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Term Loan Agreement

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by and among



and the Subsidiary Guarantors

from time to time party hereto,

as Guarantors


TD BANK, N.A., as Agent and a Lender


The Additional Lenders From

Time to Time Party Hereto

July 29, 2010


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Page ARTICLE 1. DEFINITIONS AND RULES OF INTERPRETATION 1 Section 1.1 Definitions 1 Section 1.2 Rules of Interpretation 24 ARTICLE 2. THE REVOLVING CREDIT FACILITY 25 Section 2.1 Commitment to Lend 25 Section 2.2 Revolving Loan Commitment Fee 26 Section 2.3 Reduction of Revolving Credit Loan Commitment 26 Section 2.4 The Revolving Credit Note 26 Section 2.5 Requests for Revolving Loans; Continuation and Conversion 27 Section 2.6 Payment and Sharing of Payment 29 Section 2.7 Change in Borrowing Base 29 ARTICLE 3. REPAYMENT OF THE REVOLVING CREDIT LOANS 29 Section 3.1 Maturity 29 Section 3.2 Mandatory Repayments of Revolving Credit Loans 30 Section 3.3 Optional Repayments of Revolving Credit Loans 30 ARTICLE 4. TERM LOAN AND REAL ESTATE LOAN 30 Section 4.1 Term Loan; Real Estate Loan 30 Section 4.2 The Term Notes 30 Section 4.3 Term Loan and Real Estate Loan Continuation 31 ARTICLE 5. REPAYMENT OF TERM LOAN AND REAL ESTATE LOAN 31 Section 5.1 Scheduled Principal Amortization 31 Section 5.2 Optional Prepayments 31 Section 5.3 Mandatory Prepayments 32 Section 5.4 Term Loan and Real Estate Loan Payments Settlement. 33 Section 5.5 Late Fee 33 ARTICLE 6. CERTAIN GENERAL PROVISIONS 33 Section 6.1 Amendment Fee 33 Section 6.2 Interest on Loans 33 Section 6.3 Funds for Payments 34 Section 6.4 Computations 34 Section 6.5 Additional Costs, Etc 34 Section 6.6 Capital Adequacy 35 Section 6.7 Certificate 36 Section 6.8 Interest Following Event of Default; Late Charge 36 Section 6.9 Inability to Determine LIBOR 36 Section 6.10 Illegality 36 Section 6.11 Indemnity 37 Section 6.12 Taxes 38 Section 6.13 General Obligations 39


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Page Section 6.14 Replacement of Lender Due to Increased Costs 40 ARTICLE 7. LETTERS OF CREDIT SUBLIMIT; FOREIGN EXCHANGE SUBLIMIT 40 Section 7.1 Letter of Credit Commitments 40 Section 7.2 Reimbursement Obligation of the Borrower 41 Section 7.3 Letter of Credit Payments 41 Section 7.4 Obligations Absolute 41 Section 7.5 Reliance by Issuer 42 Section 7.6 Letter of Credit Fee 42 Section 7.7 Foreign Exchange Facility 42 ARTICLE 8. COLLATERAL SECURITY 44 ARTICLE 9. REPRESENTATIONS AND WARRANTIES 44 Section 9.1 Corporate Authority 44 Section 9.2 Governmental Approvals 45 Section 9.3 Title to Properties; Leases 45 Section 9.4 Financial Statements and Projections 46 Section 9.5 No Material Changes, Etc 46 Section 9.6 Franchises, Patents, Copyrights, Etc 46 Section 9.7 Litigation 47 Section 9.8 No Materially Adverse Contracts, Etc 47 Section 9.9 Compliance with Other Instruments, Laws, Etc 47 Section 9.10 Tax Status 47 Section 9.11 No Event of Default 48 Section 9.12 Holding Company and Investment Company Acts 48 Section 9.13 Absence of Financing Statements, Etc 48 Section 9.14 Perfection of Security Interest 48 Section 9.15 Certain Transactions 48 Section 9.16 Employee Benefit Plans 49 Section 9.17 Regulations T, X and U 49 Section 9.18 Environmental Compliance 49 Section 9.19 Ownership; Subsidiaries, Etc 51 Section 9.20 Bank Accounts 51 Section 9.21 Chief Executive Offices 51 Section 9.22 Fiscal Year 51 Section 9.23 No Amendments to Certain Documents 51 Section 9.24 Disclosure 52 Section 9.25 Intentionally Omitted. 52 Section 9.26 Insurance 52 Section 9.27 Foreign Assets Control Regulation, Etc 52 Section 9.28 Use of Proceeds 53 Section 9.29 Licenses and Permits 53 Section 9.30 Product Liability 53


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Page Section 9.31 Government Contracts 53 Section 9.32 Export Licenses and Compliance 55 ARTICLE 10. AFFIRMATIVE COVENANTS OF THE BORROWER 56 Section 10.1 Punctual Payment 56 Section 10.2 Maintenance of Office 57 Section 10.3 Records and Accounts 57 Section 10.4 Financial Statements, Certificates and Information 57 Section 10.5 Notices 59 Section 10.6 Legal Existence; Maintenance of Properties 60 Section 10.7 Insurance 60 Section 10.8 Taxes 61 Section 10.9 Inspection of Properties and Books, Etc 61 Section 10.10 Compliance with Laws, Contracts, Licenses, and Permits 62 Section 10.11 Employee Benefit Plans 62 Section 10.12 Bank Accounts 63 Section 10.13 Further Assurances 63 Section 10.14 Use of Proceeds 63 ARTICLE 11. CERTAIN NEGATIVE COVENANTS OF THE BORROWER 63 Section 11.1 Restrictions on Indebtedness 63 Section 11.2 Restrictions on Liens 64 Section 11.3 Restrictions on Investments 66 Section 11.4 Restricted Payments 67 Section 11.5 Merger, Consolidation and Disposition of Assets 68 Section 11.6 Sale and Leaseback 69 Section 11.7 Compliance with Environmental Laws 69 Section 11.8 Employee Benefit Plans 69 Section 11.9 Modification of Documents 70 Section 11.10 Negative Pledges 70 Section 11.11 Transactions with Affiliates 70 Section 11.12 Upstream Limitations 70 Section 11.13 Inconsistent Agreements 71 Section 11.14 Bank Accounts 71 Section 11.15 Restriction on Subsidiaries 71 Section 11.16 Restrictions on Loans and Advances 71 Section 11.17 Line of Business 72 Section 11.18 Use of Proceeds 72 Section 11.19 Activity of the Holding Company 72 ARTICLE 12. FINANCIAL COVENANTS OF THE BORROWER 72 Section 12.1 Coverage Ratios 72 Section 12.2 Leverage Ratio 72 Section 12.3 Capital Expenditures 73


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Page Section 12.4 Current Ratio 73 Section 12.5 Minimum EBITDA 73 ARTICLE 13. CLOSING CONDITIONS 73 Section 13.1 Loan Documents 73 Section 13.2 Granite Subordinated Debt Documents 74 Section 13.3 Certified Copies of Charter Documents 74 Section 13.4 Corporate Action 74 Section 13.5 Incumbency Certificate 74 Section 13.6 Validity of Liens 74 Section 13.7 Perfection Certificates and Lien Search Results 74 Section 13.8 Reserved 74 Section 13.9 Reserved 74 Section 13.10 Solvency Certificate 74 Section 13.11 Opinion of Counsel 75 Section 13.12 Reserved 75 Section 13.13 Payment of Fees 75 Section 13.14 Material Adverse Effect 75 Section 13.15 Consents 75 Section 13.16 Borrowing Base Report 75 Section 13.17 Granite Subordination Payment and Documents 75 Section 13.18 Agent Approved Subordination Agreement 75 ARTICLE 14. CONDITIONS TO ALL BORROWINGS 75 Section 14.1 Representations True; No Event of Default 76 Section 14.2 No Legal Impediment 76 Section 14.3 Governmental Regulations 76 Section 14.4 Proceedings and Documents 76 Section 14.5 Borrowing Base Certificate 76 ARTICLE 15. EVENTS OF DEFAULT; ACCELERATION; ETC 76 Section 15.1 Events of Default and Acceleration 76 Section 15.2 Termination of Total Commitment 79 Section 15.3 Remedies 80 Section 15.4 Distribution of Collateral Proceeds 80


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Page ARTICLE 16. SETOFF 81 ARTICLE 17. EXPENSES 81 ARTICLE 18. INDEMNIFICATION 82 ARTICLE 19. SURVIVAL OF COVENANTS, ETC 83 ARTICLE 20. AGENT 83 Section 20.1 Appointment and Authorization of Agent 83 Section 20.2 Delegation of Duties 83 Section 20.3 Liability of the Agents 84 Section 20.4 Reliance by Agent 84 Section 20.5 Notice of Default 84 Section 20.6 Credit Decision; Disclosure of Information by Agent 85 Section 20.7 Indemnification of Agent 85 Section 20.8 Agent in its Individual Capacity 86 Section 20.9 Successor Agent 86 Section 20.10 Agent May File Proofs of Claim 86 Section 20.11 Collateral and Guaranty Matters 87 Section 20.12 Lender Pledge 87 Section 20.13 Return of Payments; Defaulting Lender 88 Section 20.14 Right to Perform, Preserve and Protect 88 Section 20.15 Amendment of Article 20 89 ARTICLE 21. ASSIGNMENT AND PARTICIPATION 89 Section 21.1 Conditions to Assignment by any Lender 89 Section 21.2 Participations 89 Section 21.3 Disclosure 89 Section 21.4 Assignee or Participant Affiliated with the Borrower 89 Section 21.5 Assignment by the Borrower 90


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List of Exhibits and Schedules

Exhibitsnone Exhibit A-1 Form of Revolving Credit Note Exhibit A-2 Form of Amended and Restated Term Note Exhibit A-3 Form of Real Estate Loan Note Exhibit B Form of Notice of Borrowing (Revolving Loan) Exhibit C Form of Notice of Borrowing (Term Loans) Exhibit D Form of Compliance Certificate Exhibit E Form of Assignment and Acceptance Agreement Exhibit F Form of Management Fees Subordination Agreement Exhibit G Form of Consulting Fee Subordination Letter

Schedulesnone Schedule 1.1 Omniglow Litigation Description Schedule 9.3 Title to Property; Leases Schedule 9.5 Material Changes Schedule 9.6 Franchises, Patents, Copyrights, Etc. Schedule 9.7 Litigation Schedule 9.8 No Materially Adverse Contracts, Etc. Schedule 9.9 Compliance with Other Instruments, Laws, Etc. Schedule 9.15 Certain Transactions Schedule 9.19A Post-Closing Capitalization of Borrower Schedule 9.19B Post-Closing Capitalization of Holding Company Schedule 9.20 Bank Accounts Schedule 9.26 Insurance Schedule 9.29 Licenses and Permits Schedule 9.31 Government Contracts Schedule 9.32 Export Licenses and Compliance Schedule 11.9 Warrant



This AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT is made as of the 29 TH day of July, 2010, by and among CYALUME TECHNOLOGIES, INC., a Delaware corporation (the " Borrower" ), CYALUME TECHNOLOGIES HOLDINGS, INC., a Delaware corporation (the " Holding Company" ), the Lenders and the other financial institutions or other entities from time to time parties hereto identified on the signature pages hereto and TD Bank, N.A., a national banking association, as Agent and as Lender.


The Borrower, the Holding Company and the Agent entered into that certain Revolving Credit and Term Loan Agreement (the " Initial Credit Agreement" ) dated as of the Original Closing, which was amended by that certain First Amendment to Credit Agreement and Limited Waiver dated as of September 1, 2009 (the " First Amendment" ), which was further amended by that certain Second Amendment to Credit Agreement and Limited Waiver dated as of December 7, 2009 (the " Second Amendment" , together with the First Amendment and the Initial Credit Agreement, collectively, the " Original Credit Agreement" ). The Borrower has requested the Agent and the Lender consent to the Borrower issuing certain subordinated debt, to certain modifications to the financial covenants and to the other modifications herein contained.

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


Section 1.1 Definitions. The following terms shall have the meanings set forth in this Article 1 or elsewhere in the provisions of this Credit Agreement referred to below:

Account Debtornone . Any Person who is or who may become obligated under, with respect to, or on account of, an Account, Chattel Paper, or a General Intangible.

Account(s)none . As applied to any Person all now owned or hereafter acquired right, title, and interest with respect to " accounts" (as such term is defined from time to time in the Uniform Commercial Code), and any and all supporting obligations in respect thereof.

Acquired EBITDAnone . With respect to the twelve (12) month period following the closing of a Permitted Acquisition, the maximum, stipulated, pro forma amount approved by the Agent and the Lenders which can be added to actual trailing twelve (12) month EBITDA.

Acquisitionnone . The acquisition by a Subsidiary of the Holding Company on the Acquisition Closing Date of substantially all of the assets of the Borrower.

Acquisition Closing Datenone . The date on which the conditions set forth in the Purchase Agreement have been satisfied and the Acquisition has been consummated.

Acquisition Documentsnone . Collectively, the Purchase Agreement and all other agreements and documents required to be entered into or delivered pursuant thereto or in connection with the Acquisition, each in the form delivered to the Agent on the Acquisition Closing Date and as amended as permitted hereunder.

Adjusted EBITDAnone . With respect to any period, an amount equal to EBITDA for such period plusnone to the extent accounted for in EBITDA and without duplication, the sum of (i) Acquired EBITDA and (ii) legal and professional fees related to Permitted Acquisitions to the extent included in Consolidated Net Income.

Affiliatenone . As applied to any Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, " control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of Shares, by contract, or otherwise; providednone that, for purposes of Section 11.11 hereof: (a) any Person which owns directly or indirectly 10% or more of the securities having ordinary voting power for the election of directors or other members of the governing body of a Person or 10% or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed to control such Person; (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person; and (c) each partnership or joint venture in which a Person is a partner or joint venturer shall be deemed to be an Affiliate of such Person.

Agentnone . TD Bank, N.A., solely in its capacity as agent and collateral agent for the Lenders hereunder and any other holder of Obligations, and any successor thereto.

Agent Approved Subordination Agreementnone . A subordination agreement in form and substance satisfactory to the Agent, in its sole discretion, which contains such payment, remedy blockages and standstill provisions and other such terms as the Agent may require or may deem acceptable.

Agent' s Head Officenone . The Agent' s office located at 370 Main Street, Worcester, MA 01608 or such other location as the Agent may designate from time to time.

Agent' s Special Counselnone . Choate, Hall & Stewart LLP or such other counsel as may be approved by the Agent.

Amendment Feenone . See Section 6.1.

Anti-Terrorism Lawsnone . Any Laws relating to terrorism or money laundering, including Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by OFAC.

Applicable Marginnone . So long as no Event of Default exists and subject to the terms of this definition, the applicable per annum percentage set forth below.


LIBOR Rate Margin Base Rate Margin 4.0% 3.0%

Availabilitynone . As of any date of determination, if such date is a Business Day, and determined at the close of business on the immediately preceding Business Day, if such date of determination is not a Business Day, the amount that the Borrower is entitled to borrow as Revolving Credit Loans under Section 2.1, after giving effect to all then outstanding Obligations and all sublimits applicable hereunder.

Balance Sheet Datenone . December 31, 2009.

Bankruptcy Codenone . The provisions of Title 11 of the United States Code, 11 U.S.C., a7a7101 et seq., as now and hereafter in effect, any successors to such statute and any other applicable insolvency or similar law of any jurisdiction including, without limitation, any law of any jurisdiction permitting a debtor to obtain a stay or a compromise of the claims of its creditors against it.

Base Ratenone . The term " Base Rate" shall mean the greater of: (A) variable annual rate of interest designated from time to time by the Wall Street Journal in the so-called " Money Rates Section" as being the " Prime Rate" of interest or, if the " Prime Rate" ceases to be so published, the rate which is in replacement thereof or substitution therefor, such interest rate to be adjusted on the effective date of any change thereof and (B) three percent (3%) per annum. The Agent shall not be required to notify the Borrower of adjustments in said interest rate. The Base Rate is only available for Revolving Credit Loans.

Base Rate Loan(s)none . Any Revolving Credit Loans bearing interest determined with reference to the Base Rate.

Blocked Personnone . Any Person: (i) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (iii) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) a Person that commits, threatens or conspires to commit or supports " terrorism" as defined in Executive Order No. 13224; or (v) a Person that is named a " specially designated national" or " blocked person" on the most current list published by OFAC or other similar list.

Borrowernone . See the preamble hereto.

Borrower' s Key Officersnone . Derek Dunaway, Thomas McCarthy, Earl Cranor and Michael Bielonko.

Borrowing Basenone . At the relevant time of reference thereto, an amount determined by the Agent by reference to the most recent Borrowing Base Report delivered to the Agent pursuant to Section 10.4(h), as adjusted pursuant to the provisions below, which is equal to the sum of: 80% of Eligible Accounts Receivable plusnone the lesser of (i) $2,000,000 or (ii) 50% of Eligible Raw Material and Finished Goods Inventory.


The Required Lenders may, in their reasonable discretion, from time to time, in accordance with Section 2.7: (x) reduce the lending formula with respect to any Eligible Accounts Receivable to the extent that the Required Lenders reasonably determine that: (i) the dilution with respect of the Eligible Accounts Receivable for any period has increased in any material respect or may be reasonably anticipated to increase in any material respect above historical levels, or (ii) the general creditworthiness of account debtors or other obligors of the Borrower has declined materially or (y) reduce the lending formula with respect to any Eligible Raw Material and Finished Goods Inventory to the extent that the Required Lenders determine that: (i) the number of days of the turnover of the inventory owned by Borrower for any period has changed in any material adverse respect, (ii) the liquidation value of any Eligible Raw Material and Finished Goods Inventory, or any category thereof, has materially decreased, or (iii) the nature and quality of the inventory has changed materially and adversely. In determining whether to reduce the lending formula(s), the Required Lenders may consider events, conditions, contingencies or risks which are also considered in determining Eligible Accounts Receivable and Eligible Raw Material and Finished Goods Inventory.

Borrowing Base Reportnone . A Borrowing Base Report signed by the Chief Financial Officer and in substantially the form of Exhibit Cnone hereto.

Business Daynone . Any day (other than Saturday, Sunday or holiday) on which the Agent is open and conducting its customary banking transactions in The Commonwealth of Massachusetts.

Capital Assetsnone . Fixed assets, both tangible (such as land, buildings, fixtures, machinery and equipment) and intangible (such as patents, copyrights, trademarks, franchises and goodwill).

Capital Expendituresnone . For any date of determination, the aggregate amount of payments made by the Borrower or any of its Subsidiaries for the rental, lease, purchase, construction, or use of any property, the value or cost of which under GAAP would appear on the Borrower' s balance sheet in the category of property, plant or equipment or intangibles, minusnone the sum of: (i) expenditures made in Permitted Acquisitions, including, without limitation, reasonable capitalized transaction costs related thereto and approved by the Required Lenders and (ii) capitalized transaction costs related to the obtaining and closing of the Loans approved by the Required Lenders.

Capitalization Documentsnone . The Charter Documents of the Holding Company.

Capitalized Lease(s)none . Leases under which the Borrower or any of its Subsidiaries is the lessee or obligor, the discounted future rental payment obligations under which are required to be capitalized on the balance sheet of the lessee or obligor in accordance with generally accepted accounting principles.

CERCLAnone . See Section 9.18(a).


Change of Controlnone . The occurrence of any one of the following events: (i) the common stock of Holding Company is no longer publicly traded or held under the Securities and Exchange Act of 1934; (ii) the Holding Company shall cease to own 100% of the Shares of the Borrower; (iii) there is a sale of all or substantially all of the assets of the Borrower or (iv) any " person" or " group" (as such terms are used in Sections 15(d) and 14(d) of the Securities Exchange Act of 1934 becomes the " beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have " beneficial ownership" of all securities that such person or group has the right to acquire (such right, an " option right" whether such right is exercisable immediately or only after the passage of time)) directly or indirectly, of 40% or more of the equity interests of the Holding Company on a fully diluted basis.

Charter Documentsnone . With respect to a Person which is a corporation, its Certificate of Incorporation as amended with the consent of the Required Lenders and in effect from time to time.

Chattel Papernone . All now owned or hereafter acquired right, title and interest with respect to " chattel paper" including, without limitation, " tangible chattel paper" and " electronic chattel paper" , as such terms are defined from time to time in the UCC and any and all supporting obligations in respect thereof.

Closing Datenone . The first date on which the conditions set forth in Article 13 have been satisfied and the Agent and the Lenders execute and deliver this Credit Agreement.

Codenone . The Internal Revenue Code of 1986, as amended.

Collateralnone . All of the property, rights and interests of the Borrower and each Guarantor that are or are intended to be subject to the security interests and mortgages created by the Security Documents.

Collateral Access Agreementsnone . A waiver or consent in form and substance satisfactory to the Agent executed by any lessor of Real Estate leased by Borrower or any of its Subsidiaries at which Real Estate any Collateral is located.

Collateral Assignment of Acquisition Documentsnone . The Collateral Assignment of Acquisition Documents dated or to be dated on or prior to the Original Closing Date, between the Borrower and the Agent, in form and substance satisfactory to the Agent, as may be amended, modified or supplemented from time to time.

Commitment Feenone . See Section 2.2.

Consolidated or consolidated or Consolidating or consolidatingnone . With reference to any term defined herein, shall mean that term as applied to the financial statements of the Holding Company and its Subsidiaries, consolidated or consolidating in accordance with generally accepted accounting principles.


Consolidated Net Income (or Deficit)none . For any period the gross revenues of the Borrower and its Subsidiaries on a consolidated basis during such period, less all expenses and other proper charges (including taxes on income), all determined in accordance with generally accepted accounting principles, but in any event, excluding: (i) any gain arising from any write down or write-up of assets, except to the extent inclusion thereof shall be approved in writing by the Required Lenders; (ii) earnings of any Subsidiary accrued prior to the date it became a Subsidiary; (iii) the net earnings of any business entity (other than a Subsidiary) in which the Borrower or any Subsidiary has an ownership interest, except to the extent such net earnings shall have actually been received by the Borrower or such Subsidiary in the form of cash distributions; (iv) the proceeds of any life insurance policy; (v) any deferred or other credit representing any excess of the equity of any Subsidiary at the date of acquisition thereof over the amount invested in such Subsidiary; and (vi) any reversal of
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