SECURITY AND PLEDGE AGREEMENT

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 ”):

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

(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:

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.

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.

(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.

(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.

(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) her