Exhibit 10.16

 

REVOLVING NOTE

(LIBOR and/or Prime)

 

    655787/00003

$10,000,000.00

  Irvine, California     April 10, 2003

 

On May 1, 2004 (“Termination Date”), SM&A, a California corporation
(“Borrower”), promises to pay to the order of City National Bank, a national
banking association (“CNB”), at its office in this city, in United States
Dollars and in immediately available funds, the principal sum of Ten Million and
no/100 Dollars ($10,000,000.00) (“Revolving Credit Commitment”) or so much
thereof as may be advanced and then outstanding, plus interest on the unpaid
balance, until fully repaid, at a rate computed on the basis of a 360-day year,
actual days elapsed, at the rates, times and in accordance with the terms set
forth below.

 

As provided herein, the principal of this Note may be borrowed, repaid and
reborrowed from time to time prior to the Termination Date, provided at the time
of any borrowing no Event of Default (as hereinafter defined) exists, and
provided further that the total borrowings outstanding at any one time shall not
exceed the lesser of (i) the Revolving Credit Commitment or (ii) the Revolving
Credit Commitment, less Letters of Credit issued and outstanding under that
certain Agreement for Issuance of Letters of Credit of even date herewith
between Borrower and CNB. Each borrowing and repayment shall be noted in the
books and records of CNB. The excess of borrowings over repayments shall
evidence the principal balance due hereon from time to time and at any time.
Borrowings hereunder shall be conclusively presumed to have been made to or for
the benefit of Borrower when made as noted in such books and records.

 

For purposes of this Note, the following definitions shall apply:

 

“Business Day” means a day that CNB’s Head Office is open and conducts a
substantial portion of its business.

 

“Eurocurrency Reserve Requirement” means the aggregate (without duplication) of
the rates (expressed as a decimal) of reserves (including, without limitation,
any basic, marginal, supplemental, or emergency reserves) that are required to
be maintained by banks during the Interest Period under any regulations of the
Board of Governors of the Federal Reserve System, or any other governmental
authority having jurisdiction with respect thereto, applicable to funding based
on so-called “Eurocurrency Liabilities”, including Regulation D (12 CFR 204).

 

“Interest Period” means the period commencing on the date a LIBOR Loan is made
(including the date a Prime Loan is converted to a LIBOR Loan, or a LIBOR Loan
is renewed as a LIBOR Loan, which, in the latter case, shall be the last day of
the expiring Interest Period) and ending on the first day of the month occurring
prior to or on the date which is one (1), two (2), three (3), six (6), nine (9),
twelve (12) months thereafter, as selected by the Borrower; provided, however,
no Interest Period may extend beyond the Termination Date.

 

“LIBOR Base Rate” means the British Banker’s Association definition of the
London InterBank Offered Rates as made available by Bloomberg LP, or such other
information service available to CNB, for the applicable monthly period upon
which the Interest Period is based for the LIBOR Loan selected by Borrower and
as quoted by CNB on the Business Day Borrower requests a LIBOR Loan or on the
last Business Day of an expiring Interest Period.

 

“LIBOR Interest Rate” means the rate per year (rounded upward to the next
one-sixteenth (1/16th) of one percent (0.0625%), if necessary) determined by CNB
to be the quotient of (a) the LIBOR Base Rate divided by (b) one minus the
Eurocurrency Reserve Requirement for the Interest Period; which is expressed by
the following formula:

 

LIBOR Base Rate

1 – Eurocurrency Reserve Requirement

 

“LIBOR Loan” means any Loan tied to the LIBOR Interest Rate.

 

“Loan(s)” means a borrowing under this Note.

 

“Prime Loan” means any Loan tied to the Prime Rate. A Loan hereunder shall be a
Prime Loan any time it is not a LIBOR Loan.

 

“Prime Rate” means the rate most recently announced by CNB at its principal
office in Beverly Hills, California, as its “Prime Rate.” Any change in the
interest rate resulting from a change in the Prime Rate shall be effective on
the day on which each change in the Prime Rate is announced by CNB.

 

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1. Interest on Loans. Each Loan shall bear interest from disbursement until due
(whether at stated maturity, by acceleration or otherwise) at a rate equal to,
at Borrower’s option, either (a) for a LIBOR Loan, the LIBOR Interest Rate plus
two and one quarter of one percent (2.250%) per annum, or (b) for a Prime Loan,
the fluctuating Prime Rate minus one half of one percent (-.500%) per annum.
Interest on the Loans shall accrue daily and be payable (a) monthly, in arrears,
on the first day of the next month, commencing on the first such date following
disbursement; and (b) if a LIBOR Loan, upon any prepayment of any LIBOR Loan (to
the extent accrued on the amount prepaid.) Anything herein to the contrary
notwithstanding, all principal and interest remaining unpaid on the Termination
Date shall be immediately due and payable.

 

2. Procedure for LIBOR Loans. Borrower may request that a Loan be a LIBOR Loan,
if herein allowed (including conversion of a Prime Loan to a LIBOR Loan, or
continuation of a LIBOR Loan as a LIBOR Loan upon the expiration of the Interest
Period). Borrower’s request shall be irrevocable, shall be made to CNB, orally
or in writing or using the form “Notice of Borrowing/Interest Selection” form
attached hereto as Exhibit “A”, no earlier than two (2) Business Days before and
no later than 1:00 p.m. Pacific Time on the date the LIBOR Loan is to be made,
and shall specify the Interest Period, the amount of the LIBOR Loan, and such
other information as CNB requests. If Borrower fails to select a LIBOR Loan in
accordance herewith, the Loan shall be a Prime Loan, and any LIBOR Loan shall be
deemed a Prime Loan upon expiration of the Interest Period.

 

3. Availability of LIBOR Loans. Notwithstanding anything herein to the contrary,
each LIBOR Loan must be in the minimum amount of $500,000.00 and increments of
$100,000.00. Borrower may not have more than five (5) LIBOR Loans outstanding at
any one time under the Revolving Credit Commitment. Borrower may have Prime
Loans and LIBOR Loans outstanding simultaneously.

 

4. Prepayment of Principal. Borrower may prepay the principal amount outstanding
on a Prime Loan at any time and in any amount without a prepayment fee. Borrower
may not make a partial principal prepayment on a LIBOR Loan. Borrower may prepay
the full outstanding principal balance on a LIBOR Loan prior to the end of the
Interest Period, provided, however, that such prepayment is accompanied by a fee
(“LIBOR Prepayment Fee”) equal to the amount, if any, by which (a) the
additional interest which would have been earned by CNB had the LIBOR Loan not
been prepaid exceeds (b) the interest which would have been recoverable by CNB
by placing the amount of the LIBOR Loan on deposit in the LIBOR market for a
period starting on the date on which it was prepaid and ending on the last day
of the applicable Interest Period. CNB’s calculation of the LIBOR Prepayment Fee
shall be conclusive absent manifest error.

 

5. Suspension of LIBOR Loans. In the event CNB, on any Business Day, is unable
to determine the LIBOR Base Rate applicable for a new, continued, or converted
LIBOR Loan for any reason, or any law, regulation, or governmental order, rule
or determination, makes it unlawful for CNB to make a LIBOR Loan, Borrower’s
right to select LIBOR Loans shall be suspended until CNB is again able to
determine the LIBOR Base Rate or make LIBOR Loans, as the case may be. During
such suspension, new Loans, outstanding Prime Loans and LIBOR Loans whose
Interest Periods terminate may only be Prime Loans.

 

6. Late Charge. Borrower shall pay to CNB a late charge of 5% or $10.00,
whichever is greater, of any payment not received by CNB on or before the 10th
day after the payment is due.

 

The occurrence of any of the following with respect to any Borrower or guarantor
of this Note or any general partner of such Borrower or guarantor shall
constitute an “Event of Default” hereunder:

 

1.   Failure to make any payment of principal or interest when due under this
Note;

 

2.   Filing of a petition by or against any of such parties under any provision
of the Bankruptcy Code;

 

3.   Appointment of a receiver or an assignee for the benefit of creditors;

 

4.   Commencement of dissolution or liquidation proceedings or the
disqualification (under any applicable law or regulation) of any of such parties
which is a corporation, partnership, joint venture or any other type of entity;

 

5.   Death or incapacity of any of such parties which is an individual;

 

6.   Revocation of any guaranty of this Note, or any guaranty of this Note
becomes unenforceable as to any future advances under this Note;

 

7.   Any financial statement provided by any of such parties to CNB is false or
materially misleading;

 

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8.   Any material default in the payment or performance of any obligation, or
any default under any provision of any contract or instrument pursuant to which
any of such parties has incurred any obligation for borrowed money, any purchase
obligation or any other liability of any kind to any person or entity, including
CNB;

 

9.   Any sale or transfer of all or a substantial part of the assets of any of
such parties other than in the ordinary course of business; or

 

10.   Any violation, breach or default under this Note, any letter agreement,
guaranty, security agreement, deed of trust, subordination agreement or any
other contract or instrument executed in connection with this Note or securing
this Note.

 

Upon the occurrence of any Event of Default, CNB, at its option, may declare all
sums of principal and interest outstanding hereunder to be immediately due and
payable without presentment, demand, protest or notice of dishonor, all of which
are expressly waived by Borrower, and CNB shall have no obligation to make any
further advances hereunder. Borrower agrees to pay all costs and expenses,
including reasonable attorneys’ fees, expended or incurred by CNB (or allocable
to CNB’s in-house counsel) in connection with the enforcement of this Note or
the collection of any sums due hereunder and irrespective of whether suit is
filed.

 

Upon the occurrence of any Event of Default (and without constituting a waiver
of the Event of Default), and until the Event of Default has been cured, the
outstanding principal (and interest, to the extent permitted by law) shall bear
additional interest at a fluctuating rate equal to five percent (5%) per annum
higher than the interest rate as determined above; provided, however, for
purposes hereof, a LIBOR Loan shall be treated as a Prime Loan upon the
termination of the Interest Period.

 

This Note and all matters related hereto shall be governed by the laws of the
State of California. If this Note is executed by more than one Borrower, all
obligations are joint and several.

 

SM&A, a California corporation

By:

 

/s/    STEVEN S. MYERS

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Steven S. Myers,

COB/President

 

By:

 

/s/    CATHY L. WOOD

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Cathy L. Wood,

CFO/Secretary