EXHIBIT 10.30
[UNION BANK OF CALIFORNIA LOGO]
SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") is made and
entered into as of September 22, 2003 by and between Sparta, Inc., a Delaware
corporation ("Borrower"), and UNION BANK OF CALIFORNIA, N.A. ("Bank"). This
Agreement amends and restates in its entirety that certain loan agreement dated
as of September 9, 1999 by and between Borrower and Bank, as amended.
SECTION 1. THE LOAN
1.1 THE REVOLVING LOAN. Bank will loan to
Borrower an amount not to exceed Six Million Dollars ($6,000,000) outstanding in
the aggregate at any one time (the "Revolving Loan"). Borrower may borrow, repay
and reborrow all or part of the Revolving Loan in accordance with the terms of
the Revolving Note. All borrowings of the Revolving Loan must be made before
July 1, 2005 at which time all unpaid principal and interest of the Revolving
Loan shall be due and payable. The Revolving Loan shall be evidenced by a
promissory note (the "Revolving Note") on the standard form used by Bank for
commercial loans. Bank shall enter each amount borrowed and repaid in Bank's
records and such entries shall be deemed to be the amount of the Revolving Loan
outstanding. Omission of Bank to make any such entries shall not discharge
Borrower of its obligation to repay in full with interest all amounts borrowed.
1.2 TERMINOLOGY.
As used herein the word "Loan" shall mean,
collectively, all the credit facilities described above.
As used herein the word "Note" shall mean,
collectively, all the promissory notes described above.
As used herein, the words "Loan Documents" shall mean
all documents executed in connection with this Agreement.
1.3 PURPOSE OF LOAN. The proceeds of the Revolving Loan
shall be used for working capital and general corporate purposes.
1.4 INTEREST. The unpaid principal balance of the
Revolving Loan shall bear interest at the rate or rates provided in the
Revolving Note and selected by Borrower. The Revolving Loan may be prepaid in
full or in part only in accordance with the terms of the Revolving Note and any
such prepayment shall be subject to the prepayment fee provided for therein.
1.5 UNUSED COMMITMENT FEE. Commencing on September 30,
2003 and on the last calendar day of each three month period thereafter, or the
earlier termination of the Loan, Borrower shall pay to Bank a fee of one eighth
of one percent (.125%) per year on the average unused portion of the Loan for
the preceding quarter computed on the basis of actual days elapsed of a year of
360 days.
1.6 DOCUMENTATION FEE. On or before the date of execution
of this Agreement, Borrower shall pay to Bank a documentation fee of Five
Hundred Dollars ($500.00).
1.7 BALANCES. Borrower shall maintain its major
depository accounts with Bank until the Note and all sums payable pursuant to
this Agreement have been paid in full.
1.8 DISBURSEMENT. Upon execution hereof, Bank shall
disburse the proceeds of the Loan as provided in Bank's standard form
Authorization executed by Borrower.
1.9 SECURITY. Prior to any disbursement of the Loan,
Borrower shall have executed a security agreement, on Bank's standard form, and
a financing statement, suitable for filing in the office of the Secretary of
State of the State of Delaware and any other state designated by Bank, granting
to Bank a first priority security interest in such of Borrower's property as is
described in said security agreement. Exceptions to Bank's first priority, if
any, are permitted only as otherwise provided in this Agreement. At Bank's
request, Borrower will also obtain executed landlord's and mortgagee's waivers
on Bank's form covering all of Borrower's property located on leased or
encumbered real property.
1.10 CONTROLLING DOCUMENT. In the event of any
inconsistency between the terms of this Agreement and any Note or any of the
other Loan Documents, the terms of such Note or other Loan Documents will
prevail over the terms of this Agreement.
SECTION 2. CONDITIONS PRECEDENT
Bank shall not be obligated to disburse all or any portion of the
proceeds of the Loan unless at or prior to the time for the making of such
disbursement, the following conditions have been fulfilled to Bank's
satisfaction:
2.1 COMPLIANCE. Borrower shall have performed and
complied with all terms and conditions required by this Agreement to be
performed or complied with by it prior to or at the date of the making of such
disbursement and shall have executed and delivered to Bank the Note and other
documents deemed necessary by Bank.
2.2 BORROWING RESOLUTION. Borrower shall have provided
Bank with copies of resolutions duly adopted by the Board of Directors of
Borrower, authorizing this Agreement and the Loan Documents. Such resolutions
shall also designate the persons who are authorized to act on Borrower's behalf
in connection with this Agreement and to do the things required of Borrower
pursuant to this Agreement.
2.3 SUBORDINATION AGREEMENTS. Bank shall have received
such subordination agreements, in form and substance satisfactory to Bank, as
shall be necessary for Borrower to achieve and maintain compliance with the
provisions of Section 5.7 hereof.
2.4 CONTINUING COMPLIANCE. At the time any disbursement
is to be made, there shall not exist any event, condition or act which
constitutes an event of default under Section 6 hereof or any event, condition
or act which with notice, lapse of time or both would constitute such event of
default; nor shall there be any such event, condition, or act immediately after
the disbursement were it to be made.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
3.1 BUSINESS ACTIVITY. The principal business of Borrower
is the analysis and design of systems for national defense programs.
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3.2 AFFILIATES AND SUBSIDIARIES. Borrower's affiliates
and subsidiaries (those entities in which Borrower has either a controlling
interest or at least a 25% ownership interest) and their addresses, and the
names of Borrower's principal shareholders, are as provided on a schedule
delivered to Bank on or before the date of this Agreement.
3.3 AUTHORITY TO BORROW. The execution, delivery and
performance of this Agreement, the Note and all other agreements and instruments
required by Bank in connection with the Loan are not in contravention of any of
the terms of any indenture, agreement or undertaking to which Borrower is a
party or by which it or any of its property is bound or affected.
3.4 FINANCIAL STATEMENTS. The financial statements of
Borrower, including both a balance sheet at December 31, 2002, together with
supporting schedules, and an income statement for the twelve (12) months ended
December 31, 2002 have heretofore been furnished to Bank, and are true and
complete and fairly represent the financial condition of Borrower during the
period covered thereby. Since December 31, 2002, there has been no material
adverse change in the financial condition or operations of Borrower.
3.5 TITLE. Except for assets which may have been disposed
of in the ordinary course of business, Borrower has good and marketable title to
all of the property reflected in its financial statements delivered to Bank and
to all property acquired by Borrower since the date of said financial
statements, free and clear of all liens, encumbrances, security interests and
adverse claims except those specifically referred to in said financial
statements.
3.6 LITIGATION. There is no litigation or proceeding
pending or threatened against Borrower or any of its property which is
reasonably likely to affect the financial condition, property or business of
Borrower in a materially adverse manner or result in liability in excess of
Borrower's insurance coverage.
3.7 DEFAULT. Borrower is not now in default in the
payment of any of its material obligations, and there exists no event, condition
or act which constitutes an event of default under Section 6 hereof and no
condition, event or act which with notice or lapse of time, or both, would
constitute an event of default.
3.8 ORGANIZATION. Borrower is duly organized and existing
under the laws of the state of its organization, and has the power and authority
to carry on the business in which it is engaged and/or proposes to engage.
3.9 POWER. Borrower has the power and authority to enter
into this Agreement and to execute and deliver the Note and all of the other
Loan Documents.
3.10 AUTHORIZATION. This Agreement and all things required
by this Agreement have been duly authorized by all requisite action of Borrower.
3.11 QUALIFICATION. Borrower is duly qualified and in good
standing in any jurisdiction where such qualification is required.
3.12 COMPLIANCE WITH LAWS. Borrower is not in violation
with respect to any applicable laws, rules, ordinances or regulations which
materially affect the operations or financial condition of Borrower.
3.13 ERISA. Any defined benefit pension plans as defined
in the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), of
Borrower meet, as of the date hereof, the minimum funding standards of Section
302 of ERISA, and no Reportable Event or Prohibited Transaction as defined in
ERISA has occurred with respect to any such plan.
3.14 REGULATION U. No action has been taken or is
currently planned by Borrower, or any agent acting on its behalf, which would
cause this Agreement or the Note to violate Regulation U or any other regulation
of the Board of Governors of the Federal Reserve
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System or to violate the Securities and Exchange Act of 1934, in each case as in
effect now or as the same may hereafter be in effect. Borrower is not engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock as one of its important activities and none of the proceeds of the
Loan will be used directly or indirectly for such purpose.
3.15 CONTINUING REPRESENTATIONS. These representations
shall be considered to have been made again at and as of the date of each
disbursement of the Loan and shall be true and correct as of such date or dates.
SECTION 4. AFFIRMATIVE COVENANTS
Until the Note and all sums payable pursuant to this Agreement or any
other of the Loan Documents have been paid in full, unless Bank waives
compliance in writing, Borrower agrees that:
4.1 USE OF PROCEEDS. Borrower will use the proceeds of
the Loan only as provided in subsection 1.3 above.
4.2 PAYMENT OF OBLIGATIONS. Borrower will pay and
discharge promptly all taxes, assessments and other governmental charges and
claims levied or imposed upon it or its property, or any part thereof, provided,
however, that Borrower shall have the right in good faith to contest any such
taxes, assessments, charges or claims and, pending the outcome of such contest,
to delay or refuse payment thereof provided that adequately funded reserves are
established by it to pay and discharge any such taxes, assessments, charges and
claims.
4.3 MAINTENANCE OF EXISTENCE. Borrower will maintain and
preserve its existence and assets and all rights, franchises, licenses and other
authority necessary for the conduct of its business and will maintain and
preserve its property, equipment and facilities in good order, condition and
repair. Bank may, at reasonable times, visit and inspect any of the properties
of Borrower.
4.4 RECORDS. Borrower will keep and maintain full and
accurate accounts and records of its operations according to generally accepted
accounting principles and will permit Bank to have access thereto, to make
examination and photocopies thereof, and to make audits during regular business
hours. Costs for such audits shall be paid by Borrower.
4.5 INFORMATION FURNISHED. Borrower will furnish to Bank:
(a) Within sixty (60) days after the close of
each fiscal quarter, except for the final quarter of each fiscal year, its
unaudited balance sheet as of the close of such fiscal quarter, its unaudited
income and expense statement with supportive schedules and statement of retained
earnings for that fiscal quarter, prepared in accordance with generally accepted
accounting principles;
(b) Within one hundred and twenty (120) days
after the close of each fiscal year, a copy of its statement of financial
condition including at least its balance sheet as of the close of such fiscal
year, its income and expense statement and retained earnings statement for such
fiscal year, examined and prepared on an audited basis by independent certified
public accountants selected by Borrower and reasonably satisfactory to Bank, in
accordance with generally accepted accounting principles applied on a basis
consistent with that of the previous year;
(c) As soon as available, copies of such
financial statements and reports as Borrower may file with any state or federal
agency;
(d) Such other financial statements and
information as Bank may reasonably request from time to time;
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(e) In connection with each fiscal year-end
statement required hereunder, any management letter of Borrower's certified
public accountants;
(f) Prompt written notice to Bank of all events
of default under any of the terms or provisions of this Agreement or of any
other agreement, contract, document or instrument entered, or to be entered into
with Bank; and of any litigation which, if decided adversely to Borrower, would
have a material adverse effect on Borrower's financial condition; and of any
other matter which has resulted in, or is likely to result in, a material
adverse change in its financial condition or operations; and
(g) Prior written notice to Bank of any changes
in Borrower's officers and other senior management; Borrower's name; and
location of Borrower's assets, principal place of business or chief executive
office.
4.6 CURRENT RATIO. Borrower will at all times maintain a
ratio of current assets to current liabilities of at least 1.25:1.0, as such
terms are defined by generally accepted accounting principles except that, for
the purposes of this calculation, any amounts borrower under the Revolving Loan
shall be considered a current liability.
4.7 TANGIBLE NET WORTH. Borrower will at all times
maintain Tangible Net Worth of not less than Thirty Three Million Dollars
($33,000,000). "Tangible Net Worth" shall mean net worth increased by
indebtedness of Borrower subordinated to Bank and decreased by patents,
licenses, trademarks, trade names, goodwill and other similar intangible assets,
organizational expenses, and monies due from affiliates (including officers,
shareholders and directors).
4.8 DEBT TO TANGIBLE NET WORTH. Borrower will at all
times maintain a ratio of total liabilities to tangible net worth of not greater
than 2.00:1.00. "Tangible Net Worth" shall mean net worth increased by
indebtedness of Borrower subordinated to Bank and decreased by patents,
licenses, trademarks, trade names, goodwill and other similar intangible assets,
organizational expenses, and monies due from affiliates (including officers,
shareholders and directors).
4.9 FIXED CHARGE COVERAGE RATIO. Borrower will maintain a
ratio of EBITDAR to Debt Service of not less than 1.50:1.0 as of the close of
each fiscal quarter. "EBITDAR" means earnings before interest, taxes, rent,
depreciation, amortization and other non-cash expense including stock based
compensation for the 12 months immediately preceding the date of calculation.
"Debt Service" means the sum of the principal portion of term obligations which
came due during the twelve (12) months preceding the date of calculation plus
interest expense plus rent expense made during the twelve (12) months preceding
the date of calculation.
4.10 INSURANCE. Borrower will keep all of its insurable
property, real, personal or mixed, insured by good and responsible companies
against fire and such other risks as are customarily insured against by
companies conducting similar business with respect to like properties. Borrower
will maintain adequate worker's compensation insurance and adequate insurance
against liability for damages to persons and property.
4.11 ADDITIONAL REQUIREMENTS. Borrower will promptly, upon
demand by Bank, take such further action and execute all such additional
documents and instruments in connection with this Agreement as Bank in its
reasonable discretion deems necessary, and promptly supply Bank with such other
information concerning its affairs as Bank may request from time to time.
4.12 LITIGATION AND ATTORNEYS' FEES. Borrower will pay
promptly to Bank upon demand, reasonable attorneys' fees (including but not
limited to the reasonable estimate of the allocated costs and expenses of
in-house legal counsel and legal staff) and all costs and other expenses paid or
incurred by Bank in collecting, modifying or compromising the Loan or in
enforcing or exercising its rights or remedies created by, connected with or
provided for in this
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Agreement or any of the Loan Documents, whether or not an arbitration, judicial
action or other proceeding is commenced. If such proceeding is commenced, only
the prevailing party shall be entitled to attorneys' fees and court costs.
4.13 BANK EXPENSES. Borrower will pay or reimburse Bank
for all costs, expenses and fees incurred by Bank in preparing and documenting
this Agreement and the Loan, and all amendments and modifications thereof,
including but not limited to all filing and recording fees, costs of appraisals,
insurance and attorneys' fees, including the reasonable estimate of the
allocated costs and expenses of in-house legal counsel and legal staff.
4.14 REPORTS UNDER PENSION PLANS. Borrower will furnish to
Bank, as soon as possible and in any event within 15 days after Borrower knows
or has reason to know that any event or condition with respect to any defined
benefit pension plans of Borrower described in Section 3 above has occurred, a
statement of an authorized officer of Borrower describing such event or
condition and the action, if any, which Borrower proposes to take with respect
thereto.
SECTION 5. NEGATIVE COVENANTS
Until the Note and all other sums payable pursuant to this Agreement or
any other of the Loan Documents have been paid in full, unless Bank waives
compliance in writing, Borrower agrees that:
5.1 ENCUMBRANCES AND LIENS. Borrower will not create,
assume or suffer to exist any mortgage, pledge, security interest, encumbrance,
or lien (other than for taxes not delinquent and for taxes and other items being
contested in good faith) on property of any kind, whether real, personal or
mixed, now owned or hereafter acquired, or upon the income or profits thereof,
except to Bank and except for minor encumbrances and easements on real property
which do not affect its market value, and except for existing liens on
Borrower's personal property and future purchase money security interests
encumbering only the personal property purchased.
5.2 BORROWINGS. Borrower will not sell, discount or
otherwise transfer any account receivable or any note, draft or other evidence
of indebtedness, except to Bank or except to a financial institution at face
value for deposit or collection purposes only and without any fee other than
fees normally charged by the financial institution for deposit or collection
services. Borrower will not borrow any money, become contingently liable to
borrow money, nor enter any agreement to directly or indirectly obtain borrowed
money, except (a) pursuant to agreements made with Bank, and (b) indebtedness
incurred for the purpose of purchasing stock from current or former employees
provided, however, that payments arising from such obligations do not exceed
Borrower's quarterly stock repurchase limitation.
5.3 SALE OF ASSETS, LIQUIDATION OR MERGER. Borrower will
neither liquidate nor dissolve nor enter into any consolidation, merger,
partnership or other combination, nor convey, nor sell, nor lease all or the
greater part of its assets or business, nor purchase or lease all or the greater
part of the assets or business of another in excess of $2,000,000 without Bank's
written consent.
5.4 LOANS, ADVANCES AND GUARANTIES. Borrower will not,
except in the ordinary course of business as currently conducted, make any loans
or advances, become a guarantor or surety, pledge its credit or properties in
any manner or extend credit, except as allowed by Borrower's Stock Option Plan
or loans extended to current employees not to exceed Twenty Thousand Dollars
($20,000) per employee.
5.5 INVESTMENTS. Borrower will not purchase the debt or
equity of another person or entity except for savings accounts and certificates
of deposit of Bank, direct U.S. Government obligations and commercial paper
issued by corporations with the top ratings of Moody's or Standard & Poor's,
provided all such permitted investments shall mature within one year of
purchase.
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5.6 PAYMENT OF DIVIDENDS. Borrower will not declare or
pay any dividends, other than a dividend payable in its own common stock, or
authorize or make any other distribution with respect to any of its stock now or
hereafter outstanding.
5.7 SUBORDINATION OF CERTAIN INDEBTEDNESS. Not at any
time permit the aggregate principal amount outstanding under all promissory
notes issued by Borrower to all former employees of Borrower and other persons
in full or partial consideration for Borrower's repurchase of shares of stock in
Borrower from such former employees and other persons to exceed Four Million
Dollars ($4,000,000) unless all such amounts in excess of Four Million Dollars
($4,000,000) are subordinated to all obligations now or hereafter owed by
Borrower to Bank pursuant to subordination agreements in form and substance
satisfactory to Bank. Bank hereby acknowledges and agrees, however, that each of
such subordination agreements shall permit Borrower to make, and shall permit
the payee of the promissory note(s) subordinated thereby to receive, regularly
scheduled payments of principal and interest under such promissory note(s) so
long as Borrower has made each and every payment of principal and interest due
and owing to Bank and is not in default under any of its agreements with Bank.
SECTION 6. EVENTS OF DEFAULT
The occurrence of any of the following events ("Events of Default")
shall terminate any obligation on the part of Bank to make or continue the Loan
and automatically, unless otherwise provided under the Note, shall make all sums
of interest and principal and any other amounts owing under the Loan immediately
due and payable, without notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor, or any other notices or demands:
6.1 Borrower shall default in the due and punctual
payment of the principal of or the interest on the Note or any of the other Loan
Documents; or
6.2 Any default shall occur under the Note; or
6.3 Borrower shall default in the due performance or
observance of any covenant or condition of the Loan Documents; or
6.4 Any guaranty or subordination agreement required
hereunder is breached or becomes ineffective, or subordinating creditor dies,
disavows or attempts to revoke or terminate such guaranty or subordination
agreement; or
6.5 There is a change in ownership or control of ten
percent (10%) or more of the issued and outstanding stock of Borrower.
SECTION 7. MISCELLANEOUS PROVISIONS
7.1 ADDITIONAL REMEDIES. The rights, powers and remedies
given to Bank hereunder shall be cumulative and not alternative and shall be in
addition to all rights, powers and remedies given to Bank by law against
Borrower or any other person, including but not limited to Bank's rights of
setoff or banker's lien.
7.2 NONWAIVER. Any forbearance or failure or delay by
Bank in exercising any right, power or remedy hereunder shall not be deemed a
waiver thereof and any single or partial exercise of any right, power or remedy
shall not preclude the further exercise thereof. No waiver shall be effective
unless it is in writing and signed by an officer of Bank.
7.3 INUREMENT. The benefits of this Agreement shall inure
to the successors and assigns of Bank and the permitted successors and assignees
of Borrower, and any assignment by Borrower without Bank's consent shall be null
and void.
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7.4 APPLICABLE LAW. This Agreement and all other
agreements and instruments required by Bank in connection therewith shall be
governed by and construed according to the laws of the State of California.
7.5 SEVERABILITY. Should any one or more provisions of
this Agreement be determined to be illegal or unenforceable, all other
provisions nevertheless shall be effective. In the event of any conflict between
the provisions of this Agreement and the provisions of any note or reimbursement
agreement evidencing any indebtedness hereunder, the provisions of such note or
reimbursement agreement shall prevail.
7.6 INTEGRATION CLAUSE. Except for documents and
instruments specifically referenced herein, this Agreement constitutes the
entire agreement between Bank and Borrower regarding the Loan and all prior
communications verbal or written between Borrower and Bank shall be of no
further effect or evidentiary value.
7.7 CONSTRUCTION. The section and subsection headings
herein are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
7.8 AMENDMENTS. This Agreement may be amended only in
writing signed by all parties hereto.
7.9 COUNTERPARTS. Borrower and Bank may execute one or
more counterparts to this Agreement, each of which shall be deemed an original,
but when together shall be one and the same instrument.
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SECTION 8. SERVICE OF NOTICES
8.1 Any notices or other communications provided for or
allowed hereunder shall be effective only when given by one of the following
methods and addressed to the respective party at its address given with the
signatures at the end of this Agreement and shall be considered to have been
validly given: (a) upon delivery, if delivered personally; (b) upon receipt, if
mailed, first class postage prepaid, with the United States Postal Service; (c)
on the next business day, if sent by overnight courier service of recognized
standing; and (d) upon telephoned confirmation of receipt, if telecopied.
8.2 The addresses to which notices or demands are to be
given may be changed from time to time by notice delivered as provided above.
THIS AGREEMENT is executed on behalf of the parties by duly authorized
officers as of the date first above written.
UNION BANK OF CALIFORNIA, N.A. SPARTA, INC.
By: /s/ Xxx Xxxx By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxx Xxxx Name: Xxxxxx X. Xxxxxxx
Title: Vice President Title: President
By: /s/ Xxxxx X. Xxxxxxxxx
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Address: 18300 Von Karman Name: Xxxxx X. Xxxxxxxxx
Suite 310 Title: Vice President
Xxxxxx, XX 00000
Address: 0000 X. Xxxx Xxxx Dr.
Attention: Xxx Xxxx,VP Suite 1100
Telecopier: (000) 000-0000 Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, CFO
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
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