Exhibit 10.3

 

SECURITY AGREEMENT

 

Immediately Restricted Wells Fargo Bank, National Association Deposit Account

 

1.                                      GRANT OF SECURITY INTEREST.  For
valuable consideration, the undersigned WILLDAN GROUP, INC. (“Debtor”) pledges
and assigns to WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) a security
interest in, all of Debtor’s right title and interest in and to Account number
4968099630 at Wells Fargo Bank, National Association (whether held in Debtor’s
name or as a Bank collateral account for the benefit of Debtor, any sub-account
thereunder or consolidated therewith, and all renewals, replacements or
substitutions therefore, including any account resulting from a renumbering or
other administrative re-identification thereof (the “Account”), all amounts from
time to time on deposit in the Account and all interest, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the foregoing (collectively, the
“Collateral”).

 

2.                                      OBLIGATIONS SECURED.  The obligations
secured hereby are the payment and performance of (a) all present and future
obligations of Debtor to Bank under that certain Credit Agreement dated as of
January 1, 2012, as may be amended from time to time, entered into by Debtor and
Bank, (the “Loan Document”) whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined and whether recovery may
be or hereafter become unenforceable; and (b) all present and future obligations
of Debtor and rights of Bank under this Agreement and (c) all present and future
Indebtedness of Debtor to Bank (collectively, the “Secured Obligations”).  The
word “Indebtedness” is used herein in its most comprehensive sense and includes
any and all advances, debts, obligations and liabilities of Debtor, or any of
them, heretofore, now or hereafter made, incurred or created, whether voluntary
or involuntary and however arising, whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, and whether
Debtor may be liable individually or jointly, or whether recovery upon such
Indebtedness may be or hereafter becomes unenforceable.

 

3.                                      CONTROL OF THE ACCOUNT.  As of and after
the date of this Agreement, Debtor may not make debits to or withdrawals from
the Account and Debtor shall have no access to the Account or to funds at any
time on deposit in the Account.  Bank shall have the exclusive access to the
Account and to funds at any time on deposit in the Account.

 

4.                                      TERMINATION.  This Agreement will
terminate upon the performance in full of all Secured Obligations, including
without limitation, the payment of all Indebtedness of Debtor to Bank, and the
termination of all commitments of Bank to extend credit to Debtor.

 

5.                                      OBLIGATIONS OF BANK.  Bank has no
obligation to make any loans hereunder.

 

6.                                      REPRESENTATIONS AND WARRANTIES.  Debtor
represents and warrants to Bank that:  (a) Debtor’s legal name is exactly as set
forth on the first page of this Agreement; (b) Debtor is the owner and has
possession or control of the Collateral; (c) Debtor has the exclusive right to
grant a security interest in the Collateral; (d) all Collateral is genuine, free
from liens, adverse claims, setoffs, default, prepayment, defenses and
conditions precedent of any kind or character, except the lien created hereby or
as otherwise agreed to by Bank; (e) all statements contained herein and, where
applicable, in the Collateral are true and complete in all material respects;
(f) no financing statement covering any of the Collateral, and naming any
secured party other than Bank, is on file in any public office; (g) all persons
appearing to be obligated on Collateral have authority and capacity to contract
and are bound as they appear to be; and (h) all Collateral complies with all
applicable laws concerning form, content and manner of preparation and
execution.

 

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7.                                      COVENANTS OF DEBTOR.

 

(a)                                 Debtor agrees in general: (i) to pay the
Secured Obligations when due; (ii) to pay all costs and expenses, including
reasonable attorneys’ fees (to include outside counsel fees and all allocated
costs of Bank’s in-house counsel), incurred by Bank in the maintenance of the
Account, the perfection and preservation of the Collateral or Bank’s interest
therein, and/or the realization, enforcement and exercise of Bank’s rights,
powers and remedies hereunder; (iii) to permit Bank to exercise its powers;
(iv) to execute and deliver such documents as Bank deems necessary to create,
perfect and continue the security interests contemplated hereby; (v) not to
change its name or the jurisdiction in which it is organized and/or registered
without giving Bank prior written notice thereof; (vi) to cooperate with Bank in
perfecting all security interests granted herein and in obtaining such
agreements from third parties as Bank deems necessary, proper or convenient in
connection with the preservation, perfection or enforcement of any of its rights
hereunder; and (vii) to indemnify Bank against all losses, claims, demands,
liabilities and expenses of every kind caused by or incurred in connection with
the Collateral.

 

(b)                                 Debtor agrees with regard to the Collateral,
unless Bank agrees otherwise in writing: (i) not to permit any lien on the
Collateral, except in favor of Bank; (ii) not to sell, hypothecate or otherwise
dispose of, nor permit the transfer by operation of law of, any of the
Collateral or any interest therein, nor withdraw any funds from the Account;
(iii) to provide any service and do any other acts which may be necessary to
keep the Collateral and the Account free and clear of all defenses, rights of
offset and counterclaims; and (iv) in the event Bank elects to receive payments
of Collateral, to pay all expenses incurred by Bank in connection therewith,
including expenses of accounting, correspondence, collection efforts, reporting
to account or contract debtors, filing, recording, record keeping  and expenses
incidental thereto.

 

8.                                      POWERS OF BANK.  Debtor appoints Bank
its true attorney in fact to perform any of the following powers, which are
coupled with an interest, are irrevocable until termination of this Agreement
and may be exercised from time to time by Bank’s officers and employees, or any
of them (a) whether or not Debtor is in default, to make debits to or
withdrawals from the Account in accordance with the Loan Document or this
Agreement; (b) following the occurrence of an Event of Default, to perform any
obligation of Debtor hereunder in Debtor’s name or otherwise; and (c) to do all
acts and things and execute all documents in the name of Debtor or otherwise,
deemed by Bank as necessary, proper and convenient in connection with the
preservation, perfection or enforcement of its rights hereunder.

 

9.                                      EVENTS OF DEFAULT.  The occurrence of
any of the following shall constitute an “Event of Default” under this
Agreement: (a) any default in the payment or performance of any obligation, or
any defined event of default, under the Loan Document or any contract or
instrument evidencing, relating to or executed in connection with the Secured
Obligations; (b) any representation or warranty made by Debtor herein shall
prove to be incorrect, false or misleading in any material respect when made;
(c) Debtor shall fail to observe or perform any obligation or agreement
contained herein; and (d) any impairment of the rights of Bank in any
Collateral.

 

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10.                               REMEDIES.  Upon the occurrence of any Event of
Default, Bank shall have all rights, powers, privileges and remedies granted to
a secured party upon default under the California Uniform Commercial Code or
otherwise provided by law.  All rights, powers, privileges and remedies of Bank
shall be cumulative.  No delay, failure or discontinuance of Bank in exercising
any right, power, privilege or remedy hereunder shall affect or operate as a
waiver of such right, power, privilege or remedy; nor shall any single or
partial exercise of any such right, power, privilege or remedy preclude, waive
or otherwise affect any other or further exercise thereof or the exercise of any
other right, power, privilege or remedy.  Any waiver, permit, consent or
approval of any kind by Bank of any default hereunder, or any such waiver of any
provisions or conditions hereof, must be in writing and shall be effective only
to the extent set forth in writing.  While an Event of Default exists:
(a) Debtor will not dispose of any Collateral except on terms approved by Bank
and (b) Bank may, at any time and at Bank’s sole option, liquidate the
Collateral and apply the proceeds thereof to payment of the Secured Obligations,
whether or not deposits have matured and notwithstanding the fact that such
liquidation may give rise to penalties for early withdrawal of funds.

 

11.                               DISPOSITION OF COLLATERAL AND PROCEEDS;
TRANSFER OF SECURED OBLIGATIONS.  In disposing of Collateral hereunder, any
proceeds of any disposition of Collateral or any part thereof, may be applied by
Bank to the payment of expenses incurred by Bank in connection with the
foregoing, including reasonable attorneys’ fees (to include outside counsel fees
and all allocated costs of Bank’s in-house counsel), and the balance of such
proceeds may be applied by Bank toward the payment of the Secured Obligations in
such order of application as Bank may from time to time elect.  Upon the
transfer of all or any part of the Secured Obligations, Bank may transfer all or
any part of the Collateral and shall be fully discharged thereafter from all
liability and responsibility with respect to any of the foregoing so
transferred, and the transferee shall be vested with all rights and powers of
Bank hereunder with respect to any of the foregoing so transferred; but with
respect to any Collateral not so transferred Bank shall retain all rights,
powers, privileges and remedies herein given.

 

12.                               STATUTE OF LIMITATIONS.  Until all Secured
Obligations shall have been paid in full and all commitments by Bank to extend
credit to Debtor have been terminated, the power of sale or other disposition
and all other rights, powers, privileges and remedies granted to Bank hereunder
shall continue to exist and may be exercised by Bank at any time and from time
to time irrespective of the fact that the Secured Obligations or any part
thereof may have become barred by any statute of limitations, or that the
personal liability of Debtor may have ceased, unless such liability shall have
ceased due to the payment in full of all Secured Obligations.

 

13.                               PAYMENT OF CHARGES, LIENS AND ASSESSMENTS. 
Debtor agrees to pay, prior to delinquency, all charges, liens and assessments
against the Collateral and the Account, and upon the failure of Debtor to do so,
Bank at its option may pay any of them and shall be the sole judge of the
legality or validity thereof and the amount necessary to discharge the same. 
Any such payments made by Bank shall be obligations of Debtor to Bank, due and
payable immediately upon demand, together with interest at a rate determined in
accordance with the provisions of this Agreement, and shall be secured by the
Collateral, subject to all terms and conditions of this Agreement.

 

14.                               MISCELLANEOUS.  When there is more than one
Debtor named herein:  (a) the word “Debtor” shall mean all or any one or more of
them as the context requires; (b) the obligations of each Debtor hereunder are
joint and several; and (c) until all Secured Obligations shall have been paid in
full, no Debtor shall have any right of subrogation or contribution, and

 

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each Debtor hereby waives any benefit of or right to participate in any of the
Collateral or any other security now or hereafter held by Bank.  Debtor hereby
waives any right to require Bank to (i) proceed against Debtor or any other
person, (ii) proceed against or exhaust any security from Debtor or any other
person, (iii) perform any obligation of Debtor with respect to any Collateral,
and (iv) make any presentment or demand, or give any notice of nonpayment or
nonperformance, protest, notice of protest or notice of dishonor hereunder or in
connection with any Collateral.  Debtor further waives any right to direct the
application of payments or security for any Secured Obligations.

 

15.                               NOTICES.  All notices, requests and demands
required under this Agreement must be in writing, addressed to Bank at the
address specified in any other loan documents entered into between Debtor and
Bank and to Debtor at the address of its chief executive office (or principal
residence, if applicable) specified below or to such other address as any party
may designate by written notice to each other party, and shall be deemed to have
been given or made as follows: (a) if personally delivered, upon delivery;
(b) if sent by mail, upon the earlier of the date of receipt or three (3) days
after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent
by telecopy, upon receipt.

 

16.                               COSTS, EXPENSES AND ATTORNEYS’ FEES.  Debtor
shall pay to Bank immediately upon demand the full amount of all payments,
advances, charges, costs and expenses, including reasonable attorneys’ fees (to
include outside counsel fees and all allocated costs of Bank’s in-house
counsel), expended or incurred by Bank in exercising any right, power, privilege
or remedy conferred by this Agreement or in the enforcement thereof, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Debtor or in any way affecting any of the Collateral or Bank’s ability to
exercise any of its rights or remedies with respect thereto.  All of the
foregoing shall be paid by Debtor with interest from the date of demand until
paid in full at a rate per annum equal to the greater of 10 percent or Bank’s
Prime Rate in effect from time to time.

 

17.                               INDEMNIFICATION.  Debtor shall indemnify,
defend, and hold Bank and its officers, directors, agents, partners, members,
controlling entities, and employees, (collectively, “Bank Indemnities”) harmless
from and against any liability, claim, cost, loss, judgment, damage or expense
(including reasonable attorneys’ fees and expenses) that Bank Indemnities incur
or suffer as a result of or arising out this Agreement.

 

18.                               SUCCESSORS; ASSIGNS; AMENDMENT.  This
Agreement shall be binding upon and inure to the benefit of the heirs,
executors, administrators, legal representatives, successors and assigns of the
parties, and may be amended or modified only in writing signed by Bank and
Debtor, provided, however, that Debtor’s rights and obligations hereunder may
not be assigned or delegated by Debtor without the prior written consent of
Bank.

 

19.                               SEVERABILITY OF PROVISIONS.  If any provision
of this Agreement shall be held to be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or any
remaining provisions of this Agreement.

 

20.                               GOVERNING LAW.  This Agreement shall be
governed by and construed in accordance with the laws of the State of
California.

 

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21.                               OBLIGATIONS OF MARRIED PERSONS.  Any married
person who signs this Agreement as Debtor hereby expressly agrees that recourse
may be had against his or her separate property for all his or her Indebtedness
to Bank secured by the Collateral under this Agreement. Debtor warrants that
Debtor is an organization registered under the laws of the State of California.

 

Debtor warrants that its chief executive office (or principal residence, if
applicable) is located at the following address:  2401 E Katella Avenue,
Suite 300, Anaheim, California 92806.

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of April 1, 2013.

 

WILLDAN GROUP, INC.

 

 

 

By:

/s/ Kimberly D. Gant

 

 

Kimberly D. Gant

 

 

Senior Vice President/Chief Financial Officer

 

 

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

 

 

 

 

By:

/s/ Razia Damji

 

 

Razia Damji, Vice President

 

 

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