written consent of the
Mortgagee.  This Mortgage is intended to vest in the Mortgagee (for
the pro rata benefit of the Lenders) the present and absolute right, title and
interest in and to all Leases and Property Income.  Without limiting
the generality of the foregoing, the Mortgagor is not retaining, and is not
being granted by the Mortgagee, any right or license to collect or direct the
collection or payment of Property Income, all of such right being irrevocably
granted to and vested in the Mortgagee as aforesaid  However,
notwithstanding that this instrument is a present, absolute and unconditional
assignment of the Leases and Property Income, and a present, absolute, and
unconditional grant of the powers herein granted to the Mortgagee, the Mortgagor
is hereby granted a license to enforce the Leases (other than collecting
Property Income as aforesaid, as to which Mortgagor shall have no license), so
long as there occurs no Event of Default.  Upon the occurrence of an
Event of Default, the aforementioned license granted to Mortgagor shall
automatically terminate without notice to Mortgagor.  In any event,
the Mortgagor shall be the agent of the Mortgagee with respect to any Property
Income collected or received, and any Property Income so collected or otherwise
received by the Mortgagor shall be held in trust by the Mortgagor for the sole
and exclusive benefit of Mortgagee, and the Mortgagor shall, within one (1)
business day after receipt of any Property Income, pay the same to Mortgagee to
be applied by Mortgagee as hereinafter set forth.  Nothing in this
section 2.15 shall be construed to permit the Mortgagor to lease, sublease or
otherwise convey any of the Mortgaged Property in violation of section 2.13
hereof.  In any event, the Mortgagor hereby irrevocably confirms to,
authorizes, and directs each of the Lessees under the Leases and the guarantors
under any guaranties thereof, to pay all Property Income due or which become due
under the Leases or such guaranties to the Mortgagee and to continue to do so
until otherwise notified in writing by the Mortgagee.

     

    
      
        
        

      

      
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    2.16.      
 Additional Representations,
Warranties, and Covenants Respecting Compliance with Laws.

     

    (a)         
 Mortgagor
represents and warrants that:

     

    (i)           
the
Premises comply in all material respects with all Legal Requirements, including
without limitation all Environmental Laws,

     

    (ii)          
the
Mortgagor has obtained all necessary certificates, licenses, authorizations,
registrations, permits and approvals necessary for the use and operation of the
Premises or any parts thereof for the use to which the Mortgagor and any tenant
or other occupant of the Premises shall use or is using the
Premises,

     

    (iii)         
the
Mortgagor has no knowledge of and not received any notice or communication from
any Governmental Authority or any other Person that the Premises do not comply
with all Legal Requirements, including without limitation Environmental
Laws,

     

    (iv)         
neither
the Mortgagor, nor any tenant or other occupant of the Premises, nor any other
Person, has caused or suffered to occur, and the Mortgagor will not hereafter
cause or suffer to occur, any Spill, at, upon, under or within the Premises, and
neither the Mortgagor, nor any tenant or other occupant of the Premises, nor any
other Person, will be, has been or is, involved in operations at or near the
Premises, nor will there be, are there, any substances or conditions in or on
the Premises, which could support a claim or cause of action or lead to the
imposition of liability on the Mortgagor or any other owner or operator of the
Premises or the creation of Liens on the Premises under any of the Legal
Requirements or under any Environmental Laws.

     

    
      
        
        

      

      
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    (b)         
 In the
event of any Spill at, upon, under, within or in close proximity to the
Premises, the Mortgagor shall promptly upon obtaining knowledge of same notify
the Mortgagee in writing, and shall promptly forward to the Mortgagee copies of
all orders, notices, permits, applications or other communications and reports
in connection with any Spill or any other matters relating to the Environmental
Laws as they may affect the Premises.

     

    (c)          
In the
event of any Spill affecting the Premises, and/or if the Mortgaged Property
shall fail to comply with any of the requirements of the Environmental Laws, the
Mortgagee shall have the right, but shall not be obligated, to give such notices
and/or cause such work to be performed at the Premises and/or take any and all
other actions as the Mortgagee shall deem necessary or advisable in order to
remedy said Spill or cure such failure of compliance.  Any partial
exercise by the Mortgagee of any of such rights shall not obligate the Mortgagee
to complete any actions commenced or expend further sums to cure such failure of
compliance.

     

    3.           
 Security
Agreement.

     

    3.1.          Additional Covenants and
Representations of the Mortgagor.  The Mortgagor hereby
warrants and represents to and covenants and agrees with the Mortgagee as
follows:

     

    (a)         
 The
Mortgagor is the owner of and has good and marketable title to the Related
Personalty free from any Liens other than the Liens arising hereunder and under
the other Loan Documents and any Liens explicitly permitted hereunder or under
the Loan Agreement, and the Mortgagor will defend the Related Personalty against
all claims and demands of all Persons at any time claiming the same or any
interest therein.

     

    (b)         
The
Mortgagor will keep the Related Personalty in good repair, working order and
condition and adequately insured at all times in accordance with the provisions
of the Loan Agreement, this Mortgage and the other Loan Documents.

     

    (c)          
The
Mortgagor will, upon request by the Mortgagee, promptly make, execute,
acknowledge and deliver and file and record in all proper offices and places
such financing statements, continuation statements, certificates, collateral
agreements and other agreements, documents or instruments as may be necessary to
perfect or from time to time renew the Liens arising hereunder and under the
other Loan Documents, including those that may be necessary to perfect such
Liens in any additional Related Personalty hereafter acquired by the Mortgagor
or in any replacements or proceeds thereof, and the Mortgagor will take all such
action as may be deemed necessary or advisable by the Mortgagee to carry out the
intent and purposes of the Loan Documents or for assuring and confirming to the
Mortgagee the grant and perfection of the Liens in the Related
Personalty.  To the extent permitted by law, the Mortgagor authorizes
and appoints the Mortgagee to execute such financing statements, continuation
statements, certificates, collateral agreements and other agreements, documents
and instruments in its stead, with full power of substitution, as the
Mortgagor's attorney-in-fact, coupled with an interest.  To the extent
permitted by law, the Mortgagor further agrees that a carbon, photographic or
other reproduction of this Mortgage, or any security agreement, financing
statement or continuation statement is sufficient as a financing statement or
continuation statement.

     

    
      
        
        

      

      
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    3.2.        
 Mortgage as Security
Agreement and Financing Statement.  THIS MORTGAGE CONSTITUTES A
SECURITY AGREEMENT AND SERVES AS A FIXTURE FILING IN ACCORDANCE WITH THE UNIFORM
COMMERCIAL CODE.

     

    4.            
Default and
Remedies.

     

    4.1.          Events of
Default.  The Mortgagor shall be in default under this Mortgage
if any one or more of the following events (each an "Event of Default") shall
occur (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body), that it is to say:

     

    (a)          
if
default shall be made in the performance or observance of any covenant,
agreement or condition contained in sections 2.1, 2.4, 2.6, 2.12, 2.13, or 3.1
or if any representation or warranty made by the Mortgagor in any such section
shall prove to have been false or incorrect on the date as of which
made;

     

    (b)          
if
default shall be made in the performance or observance of any other of the
covenants, agreements or conditions contained in this Mortgage and such default
shall have continued for a period of 30 days; provided, however, that if such
default is susceptible to cure but not within said 30 day period, then such 30
day period shall be extended for such additional number of days, not to exceed
60, as may be required to cure the same if the Mortgagor commences such cure
within the initial 30 day period and thereafter diligently pursues the same to
completion; or

     

    (c)          
if an
Event of Default as defined in the Loan Agreement (not otherwise addressed in
the preceding clauses (a) or (b) of this section 4.1) shall occur.

     

    4.2.         
Remedies.  Upon
the occurrence and continuance of any Event of Default, all of the Secured
Obligations may become or be declared to be immediately due and payable in
accordance with the Loan Agreement, without notice or demand, and the Mortgagee
may take such action, without notice or demand, as the Mortgagee shall deem
advisable to protect and enforce its rights against the Mortgagor and in and to
the Mortgaged Property, including the following actions, which shall be
cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, against the Mortgagor and/or the Mortgaged
Property or any part thereof, at such times and in such order as the Mortgagee
may determine, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of the Mortgagee permitted by
law, equity or contract or as set forth herein or in the other Loan
Documents:

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (a)          
the
Mortgagee may exercise all rights and remedies provided in the Loan Documents or
in any other agreement, document or instrument pertaining to any of the Secured
Obligations, including the right to declare the Secured Obligations to be
immediately due and payable as provided therein;

     

    (b)           the
Mortgagee shall be entitled to immediate and exclusive possession of the
Mortgaged Property and may enter into or upon the Mortgaged Property, and may
dispossess the Mortgagor and its agents and servants therefrom, and thereupon
the Mortgagee may (i) use, operate, manage, control, insure, repair, restore and
otherwise deal with all and every part of the Mortgaged Property and conduct
business thereon, in any case either in the name of the Mortgagee or in such
other name as the Mortgagee shall determine; (ii) commence and/or complete any
construction on the Mortgaged Property; (iii) make alterations, additions,
renewals, replacements and improvements to or on the Mortgaged Property; (iv)
exercise all rights and powers of the Mortgagor with respect to the Mortgaged
Property, whether in the name of the Mortgagor or otherwise, including the right
to make, cancel, enforce or modify any Leases, obtain real estate tax
abatements, obtain and evict tenants, and demand, sue for, collect and receive
all Property Income; and (v) apply the receipts of Property Income from the
Mortgaged Property to the payment of the Secured Obligations in accordance with
section 4.3(i);

     

    (c)           with or
without making entry into or taking possession of the Premises and with or
without commencing complete or partial foreclosure or other enforcement of this
Mortgage, the Mortgagee may exercise any or all of the rights and remedies set
forth in sections 4.2(a) through 4.2(i), inclusive;

     

    (d)           with or
without making entry into or taking possession of the Premises, the Mortgagee
may exercise the STATUTORY POWER OF SALE and institute proceedings for the
complete foreclosure of this Mortgage, in which case the Mortgaged Property may
be sold for cash or upon credit, as an entirety or in parcels or
portions;

     

    (e)           with or
without making entry into or taking possession of the Premises, the Mortgagee
may exercise the STATUTORY POWER OF SALE and institute proceedings for the
partial foreclosure of this Mortgage for the portion of the Secured Obligations
then due and payable, subject to the continuing Lien of this Mortgage for the
balance of the Secured Obligations not then due;

     

    (f)           the
Mortgagee may institute an action, suit or proceeding at law or in equity for
the specific performance of any covenant, condition or agreement contained in
this Mortgage or in any other Loan Document, or in aid of the execution of any
power granted hereunder or thereunder or for the enforcement of any other
appropriate legal or equitable remedy;

     

    (g)           the
Mortgagee may pursue all rights and remedies provided by law, including those
provided by the Uniform Commercial Code, including without limitation, the right
and power to sell or otherwise dispose of the Related Personalty or any part
thereof, and for that purpose may take immediate and exclusive possession of the
Related Personalty or any part thereof, and, with or without judicial process,
may enter upon the Mortgaged Property or any other premises on which the Related
Personalty or any part thereof may be situated and remove the same therefrom
without being deemed guilty of trespass and without liability for damages, or at
the Mortgagee's option, the Mortgagor shall assemble the Related Personalty and
make it available to the Mortgagee at the place and time designated in the
demand.  The Mortgagee shall be entitled to hold, maintain, preserve
and prepare the Related Personalty for sale in the manner provided by
law.  The Mortgagee, without removal of the Related Personalty from
the Mortgaged Property, may render the Related Personalty unusable and dispose
of the Related Personalty on the Mortgaged Property.  To the extent
permitted by law, the Mortgagor expressly waives any notice of sale or other
disposition of the Related Personalty and any other right or remedy of the
Mortgagor existing at the occurrence of an Event of Default, and to the extent
any such notice is required and cannot be waived, the Mortgagor agrees that as
it relates to this subsection only, if such notice is mailed, postage prepaid to
the Mortgagor at the address set forth in section 6.1 at least ten days before
the time of sale or disposition, such notice shall be deemed reasonable and
shall fully satisfy any requirements for giving said notice;

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (h)           the
Mortgagee may recover judgment on the Secured Obligations with or without the
Mortgagee having instituted any proceedings for the complete or partial
foreclosure or other enforcement of this Mortgage; and

     

    (i)           
with or
without making entry into or taking possession of the Premises, and with or
without having instituted any proceeding for the complete or partial foreclosure
or other enforcement of this Mortgage, the Mortgagee may secure, ex
parte,  the appointment of a receiver, trustee, liquidator or similar
official of the Mortgaged Property or any part thereof, and the Mortgagor hereby
consents and agrees to such appointment, without notice to the Mortgagor and
without regard to the adequacy of the security for the Secured Obligations and
without regard to the solvency of the Mortgagor or any other Person primarily or
secondarily liable for the payment of the Secured Obligations, and such receiver
or other official shall be entitled to compensation therefor, and shall have all
rights and powers permitted by applicable law and such other rights and powers
as the court making such appointment may confer, and the appointment of such
receiver or other official shall not impair or in any manner prejudice the
rights of the Mortgagee to receive the Property Income pursuant to this
Mortgage.

     

    For
purposes hereof, the term “default,” as used in the STATUTORY POWER OF SALE,
shall mean an Event of Default as herein defined.  Without limiting
any provision hereof, this Mortgage is upon the STATUTORY CONDITION and upon the
further condition that all covenants and agreements on the part of the Mortgagor
herein shall be kept and fully performed and that no breach of any of the other
conditions specified herein shall be permitted, for any breach of which the
Mortgagee shall have the STATUTORY POWER OF SALE.

    

    4.3.          General Provisions Regarding
Remedies.

     

    (a)          
No
recovery of any judgment by the Mortgagee and no levy of an execution under any
judgment upon any property of the Mortgagor other than the Mortgaged Property
shall affect in any manner or to any extent the Lien of this Mortgage upon the
Mortgaged Property or any part thereof, or any rights, powers or remedies of the
Mortgagee hereunder, but such Lien, rights, powers and remedies of the Mortgagee
shall remain unimpaired.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (b)          At any
sale of the Mortgaged Property or any part thereof pursuant to the provisions of
this Mortgage, the Mortgagee, and each Lender, shall have the right to purchase
the Mortgaged Property (or any part thereof) being sold, and in such case shall
have the right to credit against the amount of the bid made therefor (as opposed
to paying in immediately available funds) all or any of the judgment then due
and owing to the said bidder.

     

    (c)           At any
time before conclusion of any proceeding or other action brought by the
Mortgagee in connection with its exercise of the remedies provided in section
4.2, the Mortgagee may partially or completely terminate, abandon, adjourn,
postpone, reschedule and resume such proceeding or action, all without prejudice
of any kind.

     

    (d)           The
Mortgagee may resort to any remedies given by the Loan Documents or applicable
law, or any collateral thereunder in such portions and in such order as the
Mortgagee shall determine, and any such action shall not in any way be
considered as a waiver of any of the rights, benefits or remedies evidenced or
provided by, or referred to in, the Loan Documents or applicable
law.  The failure of the Mortgagee to exercise any right, remedy or
option evidenced or provided by, or referred to in, the Loan Documents shall not
be deemed to be a waiver thereof.  No acceptance by the Mortgagee of
any payment after the occurrence of a Default or Event of Default and no payment
by the Mortgagee of any amount, insurance or other cost for which the Mortgagor
is obligated hereunder, shall be deemed to waive or cure such Default or Event
of Default or the Mortgagor's obligation to pay or reimburse Mortgagee for the
same.  No sale of all or any part of the Mortgaged Property, no
forbearance on the part of the Mortgagee and no extension of the time for the
payment of the whole or any part of the Secured Obligations or any other
indulgence given by the Mortgagee to the Mortgagor or any other Person shall
operate to release or in any manner affect the interest of the Mortgagee in the
Mortgaged Property or the liability of the Mortgagor to pay the Secured
Obligations, except to the extent that such liability is reduced by proceeds of
the sale of all or any of the Mortgaged Property actually received in cash by
the Mortgagee.

     

    (e)           The
Mortgagor hereby consents to and waives notice of the granting of renewals,
extensions of time for payment or other indulgences to the Mortgagor or any
other Person, or substitution, release or surrender of any of the Mortgaged
Property, the addition or release of Persons primarily or secondarily liable on
any Secured Obligation, the acceptance of partial payments on any Secured
Obligations and/or the settlement or compromise thereof.  No course of
dealing between the Mortgagor or any Affiliate of the Mortgagor or the Mortgagee
and no delay in exercising any rights hereunder shall operate as a waiver of any
right of the Mortgagee.  No waiver by the Mortgagee of any default
shall be effective unless made in writing and otherwise in accordance with the
terms of section 6.1 and no such waiver shall extend to or affect any obligation
not expressly waived or impair any right consequent thereon.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (f)           To the
fullest extent the Mortgagor may legally do so, the Mortgagor
irrevocably:

     

    (i)            waives
presentment, demand, notice (except as explicitly required by this Mortgage),
protest, and except as is otherwise explicitly provided herein, all other
demands and notices in connection with this Mortgage or the enforcement of any
of the rights and remedies of the Mortgagee hereunder or in connection with the
Secured Obligations or the Mortgaged Property;

     

    (ii)           waives
all rights to a marshalling of the assets of the Mortgagor, the Mortgagor's
partners, if any, and others with interests in the Mortgagor, including the
Mortgaged Property, or to a sale in inverse order of alienation in the event of
foreclosure of the interests hereby created, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, the homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of the Mortgagee under the Loan Documents to a sale of the Mortgaged Property
for the collection of the Secured Obligations without any prior or different
resort for collection, or the right of the Mortgagee to the payment of the
Secured Obligations out of the proceeds of sale of the Mortgaged Property in
preference to every other claimant whatsoever;

     

    (iii)          waives
all rights of redemption and notice of election to accelerate or declare due the
whole of the Secured Obligations and all rights to bring or utilize any defense,
counterclaim or setoff which denies the existence or sufficiency of the facts
upon which the foreclosure action is grounded or which is based on the wrongful
actions of the Mortgagee.  If any defense, counterclaim or setoff is
timely raised in such foreclosure action, such defense, counterclaim or setoff
shall be dismissed.  If such defense, counterclaim or setoff is based
on a claim which could be tried in an action for money damages, the foregoing
waiver shall not bar a separate action for such damages (unless such claim is
required by laws or applicable rules of procedure to be pleaded in or
consolidated with the action initiated by the Mortgagee), but such separate
action shall not thereafter be consolidated with any foreclosure action of the
Mortgagee.  The bringing of such separate action for money damages
shall not be deemed to afford any grounds for staying any such foreclosure
action;

     

    (iv)        
waives
the defense of laches; and

     

    (v)         
waives
all rights to a trial by jury in any suit, action or other proceeding instituted
by or against it in respect of its obligations hereunder and under any of the
other Loan Documents and the transactions contemplated hereby and by the other
Loan Documents, such waiver being made by the Mortgagor after consultation with
the Mortgagor's counsel.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (g)          In the
event of a sale or other disposition of the Mortgaged Property pursuant to
section 4.2 and the execution of a deed or other conveyance pursuant thereto,
the recitals therein of facts (such as default, the giving of notice of default
and notice of sale, demand that such sale should be made, postponement of sale,
terms of sale, purchase, payment of purchase money and other facts affecting the
regularity or validity of such sale or disposition) shall be conclusive proof of
the truth of such facts.  Any such deed or conveyance shall be
conclusive against all Persons as to such facts recited therein.

     

    (h)          Any right
or remedy of the Mortgagee relating to the Mortgaged Property or which arises
under or is referred to in this Mortgage or arises in equity or under applicable
law may be exercised by the Mortgagee, either personally or by its agents,
nominees or attorneys, including by a receiver, trustee, liquidator or other
similar official or any other authorized representative or representatives of
the Mortgagee, and reasonable compensation for the services of such Persons
shall be deemed an Expense.

     

    (i)           Any and
all proceeds received by the Mortgagee in respect of the Mortgaged Property
after the occurrence of an Event of Default but prior to the maturity or
acceleration of the Notes, shall be applied to the prepayment of the Secured
Obligations, after payment of all Expenses, Indemnified Costs and all other
costs incurred by the Mortgagee in connection with this Mortgage or the
Mortgaged Property, in such order of priority as the Mortgagee shall
determine.  Any and all proceeds received by the Mortgagee after the
maturity or acceleration of the Notes, shall be applied to the payment of the
Secured Obligations, with the applicable premium, if any, after payment of all
Expenses, Indemnified Costs and all other costs incurred by the Mortgagee in
connection with this Mortgage or the Mortgaged Property, in such order of
priority as the Mortgagee shall determine.

     

    5.            No
Usury.  The Secured Obligations, this Mortgage, and the other
Loan Documents, are subject to the express condition that at no time shall the
Mortgagor (or any other Person primarily or secondarily liable for any of the
Secured Obligations) be obligated or required to pay interest on principal at a
rate which could subject the Mortgagee to either civil or criminal liability as
a result of such interest being in excess of the maximum interest rate which the
Mortgagor (or any other such Person) is permitted by applicable law to contract
to pay or which the Mortgagee is permitted by applicable law to
receive.  If by the terms of the Secured Obligations, this Mortgage or
any other Loan Document the Mortgagor (or any other such Person) is at any time
required or obligated to pay interest on principal at a rate in excess of such
maximum rate, the rate of interest shall be deemed to be immediately reduced to
such maximum rate and the interest payable shall be computed at such maximum
rate and all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of
principal.

     

    6.           
 Miscellaneous.

     

    6.1.          Notices.

     

    (a)           All
communications provided for herein shall be addressed as follows:

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

       

    

    (i)            if to the
Mortgagor, addressed at its address specified on the cover page hereto (or at
such other address as may be furnished in writing by the Mortgagor to the
Mortgagee), with a copy (which shall not constitute notice) to:  Loeb
& Loeb LLP, 345 Park Avenue, New York, NY 10154,
Attention:  Mitchell Nussbaum, Esquire; and

     

    (ii)           if to the
Mortgagee, addressed at its address specified on the cover page hereto (or at
such other address as may be furnished in writing by Mortgagee to the
Mortgagor), with a copy (which shall not constitute notice)
to:  Choate, Hall & Stewart, LLP, Two International Place, Boston,
MA  02110, Attention:  James R. Kane, Esquire.

     

    (b)           Any
communication provided for herein shall become effective only upon and at the
time of acknowledged receipt by the Person to whom it is given, unless such
communication (i) is mailed by certified mail (postage prepaid, return receipt
requested), in which case it shall become effective on the fifth Business Day
following the mailing thereof or (ii) is sent by facsimile transmission, in
which case it shall become effective upon receipt of confirmation of receipt of
transmission from the Person to whom the transmission was sent, provided that
the original of such communication is sent on the day of such facsimile
transmission to such Person by a courier guaranteeing overnight
delivery.

     

    6.2.         
Binding Obligations;
Successors and Assigns.  This Mortgage shall run with the land,
and bind and inure to the benefit of and be enforceable by the Mortgagee
(including each Lender from time to time, each of whom or which shall, without
further action, be entitled to enforce the provisions and enjoy the benefits
hereof, whether or not an express assignment to such Lender of rights hereunder
has been made).

     

    6.3.         
Headings;
Integration.  The headings of this Mortgage are for purposes of
reference only and shall not limit or otherwise affect the meaning
hereof.  This Mortgage (together with the other Loan Documents)
embodies the entire agreement and understanding between the Mortgagee and the
Mortgagor and supersedes all prior agreements and understandings relating to the
subject matter hereof.

     

    6.4.         
Further
Assurances.  From time to time hereafter, the Mortgagor will
execute, acknowledge and deliver, or will cause to be executed, acknowledged and
delivered, at its sole cost and expense, such additional agreements, documents
and instruments (including additional title insurance policies or endorsements),
and will take such other actions as the Mortgagee may reasonably request for the
purpose of implementing or effectuating the provisions of this Mortgage or for
more fully perfecting or renewing the rights of the Mortgagee with respect to
the Mortgaged Property (or any part thereof) pursuant thereto.  Upon
the exercise by the Mortgagee of any power, right, privilege or remedy pursuant
to this Mortgage which requires any consent, approval or authorization of, or
declaration or filing with any other Person, including any governmental
authority, the Mortgagor will execute and deliver, or will cause the execution
and delivery of, all such agreements, documents and instruments that the
Mortgagee may reasonably request in connection therewith.  The
Mortgagor hereby irrevocably appoints the Mortgagee as its attorney-in-fact,
coupled with an interest, and authorizes any such Person in the name of the
Mortgagor, upon any failure of the Mortgagor to take the action described above
in this section 6.4, to execute and to file and record, if necessary, from time
to time, any agreement, document, financing statement or other instrument and to
take any other action which any such Person may reasonably deem necessary or
appropriate for the purpose of implementing or effectuating the provisions of
this Mortgage and complying with Mortgagor's obligations under the Loan
Documents.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    6.5.        
 Severability.  In
case any provision in this Mortgage shall be invalid, illegal or unenforceable,
the validity, legality or enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby.

     

    6.6.        
 The Mortgagor's Obligations
Absolute.  All sums payable by the Mortgagor hereunder and
under the other Loan Documents shall be paid without notice, demand,
counterclaim, setoff, deduction or defense and without abatement, suspension,
deferment, diminution or reduction, and the obligations and liabilities of the
Mortgagor hereunder and thereunder shall in no way be released, discharged, or
otherwise affected (except as expressly provided herein) by reason
of:  (a) any damage to or destruction of or any Taking of the
Mortgaged Property or any part thereof; (b) any restriction or prevention of or
interference with any use of the Mortgaged Property or any part thereof; (c) any
title defect or encumbrance or any eviction from the Premises or any part
thereof by title paramount or otherwise; (d) any Bankruptcy Proceeding relating
to the Mortgagor or any other Person primarily or secondarily liable for any of
the Secured Obligations, or any action taken with respect to this Mortgage or
any other Loan Documents, including by any trustee or receiver of the Mortgagor
or any other such Person, or by any court, in any such proceeding; (e) any claim
which the Mortgagor has or might have against the Mortgagee; (f) any default or
failure on the part of the Mortgagee to perform or comply with any of the terms
hereof or of any other agreement with the Mortgagor or (g) any other occurrence
whatsoever, whether similar or dissimilar to the foregoing, whether or not the
Mortgagor shall have notice or knowledge of any of the
foregoing.  Except as expressly provided herein, the Mortgagor waives
all rights now or hereafter conferred by statute or otherwise to any abatement,
suspension, deferment, diminution or reduction of any of the Secured
Obligations.

     

    6.7.        
 Other Loan Documents and
Schedules.  All of the agreements, conditions, covenants,
provisions and stipulations related to the Secured Obligations, contained in the
other Loan Documents, and each of them, which are to be kept and performed by
the Mortgagor are hereby made a part of this Mortgage to the same extent and
with the same force and effect as if they were fully set forth in this Mortgage,
and the Mortgagor shall keep and perform the same, or cause them to be kept and
performed in accordance with their respective terms.  The information
set forth on the cover page hereto and on each exhibit attached hereto is hereby
incorporated herein.  In the event of any conflict between the
provisions of any exhibit attached hereto and this Mortgage, the provisions of
such exhibit shall prevail.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    6.8.        
 Governing Law;
Jurisdiction.  The agreements of the parties with respect to
the Secured Obligations, the interest thereon, any loan or other charges,
commitment fees, or brokerage commissions with respect to the transaction
secured hereby are governed by and are to be construed in accordance with the
laws of The Commonwealth of Massachusetts, and of the rights and obligations
under this Mortgage (including the rights and remedies of the Mortgagee in and
with respect to the Mortgaged Property and the enforcement of the Mortgagee's
rights and remedies in the Mortgaged Property) similarly are to be governed by
and construed in accordance with Massachusetts law.  The Mortgagor, to
the extent that it may lawfully do so, hereby consents to service of process,
and to be sued, in The Commonwealth of Massachusetts and consents to the
jurisdiction of the courts of The Commonwealth of Massachusetts and the United
States District Court for the District of Massachusetts, as well as to the
jurisdiction of all courts to which an appeal may be taken from such courts, for
the purposes of any suit, action or other proceeding arising out of any of its
obligations hereunder and under the other Loan Documents or with respect to the
transactions contemplated hereby or thereby, and expressly waives any and all
objections it may have as to venue in any such courts.  The Mortgagor
further agrees that a summons and complaint commencing an action or proceeding
in any of such courts shall be properly served and shall confer personal
jurisdiction if served by certified mail to it in accordance with section 6.1 or
as otherwise provided under the laws of The Commonwealth of
Massachusetts.  Notwithstanding the foregoing, the Mortgagor agrees
that nothing contained in this section 6.8 shall preclude the institution of any
such suit, action or other proceeding in any jurisdiction other than The
Commonwealth of Massachusetts.

     

    6.9.         
Merger.  So
long as any Secured Obligations shall remain unpaid, fee title to and any other
estate in the Mortgaged Property shall not merge, but shall be kept separate and
distinct, notwithstanding the union of such estates in any Person.

     

    [Remainder
of page left blank intentionally.]

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, this Mortgage has been duly executed and delivered as an
instrument under seal as of the date first above written.

    

    
      
        
          	
                  WITNESS:

                	 
      	
                  CYALUME
      TECHNOLOGIES, INC.

                
	 
      	 
      	 
      	 
      
	
                  /s/ Kirsten DeVries

                	 
      	
                  By:

                	
                  /s/ Michael Bielonko

                
	
                  Name

                	 
      	 
      	 
      

        

      

    

     

    
      
        
          	
                  COMMONWEALTH
      OF MASSACHUSETTS

                	
                  )

                
	 
      	
                  )

                
	
                  Hampden
      COUNTY

                	
                  )

                

        

      

    

    

    Before me, the undersigned, a Notary
Public in and for said County and State, this 11th day of December, 2008,
personally appeared Michael Bielonko, its Chief Financial Officer and Kirsten
DeVries its Executive Assistant, and each acknowledged execution of the
foregoing instrument as their free act and deed and swore to the truth of the
matters contained therein.

    

    IN WITNESS WHEREOF, I have hereunto
subscribed my name and affixed my official seal.

    

    
      
        	 
      	 
      	
                /s/
      Margot Schulte

              
	 
      	 
      	
                Notary
      Public

              
	 
      	 
      	 
      
	 
      	 
      	
                Margot
      Schulte

              
	 
      	 
      	
                Printed
      Name

              
	 
      	 
      	 
      
	
                My
      Commission Expires:

              	 
      	
                County
      of Residence:

              
	
                September
      6, 2013

              	 
      	
                Hampden

              

      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
A

    

    [to
be inserted when final title commitment issues]

    

    Exhibit
B

    Permitted
Encumbrances

    Exhibits:

    
      
        	
                Exhibit A  

              	
                Legal
      Description (Land)

              
	
                Exhibit
      B

              	
                Permitted
      Encumbrances

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
B

    

    Permitted
Encumbrances

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