Exhibit 10.2

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Orange County
BUSINESS BANK

 

PROMISSORY NOTE

Principal

 

Loan Date

 

Maturity

 

Loan No

 

Call/Coll

 

Account

 

Officer

 

Initials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$8,000,000.00

 

01-31-2007

 

07-31-2007

 

10176244

 

4A/430

 

 

 

NG1

 

/s/ NJG

 

References in the shaded area are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item.

Any item above containing “***” has been omitted due to text length limitations.

Borrower:

 

Willdan Group, Inc.

 

Lender:

 

Orange County Business Bank

 

 

 

2401 East Katella Avenue, Suite 300

 

 

 

Main Office

 

 

Anaheim, CA 92806

 

 

 

4675 MacArthur Court

 

 

 

 

 

 

Suite 100

 

 

 

 

 

 

Newport Beach, CA 92660

 

Principal Amount: $8,000,000.00

Initial Rate: 8.500%

Date of Note: January 31, 2007

 

PROMISE TO PAY. Willdan Group, Inc. (“Borrower”) promises to pay to Orange
County Business Bank (“Lender”), or order, in lawful money of the United States
of America, the principal amount of Eight Million & 00/100 Dollars
($8,000,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan in full immediately upon Lender’s demand.
If no demand is made, Borrower will pay this loan in one payment of all
outstanding principal plus all accrued unpaid interest on July 31, 2007. In
addition, Borrower will pay regular monthly payments of all accrued unpaid
interest due as of each payment date, beginning February 28, 2007, with all
subsequent interest payments to be due on the last day of each month after that.
Unless otherwise agreed or required by applicable law, payments will be applied
first to any accrued unpaid interest; then to principal; and then to any late
charges. The annual interest rate for this Note is computed on a 365/360 basis;
that is, by applying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender at
Lender’s address shown above or at such other place as Lender may designate in
writing.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the Wall Street
Journal Prime Rate as quoted in the Western Edition of the Wall Street Journal
(the “Index”). The Index is not necessarily the lowest rate charged by Lender on
its loans. If the Index becomes unavailable during the term of this loan, Lender
may designate a substitute index after notifying Borrower. Lender will tell
Borrower the current Index rate upon Borrower’s request. The interest rate
change will not occur more often than each day. Borrower understands that Lender
may make loans based on other rates as well. The Index currently is 8.250%. The
interest rate to be applied to the unpaid principal balance during this Note
will be at a rate of 0.250 percentage points over the Index, resulting in an
initial rate of 8.500%. NOTICE: Under no circumstances will the interest rate on
this Note be more than the maximum rate allowed by applicable law.

PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of this Note, Borrower understands that Lender is entitled to a
minimum interest charge of $100.00. Other than Borrower’s obligation to pay any
minimum interest charge, Borrower may pay without penalty all or a portion of
the amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower’s obligation to continue
to make payments of accrued unpaid interest. Rather, early payments will reduce
the principal balance due. Borrower agrees not to send Lender payments marked
“paid in full”, “without recourse”, or similar language. If Borrower sends such
a payment, Lender may accept it without losing any of Lender’s rights under this
Note, and Borrower will remain obligated to pay any further amount owed to
Lender. All written communications concerning disputed amounts, including any
check or other payment instrument that indicates that the payment constitutes
“payment in full” of the amount owed or that is tendered with other conditions
or limitations or as full satisfaction of a disputed amount must be mailed or
delivered to: Orange County Business Bank, 4675 MacArthur Court Newport Beach,
CA 92660.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $5.00, whichever is greater.

INTEREST AFTER DEFAULT. Upon default, the interest rate on this Note shall, if
permitted under applicable law, immediately increase by adding a 6.000
percentage point margin (“Default Rate Margin”). The Default Rate Margin shall
also apply to each succeeding interest rate change that would have applied had
there been no default.

DEFAULT. Each of the following shall constitute an event of default (“Event of
Default”) under this Note:

Payment Default. Borrower fails to make any payment when due under this Note
within ten (10) days of due date.

Other Defaults. Borrower fails to comply with or to perform any other material
term, obligation, covenant or condition contained in this Note or in any of the
related documents or to comply with or to perform any term, obligation, covenant
or condition contained in any other agreement between Lender and Borrower within
twenty (20) days of notice from Lender.

False Statements. Any warranty, representation or statement made or furnished to
Lender by Borrower or on Borrower’s behalf under this Note or the related
documents is false or misleading in any material respect, either now or at the
time made or furnished.

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Insolvency. The dissolution or termination of Borrower’s existence as a going
business, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower’s property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the loan. This includes a garnishment of any of
Borrower’s accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to
any Guarantor of any of the indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
guaranty of the indebtedness evidenced by this Note. In the event of a death,
Lender, at its option, may, but shall not be required to, permit the Guarantor’s
estate to assume unconditionally the obligations arising under the guaranty in a
manner satisfactory to Lender, and, in doing so, cure any Event of Default.

Adverse Change. A material adverse change occurs in Borrower’s financial
condition, which causes Lender to believe the prospect of payment or performance
of this Note is impaired.

Cure Provisions. If any default, other than a default in payment is curable and
if Borrower has not been given a notice of a breach of the same provision of
this Note within the preceding twelve (12) months, it may be cured if Borrower,
after receiving written notice from Lender demanding cure of such default: (1)
cures the default within twenty (20) days; or (2) if the cure requires more than
twenty (20) days, immediately initiates steps which Lender deems in Lender’s
sole discretion to be sufficient to cure the default and thereafter continues
and completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.

LENDER’S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance under this Note and all accrued unpaid interest immediately. due, and
then Borrower will pay that amount.

ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay reasonable attorney fees.
This includes, subject to any limits under applicable law, Lender’s attorneys’
fees and Lender’s legal expenses, whether or not there is a lawsuit, including
attorneys’ fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals. Borrower also
will pay any court costs, in addition to all other sums provided by law.

GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of
California without regard to its conflicts of law provisions. This Note has been
accepted by Lender in the State of California.

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender’s request to
submit to the jurisdiction of the courts of Orange County, State of California.

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $45.00 if Borrower
makes a payment on Borrower’s loan and the check or preauthorized charge with
which Borrower pays is later dishonored.

COLLATERAL. Borrower acknowledges this Note is secured by the following
collateral described in the security instrument listed herein: inventory,
chattel paper, accounts, equipment and general intangibles described in a
Commercial Security Agreement dated January 31, 2007.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note, as well as directions for payment from Borrower’s accounts, may be
requested orally or in writing by Borrower or as provided in this paragraph.
Lender may, but need not, require that all oral requests be confirmed in
writing. The following persons currently are authorized, except as provided in
this paragraph, to request advances and authorize payments under the line of
credit until Lender receives from Borrower, at Lender’s address shown above,
written notice of revocation of their authority: Win S. Westfall; Roy L. Gill;
Mallory McCamant; and Kate Mai Nguyen. In addition to requesting advances orally
or in writing, advances may be requested via online banking or loan sweep.
Borrower agrees to be liable for all sums either: (A) advanced in accordance
with the instructions of an authorized person or (B) credited to any of
Borrower’s accounts with Lender. The unpaid principal balance owing on this Note
at any time may be evidenced by endorsements on this Note or by Lender’s
internal records, including daily computer print-outs. Lender will have no
obligation to advance funds under this Note if: (A) Borrower or any guarantor is
in default under the terms of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (B) Borrower or any guarantor ceases doing business or is
insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor’s guarantee of this Note or any other loan with
Lender; or (D) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender.

ADDITIONAL PROVISION.

Two million dollars ($2,000,000.00) of the revolving line of credit can be
converted to two term loans and is subject to the following provisions.

A maximum one million dollars ($1,000,000.00) for expenses incurred to start up
a new division and or business unit of Borrower can be converted to a multiple
advance loan for up to two (2) years. At the end of the multiple advance period,
the total amount advanced up to one million dollars ($1,000,000.00) will be
converted to a fully amortized term loan for a period of up to three (3) years.

A maximum one million dollars ($1,000,000.00) for the acquisition of other
companies can be converted to a fully amortized term loan for a period of up to
three years.

Once the conversion of both term loans has been executed, the amount available
for borrowing hereunder shall be permanently reduced by the total of such
amount.

Once a formula base credit line is in effect, Borrower shall deliver to Lender
as of the end of each month a Borrowing Base Certificate, calculation of
Ineligible Accounts, detailed Accounts Receivable Aging and Accounts Payable
Aging and Work in Process Report within forty five (45) days of each month end.

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SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower’s heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.

NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.
Please notify us if we report any inaccurate information about your account(s)
to a consumer reporting agency. Your written notice describing the specific
inaccuracy(ies) should be sent to us at the following address: Orange County
Business Bank 4675 MacArthur Court, Suite 100 Newport Beach, CA 92660.

GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender’s right to
declare payment of this Note on its demand. If any part of this Note cannot be
enforced, this fact will not affect the rest of the Note. Lender may delay or
forgo enforcing any of its rights or remedies under this Note without losing
them. Borrower and any other person who signs, guarantees or endorses this Note,
to the extent allowed by law, waive any applicable statute of limitations,
presentment, demand for payment, and notice of dishonor. Upon any change in the
terms of this Note, and unless otherwise expressly stated in writing, no party
who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan or release
any party or guarantor or collateral; or impair, fail to realize upon or perfect
Lender’s security interest in the collateral; and take any other action deemed
necessary by Lender without the consent of or notice to anyone. All such parties
also agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER:

WILLDAN GROUP, INC.

 

 

 

 

 

By:

/s/ Win S. Westfall

 

 

 

 

 

Win S. Westfall, President/CEO of Willdan

 

 

 

Group, Inc.

 

 

 

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