exv10w2



 






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



 









 







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.



 









 






(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.



 









 





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