EXHIBIT 10.2
COMMERCIAL PROMISSORY NOTE
(Base Rate)

         
Debtor Name
SPARTA, Inc., a Delaware corporation
       
 
       
Debtor Address
25531 Commercentre Drive, Suite 120
Lake Forest, CA 92630-8873
  Office
45061   Loan Number
850-832-775-8
 
       
 
  Maturity Date
July 1, 2010   Amount
$10,000,000.00

$ 10,000,000.00   Date: June 21, 2007

FOR VALUE RECEIVED, on July 1, 2010 , the undersigned (“Debtor”) promises to pay
to the order of UNION BANK OF CALIFORNIA, N.A. (“Bank), as indicated below, the
principal sum of Ten Million and 00/100ths Dollars ($ 10,000,000.00 ), or so
much thereof as is disbursed, together with interest on the balance of such
principal from time to time outstanding, at the per annum rate or rates and at
the times set forth below.
1. INTEREST PAYMENTS. Debtor shall pay interest on the 1st day of each month
commencing July 1, 2007. Should interest not be paid when due, it shall become
part of the principal and bear interest as herein provided. All computations of
interest under this note shall be made on the basis of a year of 360 days, for
actual days elapsed. If any interest rate defined in this note ceases to be
available from Bank for any reason, then said interest rate shall be replaced by
the rate then offered by Bank, which, in the sole discretion of Bank, most
closely approximates the unavailable rate.
(a) BASE INTEREST RATE. At Debtor’s option, amounts outstanding hereunder in
minimum amounts of $ 250,000 shall bear interest at a rate, based on an index
selected by Debtor, which is 1.5% per annum in excess of Bank’s LIBOR Rate for
the Interest Period selected by Debtor, acceptable to Bank.
No Base Interest Rate may be changed, altered or otherwise modified until the
expiration of the Interest Period selected by Debtor. The exercise of interest
rate options by Debtor shall be as recorded in Bank’s records, which records
shall be prima facie evidence of the amount borrowed under either interest
option and the interest rate; provided, however, that failure of Bank to make
any such notation in its records shall not discharge Debtor from its obligations
to repay in full with interest all amounts borrowed. In no event shall any
Interest Period extend beyond the maturity date of this note.
To exercise this option, Debtor may, from time to time with respect to principal
outstanding on which a Base Interest Rate is not accruing, and on the expiration
of any Interest Period with respect to principal outstanding on which a Base
Interest Rate has been accruing, select an index offered by Bank for a Base
Interest Rate Loan and an Interest Period by telephoning an authorized lending
officer of Bank located at the banking office identified below prior to
10:00 a.m., Pacific time, on any Business Day and advising that officer of the
selected index, the Interest Period and the Origination Date selected (which
Origination Date, for a Base Interest Rate Loan based on the LIBOR Rate, shall
follow the date of such selection by no more than two (2) Business Days).
Bank will mail a written confirmation of the terms of the selection to Debtor
promptly after the selection is made. Failure to send such confirmation shall
not affect Bank’s rights to collect interest at the rate selected. If, on the
date of the selection, the index selected is unavailable for any reason, the

 

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selection shall be void. Bank reserves the right to fund the principal from any
source of funds notwithstanding any Base Interest Rate selected by Debtor
(b) VARIABLE INTEREST RATE. All principal outstanding hereunder which is not
bearing interest at a Base Interest Rate shall bear interest at a rate per annum
of 00.25 % less than the Reference Rate, which rate shall vary as and when the
Reference Rate changes.
At any time prior to the maturity date of this note, subject to the provisions
of paragraph 4 below. Debtor may borrow, repay and reborrow hereunder so long as
the total outstanding at any one time does not exceed the principal amount of
this note.
Debtor shall pay all amounts due under this note in lawful money of the United
States at Bank’s P.O. Box 30115. Los Angeles, CA 90030-0115 Office, or such
other office as may be designated by Bank, from time to time.
2. LATE PAYMENTS. If any payment required by the terms of this note shall remain
unpaid ten days after same is due, at the option of Bank, Debtor shall pay a fee
of $100 to Bank.
3. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option of
Bank, and, to the extent permitted by law, interest shall be payable on the
outstanding principal under this note at a per annum rate equal to five percent
(5%) in excess of the interest rate specified in paragraph l.b, above,
calculated from the date of default until all amounts payable under this note
are paid in full.
4. PREPAYMENT.
(a) Amounts outstanding under this note bearing interest at a rate based on the
Reference Rate may be prepaid in whole or in part at any time, without penalty
or premium. Debtor may prepay amounts outstanding under this note bearing
interest at a Base Interest Rate in whole or in part provided Debtor has given
Bank not less than five (5) Business Days prior written notice of Debtor’s
intention to make such prepayment and pays to Bank the prepayment fee due as a
result. The prepayment fee shall also be paid, if Bank, for any other reason,
including acceleration or foreclosure, receives all or any portion of principal
bearing interest at a Base Interest Rate prior to its scheduled payment date.
The prepayment fee shall be an amount equal to the present value of the product
of: (i) the difference (but not less than zero) between (a) the Base Interest
Rate applicable to the principal amount which is being prepaid, and (b) the
return which Bank could obtain if it used the amount of such prepayment of
principal to purchase at bid price regularly quoted securities issued by the
United States having a maturity date most closely coinciding with the relevant
Base Rate Maturity Date and such securities were held by Bank until the relevant
Base Rate Maturity Date (“Yield Rate”); (ii) a fraction, the numerator of which
is the number of days in the period between the date of prepayment and the
relevant Base Rate Maturity Date and the denominator of which is 360 ; and
(iii) the amount of the principal so prepaid (except in the event that principal
payments are required and have been made as scheduled under the terms of the
Base Interest Rate Loan being prepaid, then an amount equal to the lesser of
(A) the amount prepaid or (B) 50% of the sum of (1) the amount prepaid and
(2) the amount of principal scheduled Under the terms of the Base Interest Rate
Loan being prepaid to be outstanding at the relevant Base Rate Maturity Date).
Present value under this note is determined by discounting the above product to
present value using the Yield Rate as the annual discount factor.
(b) In no event shall Bank be obligated to make any payment or refund to Debtor,
nor shall Debtor be entitled to any setoff or other claim against Bank, should
the return which Bank could obtain under this prepayment formula exceed the
interest that Bank would have received if no prepayment had occurred. All
prepayments shall include payment of accrued interest on the principal amount so
prepaid and shall be applied to payment of interest before application to
principal. A determination by Bank as to the prepayment fee amount, if any,
shall be conclusive.

 

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(c) Bank shall provide Debtor a statement of the amount payable on account of
prepayment. Debtor acknowledges that (i) Bank establishes a Base Interest Rate
upon the understanding that it apply to the Base Interest Rate Loan for the
entire Interest Period, and (ii) Bank would not lend to Debtor without Debtor’s
express agreement to pay Bank the prepayment fee described above.
DEBTOR INITIAL HERE: DES JRF
5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but not
be limited to, any of the following: (a) the failure of Debtor to make any
payment required under this note when due; (b) any breach, misrepresentation or
other default by Debtor, any guarantor, co-maker, endorser, or any person or
entity other than Debtor providing security for this note (hereinafter
individually and collectively referred to as the “Obligor”) under any security
agreement, guaranty or other agreement between Bank and any Obligor; (c) the
insolvency of any Obligor or the failure of any Obligor generally to pay such
Obligor’s debts as such debts become due; (d) the commencement as to any Obligor
of any voluntary or involuntary proceeding under any laws relating to
bankruptcy, insolvency, reorganization, arrangement, debt adjustment or debtor
relief; (e) the assignment by any Obligor for the benefit of such Obligor’s
creditors; (f) the appointment, or commencement of any proceeding for the
appointment of a receiver, trustee, custodian or similar official for all or
substantially all of any Obligor’s property; (g) the commencement of any
proceeding for the dissolution or liquidation of any Obligor; (h) the
termination of existence or death of any Obligor; (i) the revocation of any
guaranty or subordination agreement given in connection with this note; (j) the
failure of any Obligor to comply with any order, judgement, injunction, decree,
writ or demand of any court or other public authority; (k) the filing or
recording against any Obligor, or the property of any Obligor, of any notice of
levy, notice to withhold, or other legal process for taxes other than property
taxes; (l) the default by any Obligor personally liable for amounts owed
hereunder on any obligation concerning the borrowing of money; (m) the issuance
against any Obligor, or the property of any Obligor, of any writ of attachment,
execution, or other judicial lien; or (n) the deterioration of the financial
condition of any Obligor which results in Bank deeming itself, in good faith,
insecure. Upon the occurrence of any such default, Bank, in its discretion, may
cease to advance funds hereunder and may declare all obligations under this note
immediately due and payable; however, upon the occurrence of an event of default
under d, e, f, or g, all principal and interest shall automatically become
immediately due and payable.
6. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this note are not
paid when due, Debtor promises to pay all costs and expenses, including
reasonable attorneys’ fees, (including the allocated costs of Bank’s in-house
counsel and legal staff) incurred by Bank in the negotiation, documentation and
modification of this note and all related documents and in the collection or
enforcement of any amount outstanding hereunder. Debtor and any Obligor, for the
maximum period of time and the full extent permitted by law, (a) waive
diligence, presentment, demand, notice of nonpayment, protest, notice of
protest, and notice of every kind; (b) waive the right to assert the defense of
any statute of limitations to any debt or obligation hereunder; and (c) consent
to renewals and extensions of time for the payment of any amounts due under this
note. If this note is signed by more than one party, the term “Debtor” includes
each of the undersigned and any successors in interest thereof; all of whose
liability shall be joint and several. Any married person who signs this note
agrees that recourse may be had against the separate property of that person for
any obligations hereunder. The receipt of any check or other item of payment by
Bank, at its option, shall not be considered a payment on account until such
check or other item of payment is honored when presented for payment at the
drawee bank. Bank may delay the credit of such payment based upon Bank’s
schedule of funds availability, and interest under this note shall accrue until
the funds are deemed collected. In any action brought under or arising out of
this note, Debtor and any Obligor, including their successors and assigns,
hereby consent to the jurisdiction of any competent court within the State of
California, as provided in any alternative dispute resolution agreement executed
between Debtor and Bank, and consent to service of process by any means
authorized by said state’s law. The term “Bank includes, without limitation, any
holder of this note. This note shall be construed in accordance with and
governed by the laws of the State of California. This note hereby incorporates
any alternative dispute resolution agreement previously. Concurrently or
hereafter executed between Debtor and Bank.

 

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7. DEFINITIONS. As used herein, the following terms shall have the meanings
respectively set forth below: “Base Interest Rate” means a rate of interest
based on the LlBOR Rate. “Base Interest Rate Loan” means amounts outstanding
under this note that bear interest at a Base Interest Rate. “Base Rate Maturity
Date” means the last day of the Interest Period with respect to principal
outstanding under a Base Interest Rate Loan. “Business Day” means a day on which
Bank is open for business for the funding of corporate loans, and, with respect
to the rate of interest based on the LlBOR Rate, on which dealings in U.S.
dollar deposits outside of the United States may be carried on by Bank.
“Interest Period” means with respect to funds bearing interest at a rate based
on the LlBOR Rate, any calendar period of 1, 3, 6, 9 or 12 months. In
determining an Interest Period, a month means a period that starts on one
Business Day in a month and ends on and includes the day preceding the
numerically corresponding day in the next month. For any month in which there is
no such numerically corresponding day, then as to that month, such day shall be
deemed to be the last calendar day of such month. Any Interest Period which
would otherwise end on a non-Business Day shall end on the next succeeding
Business Day unless that is the first day of a month, in which event such
Interest Period shall end on the next preceding Business Day. “LIBOR Rate” means
a per annum rate of interest (rounded upward, if necessary, to the nearest 1/100
of 1%) at which dollar deposits, in immediately available funds and in lawful
money of the United States would be offered to Bank, outside of the United
States, for a term coinciding with the Interest Period selected by Debtor and
for an amount equal to the amount of principal covered by Debtor’s interest rate
selection, plus Bank’s costs, including the cost, if any, of reserve
requirements. “Origination Date” means the first day of the Interest Period.
“Reference Rate” means the rate announced by Bank from time to time at its
corporate headquarters as its Reference Rate. The Reference Rate is an index
rate determined by Bank from time to time as a means of pricing certain
extensions of credit and is neither directly tied to any external rate of
interest or index nor necessarily the lowest rate of interest charged by Bank at
any given time.

            DEBTOR:
SPARTA, Inc., a Delaware corporation
      By:   /s/ Jerry R. Fabian         Jerry R. Fabian, V.P. Administration /
Secretary             

                  By:   /s/ David E. Schreiman         David E. Schreiman, Vice
President / CFO