**Exhibit 10.25**

 

**REVOLVING NOTE**

(LIBOR and/or Prime)

 
|               | 655787/00003         |
|--------------------|----------------------|
| **$10,000,000.00** | La Palma, California |
|               | April 29, 2005       |

 

On May1, 2006 (“Termination Date”), **SM&A,**aCalifornia corporation****(“Borrower”),promises to pay to the order of **City National Bank**,a national banking association (“CNB”), at its office in this city, in UnitedStates Dollars and in immediately available funds, the principal sum of **Ten Million and no/100 Dollars ($10,000,000.00)** (“RevolvingCredit 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 onthe basis of a 360-day year, actual days elapsed, at the rates, times and inaccordance with the terms set forth below.

 

Asprovided herein, the principal of this Note may be borrowed, repaid andreborrowed from time to time prior to the Termination Date, provided at thetime of any borrowing no Event of Default (as hereinafter defined) exists, andprovided further that the total borrowings outstanding at any one time shallnot exceed the lesser of (i) the Revolving Credit Commitment or (ii) theRevolving Credit Commitment, less Letters of Credit issued and outstandingunder that certain Agreement for Issuance of Letters of Credit of even date herewithbetween Borrower and CNB.  Each borrowingand repayment shall be noted in the books and records of CNB.  The excess of borrowings over repaymentsshall evidence the principal balance due hereon from time to time and at anytime.  Borrowings hereunder shall beconclusively presumed to have been made to or for the benefit of Borrower whenmade as noted in such books and records.

 

Forpurposes of this Note, the following definitions shall apply:

 

“**Business Day**” means a day that CNB’s Head Office is open andconducts 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 emergencyreserves) that are required to be maintained by banks during the InterestPeriod under any regulations of the Board of Governors of the Federal ReserveSystem, or any other governmental authority having jurisdiction with respectthereto, applicable to funding based on so-called “Eurocurrency Liabilities”,including Regulation D (12 CFR 204).

 

“**Interest Period**” means the period commencing on the date aLIBOR Loan is made (including the date a Prime Loan is converted to a LIBORLoan, 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 firstday of the month occurring prior to or on the date which is one (1), two (2),three (3), six (6), nine (9), or  twelve(12) months thereafter, as selected by the Borrower; provided, however, noInterest Period may extend beyond the Termination Date.

 

“**LIBOR Base Rate**” means the British Banker’s Associationdefinition of the London InterBank Offered Rates as made available by BloombergLP, or such other information service available to CNB, for the applicablemonthly period upon which the Interest Period is based for the LIBOR Loanselected by Borrower and as quoted by CNB on the Business Day Borrower requestsa LIBOR Loan or on the last Business Day of an expiring Interest Period.

 

“**LIBOR Interest Rate**” means the rate per year (rounded upwardto 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; whichis 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 anytime it is not a LIBOR Loan.

 

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

 

1.**                                       Intereston Loans**.  Each Loan shall bearinterest from disbursement until due (whether at stated maturity, byacceleration 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 (2.25%) per annum, or (b) for a PrimeLoan, the fluctuating Prime Rate minus one half of one percent (-0.50%) perannum.  Interest on the Loans shallaccrue daily and be payable (a) monthly, in arrears, on the first day of*the*next month, commencing on the first such date followingdisbursement; 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 andinterest remaining unpaid on the Termination Date shall be immediately due andpayable.

 

2.**                                       Procedurefor LIBOR Loans.**  Borrower mayrequest that a Loan be a LIBOR Loan, if herein allowed (including conversion of a Prime Loan to a LIBOR Loan, orcontinuation of a LIBOR Loan as a LIBOR Loan upon the expiration of theInterest Period).  Borrower’s requestshall be irrevocable, shall be made to CNB, orally or in writing or using theform “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 theInterest Period, the amount of the LIBOR Loan, and such other information asCNB requests.  If Borrower fails to selecta LIBOR Loan in accordance herewith, the Loan shall be a Prime Loan, and anyLIBOR Loan shall be deemed a Prime Loan upon expiration of the Interest Period.

 

3.**                                       Availabilityof LIBOR Loans.**  Notwithstandinganything herein to the contrary, each LIBOR Loan must be in the minimum amountof $500,000.00 and increments of $100,000.00. Borrower may not have more than five (5) LIBOR Loans outstanding at anyone time under the Revolving Credit Commitment. Borrower may have Prime Loans and LIBOR Loans outstandingsimultaneously.

 

4.**                                       Prepaymentof Principal.**  Borrower may prepaythe principal amount outstanding on a Prime Loan at any time and in any amountwithout a prepayment fee.  Borrower maynot make a partial principal prepayment on a LIBOR Loan.  Borrower may prepay the full outstandingprincipal balance on a LIBOR Loan prior to the end of the Interest Period,provided, however, that such prepayment is accompanied by a fee (“LIBORPrepayment Fee”) equal to the amount, if any, by which (a)  the additional interest which would have beenearned by CNB had the LIBOR Loan not been prepaid exceeds (b) the interestwhich would have been recoverable by CNB by placing the amount of the LIBORLoan on deposit in the LIBOR market for a period starting on the date on whichit was prepaid and ending on the last day of the applicable InterestPeriod.  CNB’s calculation of the LIBORPrepayment Fee shall be conclusive absent manifest error.

 

5.**                                       Suspensionof LIBOR Loans.**  In the event CNB, onany Business Day, is unable to determine the LIBOR Base Rate applicable for anew, continued, or converted LIBOR Loan for any reason, or any law, regulation,or governmental order, rule or determination, makes it unlawful for CNB to makea LIBOR Loan, Borrower’s right to select LIBOR Loans shall be suspended untilCNB is again able to determine the LIBOR Base Rate or make LIBOR Loans, as thecase may be.  During such suspension, newLoans, outstanding Prime Loans and LIBOR Loans whose Interest Periods terminatemay only be Prime Loans.

 

6.                                       **Late Charge. **Borrowershall pay to CNB a late charge of 5% or $10.00, whichever is greater, of anypayment not received by CNB on or before the 10th day after thepayment is due.

 

Theoccurrence of any of the following with respect to any Borrower or guarantor ofthis Note or any general partner of such Borrower or guarantor shall constitutean “Event of Default” hereunder:

 

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

 

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

 

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

 

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

 

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

 

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6.                                       Revocationof any guaranty of this Note, or any guaranty of this Note becomesunenforceable as to any future advances under this Note;

 

7.                                       Anyfinancial statement provided by any of such parties to CNB is false ormaterially misleading;

 

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

 

9.                                       Anysale or transfer of all or a substantial part of the assets of any of suchparties other than in the ordinary course of business; or

 

10.                                 Anyviolation, breach or default under this Note, any letter agreement, guaranty,security agreement, deed of trust, subordination agreement or any othercontract or instrument executed in connection with this Note or securing thisNote.

 

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

 

Uponthe occurrence of any Event of Default (and without constituting a waiver ofthe Event of Default), and until the Event of Default has been cured, theoutstanding principal (and interest, to the extent permitted by law) shall bearadditional interest at a fluctuating rate equal to five percent (5%) per annumhigher than the interest rate as determined above; provided, however, forpurposes hereof, a LIBOR Loan shall be treated as a Prime Loan upon thetermination of the Interest Period.

 

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

 

 

**SM&A,**a California corporation

 

 
| By:    | /s/ Steven S.  Myers            |   |
|--------|---------------------------------|--------|
|   | Steven S. Myers,  COB/President |
|   |                            |
|   |                            |
| By:    | /s/ Cathy L.  Wood              |   |
|   | Cathy L. Wood,  CFO/Secretary   |
|        |                                 |        |  |

 

 
| **BANK USE ONLY** |       |
|-------------------|------------|
| ** **        | ** ** | ** ** |
|                   |            |  |

 

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EXHIBIT A

**NOTICE OFBORROWING/INTEREST SELECTION**

 

ThisNotice of Borrowing/Interest Selection (“Notice”) is executed and delivered by **SM&A,**a California corporation****(“Borrower”),to **City National Bank**, a national bankingassociation (“CNB”), pursuant to that Revolving Note (“Note”) in the principalsum of $10,000,000.00, dated April 29, 2005, executed by Borrower in favor ofCNB.  Any terms not defined herein shallhave the meanings defined in the Note or the Interest Rate Provision.

 

**1.****                                      Requestfor a Loan.** Borrower requests a Loan under the Note as follows:

 

1.1           InterestSelection- State “LIBOR” or “Prime”:                                     

 

1.2           PrincipalAmount of Loan: $                                    (If LIBOR Loan, minimum of $500,000.00)

 

1.3           LIBORLoan- Effective Date of Interest Period:                                                 ,20      

 

1.4           LIBORLoan - Interest Period:             month(s) (1, 2, 3, 6, 9 or 12 months only)

 

**2.****                                      Conversionto LIBOR Loan.**  Borrower requestsconversion of the outstanding Prime Loan to a LIBOR Loan.

 

2.1           EffectiveDate of Conversion:                                                  ,20      

 

2.2           PrincipalAmount of Conversion: $                                          [minimum of $500,000.00]

 

2.3           InterestPeriod:                 month(s) [1, 2, 3, 6, 9 or 12 months only]

 

**3.   Renewal ofLIBOR Loan.**  Borrower requestsrenewing an outstanding LIBOR Loan as follows:

 

3.1           Principal Amount ofRenewal of LIBOR Loan: $                                      [minimum of $500,000.00]**(Amount ofLIBOR Loan not renewed as a LIBOR Loan will be a Prime Loan)

 

3.2           Dateof Renewal:                                                    ,20       *[last date of currentInterest Period]*

 

3.3           InterestPeriod:                  month(s) [1, 2, 3, 6, 9 or 12 months only]

 

**4.   Conversionto Prime Loan.**  LIBOR Loansshall automatically convert to a Prime Loan at the end of an Interest Period ifCNB fails to timely receive a Notice for an outstanding LIBOR Loan.

 

**5.   Warranty.**  In connection with the action requestedherein, Borrower hereby represents and warrants to CNB that, as of the date ofsuch request, no Event of Default has occurred and is continuing.

 

ThisNotice is executed on                                               ,20            .

 

**SM&A,**aCalifornia corporation

 

 
| By:                             |   |   |
|---------------------------------|--------|--------|
| Steven  S. Myers, COB/President |
|                            |
|                            |
| By:                             |   |   |
| Cathy  L. Wood, CFO/Secretary   |

 

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